More on self-organizing teams – Semco style

September 7, 2010 at 7:23 am | Posted in Blogroll, Organizational culture, Scrum and agile, Systems Improvement | Leave a comment

Last week I had shared a few thoughts of Ricardo Semler from his book “Maverick!” about how he successfully created self-organizing teams at Semco and similarities with the practices that Scrum uses for the same purpose. This week, I would like to share from the chapter “Rounding the Pyramid”. Some of these ideas at first may appear weird, even crazy. But specific cases cited by him in the book make you wonder why other organizations shouldn’t try to benefit from them. I am quoting below a few excerpts from this chapter.

“The pyramid, the chief organizational principal of the modern corporation, turns a business into a traffic jam. Thousands of drivers start on the highway. But as it gets narrower, rewarding the few who keep climbing but demoralizing a far greater number who reach a plateau or fall by the way-side. Some drivers give up and take side roads to other destinations. Those who make their peace with the pyramid and develop specialized skills can expect job security. But is it reasonable to suppose that they will continue to be motivated? Because of the constraints of the pyramid, organizations are not ready to promote them fast enough to satisfy them, so many firms take the easy way out and create an extra level or two for their over-achievers but that only compounds the problem.”

After giving a lot of thought to this problem, Semler came up with an innovative solution. He created three concentric circles instead of a pyramid.

“The small innermost circle would enclose a team of half a dozen people, the equivalent of vice presidents and above in a conventional company. They would co-ordinate Semco’s general policies and strategies and be called Counselors. The second circle would enclose seven to ten leaders of Semco’s business units and be called partners. The last immense circle would hold virtually everyone else at Semco. They would be called associates. A group of associates is headed by a coordinator equivalent to departmental managers and supervisors.”

“The smallest circle would serve as a corporate catalyst, stimulating decisions and actions by the people in second circle, who actually run the company. The coordinators could have vastly different skills, responsibilities and salaries. Coordinators with relatively little ambition could move from one job to another provided there was an opening. They could also go back to being an associate. Associates could even earn more than the coordinators. A specialized software engineer as an associate, for instance, could make much more than a coordinator. The circles freed the people from the hierarchical tyranny; they could act as leaders when they wanted and command whatever respect their efforts and competence earned them. They could cease to be leaders whenever they wanted, or when the organization decided they no longer merited it.”

“How would decisions be made? Each associate would make all the decisions he felt confident to make by himself. if he was uncertain about a problem, he would go to his coordinator. Similarly, each coordinator would make all the decisions he felt confident of. He would bring other issues at a weekly meeting every Monday morning presided over by the partner of the business unit. Decisions that affected more than one business unit or involving large investments would be taken up to the Tuesday meeting attended by the representatives of each business unit (not necessarily the partner), plus all the counselors. All decisions in the meetings would be by vote; each person irrespective of his role has one vote.”

“Just three circles, four job categories and two meetings. That’s it.”

“Under the new rules one coordinator could not report to another coordinator and similarly one associate could not report to another associate. It was a big adjustment for those who held supervisor positions earlier but didn’t qualify now as coordinators. They found themselves floating in the big circle but their salary was not affected. Since there was a limit on number of coordinators, the associates have to take on more responsibility.”

It helps creation of self-managed to push decision making as far down as possible. Coordinator is there to help the associates make decisions only when required; similar to the role of a scrum master. Associates can easily get more exposure to different skills and capabilities and are encouraged to play multiple roles simultaneously in a team; very similar to Scrum. Whole team works for common goal.

Scrum teams could possibly benefit from two more practices from Semco; “Hiring and firing the boss” and “Sharing the wealth”. I will try to cover important aspects of these two next week and examine how these empower the teams to be more self-organized.


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