Ricardo

1. What are the personal and organizational reasons that led Ricardo Semler to change his leadership style so markedly? Ricardo Semler had taken over the reins of the company from his father in 1980. By 1982, he had taken measures to modernize the company and make its processes more efficient. However, he did this by forcing discipline and by instilling a pressure to perform which eventually created tension in the business environment. Employees were working long hours and were under immense stress. The autocratic nature and the suffocating environment had led the workers to a point where they began to stop caring for their work and the distress was becoming omnipresent. This culture of rigid controls and micro management was brought to an end by the incident at the annual corporate retreat where one of the employees drew a cartoon figure (of Grim Reaper holding a scythe surrounded by bleeding stick figures) as a symbol of rebellion against the entire authoritarian culture that was prevalent. It was at this retreat that Ricardo realized that a radical intervention and a turnaround of methods were needed within the organization. On the personal front, it was Ricardo’s health that acted as the silent tell tale of the autocratic leadership style followed in the company. The stress and its effect on his health finally came to the fore when he collapsed on the floor during a factory visit that he went to in the U.S. He was rushed to a nearby clinic for medical help. The rigid controls and tyrannical nature of the company had led to an advanced form of stress within a short span of time and that

too, in a man only aged only 25. Ricardo was strongly advised an overhaul of his life- work and personal, if any- due to this diagnosis. 2. How would you characterize Semler’s early leadership style? And his later leadership style? Ricardo Semler’s early leadership style was authoritarian, hierarchical and controlling. He had a very rebellious nature and didn’t like his father’s rigid schedule and excessive punctuality. As soon as he took over, he revamped the entire organization structure and followed a very tough-minded and statistical approach which led to a great deal of stress and tension in the workforce which reflected in their attitude and performance. It had created a lot of distrust and an unconducive work environment for the workers and also took a toll on his health.Ricardo’s later leadership style was a reflection of the change in his personality and approach to life. He was more democratic, flexible, risk-taking and willing to think outside of conventional approaches. He placed trust in his employees and let go off the need to control by giving them the freedom to run the company themselves by getting rid of the rigid organization

structure

and

promoted

equality

among

the

workforce

irrespective of their rank. Transparency in operations was encouraged and workers were allowed to design their work role which allowed them to maximize their efficiency. The most important aspect was he was patient enough to give the radical approach enough time to be absorbed by the system and bear results.

3.To what extent do you think Ricardo would succeed as a leader in other types of organizations? As mentioned in the case, Ricardo’s leadership style is characterized by trusting employees completely, sharing power and information, encouraging dissent and celebrating true democracy. While this method seems to work tremendously for SEMCO, Lumiar School and Botanique Hotel, there are several settings where this kind of leadership style might not succeed. 1 Complete faith in employees poses various threats to organizations that obtain their competitive advantage through operational excellence. Companies in sectors like manufacturing, healthcare, etc. that strategically build differentiation through low costs and tight process controls would be particularly vulnerable to negative consequences of employee misconduct. For example, contract employees, low wage workers, etc. would no longer have the incentive to deliver timely and quality results. 2 Sharing information can be risky in organizations that operate in highly competitive environments. In such settings, the company would be prone to information leakages and hence losing any sustainable competitive advantages. Also, in settings where clients entrust companies with highly sensitive internal information, any information leakages can be fatal and result in loss of clientele and reputation. 3 The profit sharing model seems to work very well since the profits of the company are restricted to the organization. In this case, the

employees can be expected to prioritize the interests of the company over their own and bring integrity to the workplace. However, in settings where the profits are not entirely withheld by the organization (for example, publicly traded corporations), the company is more prone to employees deviating from work ethics. In addition to the above reasons, there are also some softer aspects like external shareholder trust, employee cultural background, etc. that might pose challenges in various organizations and geographical settings. 4. Why does Ricardo Semler’s new leadership style work? Ricardo Semlers New Leadership style was based on three broad areas of Democracy, Ownership and Information to all. Ricardo adopted hands off style by giving the employees as much freedom as possible. He gave all the power to the employees to decide everything on they own. This trust on the employees led to improved loyalty and efficiency across the roles, as everyone took it with pride and drive on own without monitoring for reaching the goals. His style gave ownership to everyone with initiatives like change in organization structure , profit sharing program, Job rotation and training, Participatory decision making, recruiting own staff and managers,360 degree feedback system. As a result accountability increased across the organization which in turn translated into higher productivity. Ricardo Style of information to all on everything gave the system transparency. Employees had all information including the firm’s financial data, making employees

understanding what was good and improve what was bad. This transparency worked in taking faster decisions and buy in of employees to initiate change. His style and belief on giving freedom to employees, giving back profits to employees and transparency works in keeping the employees motivated, innovative, flexible and adaptable to change. He used different situational leadership styles that suited to different scenarios