managing people 1

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INTRODUCTION

This report is about a company named Semco that was created back in 1950s. The

company was established to manufacture centrifuges for the vegetable oils industry.

With the passage of time, the company has advanced itself by diversifying its range

and investing both money and resources in other bus iness sectors, expandingmajorly into the servicing area by forming associations and alliances with the global

leaders.

After having fruitful results in the areas of environmental consultancy area, facilities

management, inventory services, mobile maintenance services and real estate

consultancy, the company has become a global leader in the area of industrial

equipment and solutions for postal as well as document management.

But all this success and a position of being a global leader has been acquired by a

company that follows non-traditional ideas as well as approaches of management.

The company has achieved all the success and recognition without the leadership of a charismatic CEO as the company does not believe in traditional hierarchy to

perform the processes of decision making or problem solving. All the employees of

the company are provided with complete freedom not to express their views and

opinions but also to choose the way they want to work.

This report is about the kinds of strategies and approaches being followed by the

company for so many years that do not go with the traditional ways of management.

But the company is still placed on the position of being a global leader in its specific

area of business.

1. SEMCO¶s RELIANCE OF CLASSICAL MANAGEMENT

One of the most significant among the activities that are being performed by the

human beings is managing. According to Koontz and Weihrich (1990), Management

can be defined as the process of designing as well as maintaining an atmosphere in

which the individuals, performing collectively as teams, effectively and efficiently in

accomplishing the selected objectives and aims. Some of the different aspects that

can be included in the definition of management are:-

- Managers performing managerial activitie s of planning, staffing, organizing,

controlling as well as leading.

- Management is applied to all the managers of different levels of organizational

hierarchy

- People having the management control aims at creating the surplus

- Management is associated with productivity i.e. efficiency and effectiveness

Thus from above mentioned aspects included, the management can be said as

developing the bureaucracy that helps in deriving its significance from the demand of



strategic planning, co-ordination, directing and controlling the large as well as

complicated process of decision making. Basically, the management involves

acquiring the managerial proficiency and effectiveness in the below mentioned

significant areas:-

- Problem solving

- Human resources management

- Administration

- Organizational leadership

Firstly, the approach of management is all about solving the problems and issues

that emerge while struggling to accomplish the goals and aims set by an

organization. The process of problem solving can be performed by recognizing the

problem, analysing the identified problem and executing of remedies to the problems

faced by the managers.

Secondly, the concept of administration involves performing the laid down processes

for executing, controlling, communicating, delegating and management of the crisis.

Thirdly, the approach of human resource management must be based on the

strategic incorporation of human resources, evaluation of the employees and

exchange of perceptions among the employees and shareholders.

Last but not the least, the concept of organizational leadership needs to be

developed in accordance with interpersonal relationship, self-encouragement to

perform better, teamwork, emotional strength and maturity for handling the

circumstances, individual reliability as well as general skills of management.

1.1 Necessity of Management in any Organization

The managers or leaders within an organization are provided with the responsibility

and control to take actions that will help the individuals to perform better and to make

their best contributions for achieving the aims and goals set as a team. The concept

of having a traditional management hierarchy has been followed and adopted by

majority of the organizations ranging from small scale to large scale . The situation an

organization surviving might differ from others but the concept of having an

organizational hierarchy of management has been followed from many decades and

by most of the companies till today.

The evolution of management as a necessary, a distinct and a leading establishmentis marked as a significant event in the social history. Management is supposed to

remain a dominant as well as a basic establishment that is particularly charged with

making the assets of a company productive i.e. with the role of organizing the

economic advancement, exhibiting the basic spirit of today¶s world.

Classical Organizational Theory



There are two major theories that come under this category of management theories

i.e. the bureaucratic theory proposed by Max Weber and administrative theory

proposed by Henri Fayol.

The theory proposed by Max Weber was based on a set of beliefs for an ideal

bureaucracy i.e.:-

- A rigid as well as official area of jurisdiction

- A firmly developed hierarchy of top and subordinate employees

- Management that depends on the written records

- Thorough as well as specialized training

- Management following stable and knowable rules and guidelines

Whereas the administrative theory proposed by Henry Fayol basically stresses on

the individual responsibilities of management at a much more granular level. In

simple words, the administrative theory of Henry Fayol is more directed towards the

different layers of management hierarchy. As proposed by fayol, the management of

an organization performs five different roles i.e. to predict and planning, organizing,

commanding, co-ordinating and controlling.

- Predicting and to develop plans is an act to forecast the future and perform

necessary actions in accordance with that.

- Organizing refers to developing the resources of an organization both human

assets as well as material resources.

- Commanding points out at keeping the actions and procedures of an

organization running

- Co-ordination refers to aligning as well a s harmonizing the efforts and actions

of the teams and groups within the organization- Controlling means that the activities mentioned above should be performed as

per the set rules and norms.

1.2 SEMCO¶s Reliance on Classical School of Management

Semco is an organization that deals in the areas of environmental consultancy area,

facilities management, inventory services, mobile maintenance services and real

estate consultancy. The company does not adopt or follow a traditional style of

management structure that includes different levels or layers of an organizational

hierarchy. The company has nearly 3000 employees working for it. In the recent

years, the company has gained huge success as well as recognition worldwide and

that too without any charismati c CEO at all.

The company has no traditional hierarchy present or existing within the organization

to perform processes like decision making or problem solving. Most of the decisions

of the company such as purchasing a new plant site or making an acquisition are

made by having a democratic voting method where all the employees can participate

and have their say. All the information whether it is related with the new



developments to be made or associated with the financial situation of the company is

made available to all the employees, thus promoting self control.

The company provides freedom to everyone who is working for the company to

participate and involve him or herself in every way. As said by Semler (CEO and

majority shareholder of the company), freedom is not an easy thing, rather it

introduces complex choices to be made. Still the office has no walls in order to

stimulate the process of information exchange.

There are four different circles included in the organizational structure of Semco

described as follows:-

- The innermost circle includes six counsellors serving as the executive team

and appointed as chairperson of the company every six months. Semler

having nearly 90 percent of the company¶s stake is one of these six

executives.

- The second circle includes the business unit managers or leaders. The main

role of these people is to act as a partner to the executives or counsellors.

- The third concentric circle includes the coordinates who perform the role of

being the first line mangers or superviso rs.

- The fourth circle includes everyone else working as an associate.

In addition to this, many different teams have been formed by the company such as

Nucleuses of Technology Innovation that perform as temporary project teams and

have no boss.

As mentioned above, the organizational structure of Semco is not exactly the same

as followed by majority of the companies, where there is one head and then the

team of executives lies. After that there are managers, supervisors and lower level

employees. Semco practices a way of structure that provides everyone with the

opportunities to get involved and participate in the core decisions of the company.

2. MOTIVATIONAL THEORIES & SEMCO

Motivation has always been a very popular subject to talk and discuss abou t

throughout history. But the area of motivation got treated with some kind of

seriousness when the time of Industrial Revolution arrived and it became an area of

concern and major interest to the business world. This was the first time that the

business took a systematic approach to develop an understanding that exhibits the

relationship between motivation and performance . There are three different

approaches that were developed at the time of industrial revolution as described

below:-

Classical approach



This is based on the central idea of controlling people like machines. This approach

mainly postulated that the people are basically lazy and should not be trusted. This

approach has basically originated from the negative perception of human behaviour.

This approach acquired dissatisfaction of the employees and led to the emergence

of new approach i.e. human relations approach.

Human relations approach

This approach has basically originated from the research, which revealed that the

organization is a social community or group where people are human beings that

have social as well as emotional needs.

This approach was unable to explain the relationship am ong different aspects and

teams, so led to the development of Systems approach.

Systems approach

This approach has basically originated from the lack of explanation provided by the

human relations approach regarding the interrelationship of different subgroups or

aspects.

Motivation and behaviour is complex. This approach stresses in the fact that the

whole is greater than the sum of individuals. This approach has gained a lot of

recognition because the other two approaches are too intense and have not taken

synergy into consideration.

The author has taken examples of two mostly recognized theories of motivation i.e.

Maslow¶s Hierarchy of Needs and Herzberg¶s Two Factor theory of motivation.

2.1 Motivational Theories

The author has mentioned tow of the widely recognized theories of motivation i.e.

Maslow¶s Hierarchy of Needs and Herzberg¶s Two Factor theory of motivation


M aslow¶s H ierarchy of Needs

With experience it can be said that content theory is specifically r elevant in today¶s

business environment of fierce competition and increase in globalisation. A very well

recognized follower of the content theory is Abraham Maslow who put forward themotivational theory named as Maslow¶s Hierarchy of Needs. He stated that every

human being develops a hierarchy of needs ranging from the lower level to the

higher ones. These different levels or layers of hierarchy of needs become the

drivers or motivators during the state of deficiency. Once a lower level of hierarchy is

completely fulfilled, the tendency of an individual to climb up to the next level

increases i.e. to acquire higher level of needs. The concentration of an individual

increases once the lower set of needs are acquired. Maslow (1970) proposed a set



of five different levels in his theory of hierarchy of needs that are described as

follows:-

Psychological Needs

This level of hierarchy of needs is comprised of the most basic needs that are

required for survival including food, water, clothing, shelter and many more. Oncethese listed needs are satisfied, the tendency of fulfilling the higher set of needs

increases.

Safety or Security Needs

This includes the need for safety and developing a sense of security. People

exhibiting a high concern for this set of needs may select the roles that include less

risk. This set of needs include security as well as protection from both the physical

as well as emotional harm.

Social Needs

The tendency of the social needs arises once the lower set of needs is completely

fulfilled. This includes the need for affection, love, belonging and fulfilling the

relationship with the people associated.

Esteem Needs

Maslow believed that the individuals generally need to assess themselves in an

effective manner and they also desire that others should also value and respect

them. The self confidence of an individual grows when this set of needs is fulfilled.

People generally feel inferior, weak and worthless if these needs are not completely

met.

Self-actualization Needs

Once an individual acquired all the above mentioned four leve ls of hierarchy of

needs, the highest level of needs i.e. self actualization draws the attention. This set

of needs emphasize more on the problem areas that are associated with an

individual growth and the capability to have the peak experiences.



H erzberg Theory

A well known expert, Frederick Herzberg proposed a theory named as Two Factor

Theory. Herzberg (1987) described the relationship among the specific job

characteristics and motivation.

Motivation Factors

It includes the factors of job content such as responsibility, advancement,

accomplishment, recognition and the work itself. The level of job satisfaction arises

only if the motivators exist.

Hygiene Factors

It emphasizes more on the job related factors such as interpersonal relationships,

wages, working environment, policies of the company, technical supervision as well

as administration. The level of dissatisfaction increases if the hygiene factors are nottaken into consideration.

2.2 Relevance of above theories to SEMCO

SEMCO does not adopt or follow a traditional style of management structure that

includes different levels or layers of an organizational hierarchy. The company has

no traditional hierarchy present or existing within the organization to perform

processes like decision making or problem solving. The company provides freedom

to everyone who is working for the company to participate and involve him or herself

in every way. The company provides its employees with opportunities to participate

in the major decision making processes, thus encouraging them to perform better.Some of the motivational factors present in the SEMCO that are relevant to the

above mentioned theories are listed as follows: -

- Everyone associated and working in the company are provided with complete

freedom. This helps them in increasing the confidence as well as motivation

level of the employees. The employees are encouraged to participate in the

process of decision making and problem solving.



- The employees are provided with the freedom to decide their wages and

salaries. The salaries of an employee is made transparent to all other

employees, this everyone working in the company gets to know the pay

structure of each other. This helps in increasing the transparency among the

organization and enhancing the interpersonal relationships.

- The employees are also provided nearly 23 perc ent of the profits of thecompany and moreover this 23 percentage is also decided by the employees.

The members of teams of Technology Innovation gain royalties on the

accomplishment of the goals associated with their projects. This helps in

satisfying the motivational needs of the employees.

3. EMPOWERMENT

(http://humanresources.about.com/od/managementandleadership/tp/empowerment.htm )

The approach of empowerment has gained a lot of recognition and attention from the

researchers and experts. Empowerment can be said as the process that is

performed by the managers of enabling and helping the co-workers to accomplish

the set goals. The process of sharing the information is an essential requirement for

another aspect i.e. encouraging the employees to decentralize the decision making

and wider employee involvement. When the top management employees pass the

control down, the employees are provided with the control and power to build

decisions in the below mentioned areas: -

M anagement of Personnel

Employees can be offered with control to set their schedules of working, training and

vacations; establishment of the assignments to the employees and setting the

performance standards; conducting the performance appraisals of employees and

administer discipline; recruiting new employees etc.

Redesigning the Work Processes

Employees of an organization should be motivated to recognize the issues and

problems associated with the work processes and then looking for the reasons

behind such issues. The employees should be empowered to select and test the

solutions investigated, transforming the processes and examining the outcomes.

Many organizations have been using performance enhancement processes such as

continuous improvement methods, Total quality management, business process re -

engineering and six sigma etc.

General M anagement F unctions

Some of the general functions that are performed by the management can be

controlled by the employees themselves. This includes developing plans, controlling

the budgets (investments), interacting with the suppliers and other stakeholders and

performing the process of problem solving.



Benefits of Employee Empowerment

The working environment of an organization exhibits its values, objectives, vision as

well leadership style. The level of the empowerment of an employee within an

organization can be assessed by the kinds of decision making powers being

assigned to the employees and also from the working environment of a company

that motivates and accepts the new ideas and perceptions of its employees. Some of

the benefits of employee empowerment as described by Cichetti (2010) are: -

E m ployee Satisfaction

Providing appropriate powers to the employees is not only a wise management

approach but also a tool for increasing the satisfaction level among the workers. By

empowering the employees, a sense of ownership and belonging can be developed

among them that can help in yielding effective outcomes for the company. Based on

the responses of the employees a California based company Jupiter Networks has

been ranked number 6 out of 125 employers to be the best places to work in the

Silicon Valley. This exhibits the level of employee satisfaction achieved by the

company by empowering them.

Better c ustomer Service

Along with rewards and incentives from the management of a company, the

employees feel the need of acquiring a limited level of control and transparency to

solve the problems for delivering better customer services. As cited by Weiser

Security Services, when the employees are being motivated to participate in the

process of decision making, they feel more important and look forward in performing

better than before, thus increasing the productivity.

E m ployee Retention

By recognizing and acknowledging the efforts and perceptions of the employees, a

company can develop an environment of respect, honour and satisfaction. Many

experts have noticed that the companies following this kind of leadership style attract

the employees who are loyal and are willing to stay with the same company for

longer periods.

3.1 Relevance of Empowerment to SEMCO

The company provides freedom to everyone who is working for the company toparticipate and involve him or herself in every way. The company provides its

employees with opportunities to participate in the major decision making processes,

thus encouraging them to perform better. Some of the factors as cited in the case

study exhibiting the relevance of empowerment of employees to Semco are




- The company provides its employees with the authority to decide whether

they want to work as full-time or part-time workers. There are many

employees who work under a contract term or for other firms as well. This

helps the company in encouraging the level of entrepreneurship among the

employees.

- The employees are provided with the freedom to decide their wages andsalaries. The salaries of an employee is made transparent to all other

employees, this everyone working in the company gets to know the pay

structure of each other. This helps in increasing the transparency among the

organization and enhancing the interpersonal relationships.

- The employees are provided with the control to identify the opportunities

available in the market. The strategies of the company are developed and

implemented in accordance with the opportunities recognized by the

employees.

- The employees are empowered to participate in the process of decision

making when the company plans to explore and expand its range of products

and services.

4. CASE STUDY OF SIMILAR COMPANY (GOOGLE)

The company that has similar kind of management style as that of Semco is Google.

Google is a USA based MNC that performs its operations in the areas of Internet

search, cloud computing and advertising technologies. The company develops many

internet based products and services and provide them to the customers globally.

The foundation of Google was laid down by Larry Page and Sergey Brin while both

of them were attending the Stanford University as PhD students.

The motto of the company is µDon¶t be evil¶ and the company has always operated

on it. This moral code helps in guiding the employees as Google only holds them

accountable to management to a certain extent. In order to keep the spirit of

innovation on which the company was founded, the employees are mainly

accountable to themselves. According to the surveys performed by Fortune

magazine, Google has been ranked as the fourth most admired companies to work

for. The major reason behind such recognition is the cross-functional organizational

structure of the company that has been maintained with the help of stellar leadership

and innovative techniques of management.

Features of Google¶s Organizational Structure

The employees of the company are provided with the freedom to spend 70 percent

of their time and assets on the on-going projects, 20 percent on the similar

assignments of their own choice and remaining 10 percent on any new project in

based on their desires. This ¶70-20-10¶ rule exhibits a managerial guideline, but it

also empowers the employees to take calculated risks. The executives of the

company motivate the employees as well as the managers to work together rather



than via any formal channels. The senior executives of Google work closely with co-

employees and other teams in a form of cross-functional structure of management.

The open communication approach followed by Google also contributes to improve

the working of the company as it is one of the most considerable features of the

company.

Instead of the company setting any goals, Google facili ties and supports its

employees to fulfil their objectives as set by themselves. The leaders of the company

are act as a source of inspiration for the employees and empower them with powers

of decision making. The goals are set and assessed by the employees of Google on

quarterly basis.

Effects of Google¶s Organizational Structure

The leadership style followed by the company allows its workforce to change the

factors of their jobs when required. Employees are motivated to lead themselves,

assess their performances and then suggest for actions to improve them. The

leaders at Google want their employees to think large and loud and have open

communication regarding their goals and plans to accomplish their visions. The

organizational structure of the company promotes the transparency as the

employees must witness everything and contribute to the decision making

processes. All the employees of the company are provided with an access to any

meeting going in the organization.

Benefits of Google¶s Organizational Structure

The methods and leadership style followed by Google helps the company to attract

the talented and skilled workers as the management of the company emphasizes on

controlling via shared vision. Google allows its workers to set as well as benchmark

their own performance standards. Thus, these open policies developed by Google

get translated into a unique organizational framework, thus inspiring good nature as

well as guidance.

5. REFERENCES

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Carter, J. (2009), ³Managers Empowering Employees´, American Journal of

Business Ad ministration, pp: 39-44,Science Publications

Cichetti, J. (2010), ³Benefits of Employee Empowerment´, Sage Publications, CA.



Freeman, R. & Stoner, J. (2003), ³Management´, 6th

Edition, Prentice-Hall, New

Delhi.

Herzberg, F. (1987), 'One more time: How do you motivate employees?', Harvard

Business Review, Vol. 65 Issue 5, p109-120.

Johnson G. & Scholes K. (2002), ³Exploring Corporate Strategy´, 6th Edition, London,Prentice Hall.

Koontz, H. & Weihrich, H. (1990), ³Essentials of Management´, 5th Edition, McGraw-

Hill.

Maslow, A. (1970), µMotivation and Personality¶, New York: Harper. pp. 236.

Osborne, D. & Plastrik, P. (2000), ³Employee Empowerment´, The Reinventor¶s

Fieldbook.

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www.google.com/coporate

www.semco.com

http://www.bnet.com/article/models-for-people-management-best-buy-google-ge-semco/237201

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