Organizational culture :
SEMCO has three core values 1. employee participation 2. profit sharing 3. free flow of information
Employee participation:
It is the cornerstone of the semco culture which indicates the participation of every employee in major decisions. Participation gives people control of their work. The company admits that it operates on involvement and participation of its employees. Employees were encouraged to share their ideas and opinions. For example, the purchase of new site or any merger is done via vote of all employees. The main problem according to semler is autocracy. According to him we are still restricted by a system that doesn’t allow democracy in workplace. It’s very important to include our every employee in day today decisions that we take in the company.
Profit sharing:
The employees determine the profit share that they should get and also decide how to split it. It creates the feeling of ownership, says semler. Employees enjoy 25 % of company’s total profit. It directly affects their efficiency. The way of working is different by the employees when they have a sense of ownership. Profit sharing give them a reason to do things better. They work more sincerely and with more effort. In this way employees themselves can decide that what they will get at the end of the year.
Free flow of information:
Each piece of information is available to everybody. Nothing is kept as secret. Every employee is trained how to read a balance sheet, how different units in the organization works. Information tells people what’s working in the organization and what’s not. Everybody in company have access to the company’s books. Only one set of books wa there which was open for inspection and audit. The executives don’t want employees to think that they were holding back any sort of information.

Organizational culture inception:
In the year 1990 there was hyper inflation in Brazil. There was a total slowdown in the industry, but SEMCO survived by drastic cost cutting. At that time SEMCO had two options for cost cutting; either goes for the layoffs or pay reductions in the salary of employees. They went on for the second option and there was a decrease in the salary of employees. The employees accepted this on three conditions; 1. The percentage of profit shared was increased from 23% to 39%. 2. Management took a pay reduction of 40%. 3. Workers were given right to approve of expenses by the company. During this tough period there was a willingness to perform multiple job duties which resulted in the comprehensive knowledge of working in the factories. Thus employees start knowing what’s going on in company and how it can generate revenues. Slowly they start forming small groups to perform tasks which increase their productivity. Gradually the number of employees in a group starts increasing and so was the work. They start performing tasks in finance, operations and marketing sector giving birth to a whole new culture. They came up with new ideas and start generating profit for company. Thus a new era started in which pay was automatically inked with performance.
Other aspects of organizational culture: * Budgeting and planning were done every six months. In this they decide what funds should be allocated to a particular unit. The targets which were mentioned by the units are they met or not. * Units had to justify its continued existence as a separate unit. If it’s making profit and doing things that are beneficial for the company. * There were no fixed revenue targets by the executives. Everything was decided was the employees of the particular unit. For example, if there is a unit that is working on some research and not able to generate revenues for first six months then its fine it should be able to justify later. * The autonomous units were responsible for bringing in new business. for example, once there was a problem in tower maintenance its tower producing unit solved it and later starts up with a new unit that takes care of tower maintenance and starts earning profit.
Three step test to start a new unit:
To start a new unit at SEMCO the unit has to pass three tests they were * High level of complexity in the area of operation: this is important so that it is very difficult for is competitors to imitate the business plan or the methodology it is using. * Offering should be of high-end products or services: this helps SEMCO to stand different in the crowd from others. It is the products and services that create the image of a company in market. * Should be able to carve out a niche in the market: SEMCO wants to create a separate market. Its products should be able to do that.