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Lessons from Semco: Productive Relationships with Labor Unions in the Era of Worldwide Strikes

Christian Wandeler
Written by Christian Wandeler May 20, 2023

In December 2022, Time magazine announced that 2023 would be the year of the union strikes. So far, this prediction has proven true. People have been on strike in countries like the USA, Germany, Italy, and France. On April 19th, over 150,000 government workers in Canada went on strike after the union and government failed to agree on replacing contracts that expired in 2021.

The changing world of work

For me, as a researcher and consultant in progressive organizations, this strike is particularly interesting for the future of work. The workers not only want pay raises, but they also demand the flexibility to work remotely. Another indicator that the world of work has changed. Even if many organizations act as it would be possible to go back to being office-centric – the toothpaste is out of the tube, so to speak.

Working from home used to be more of a privilege, a reward, but now it has become more of a hygiene factor or basic expectation. And the fact that working from home has become part of a conflict between labor and management is really unfortunate.

“Another indicator that the world of work has changed. Even if many organizations act as it would be possible to go back to being office-centric – the toothpaste is out of the tube, so to speak.”

Productive relationships with labor unions

I have a lot to share about how organizations can organize in a much more modern way to accommodate the changing expectations of workers and customers. But right now, as the founder of the Semco Style Institute USA, it seems like it is a good time to share some valuable insights and lessons from Semco and Ricardo Semler about how to build positive and productive relationships with labor unions.

Semco: a successful collaborative workplace culture

First, a little background about Semco, a Brazilian company that has gained attention for its unique organizational structure and management philosophy. Semco also provides a notable example of how companies can work with unions to create a more collaborative and inclusive workplace culture. Founded in 1953 as a traditional manufacturing company, Semco has evolved into a highly innovative and decentralized organization that places a strong emphasis on employee empowerment and engagement. In the 1980s, the son of Semco's founder, Ricardo Semler, implemented a series of radical changes to the company's operations, including the elimination of traditional hierarchies and the implementation of self-managing teams.

Partnering with labor unions

One of the notable features of Semco is its relationship with labor unions. Semco established a partnership with the Metalworkers' Union in São Paulo, Brazil, which represented many of Semco's employees. Under this partnership, Semco allowed the union to participate in the company's decision-making processes and negotiate on behalf of the workers. This was a radical departure from the traditional and adversarial relationship that often exists between companies and unions. Instead, Semco and the union worked together to create a more productive and harmonious workplace.

The partnership was successful in improving working conditions and increasing productivity at Semco. It also helped to establish a more collaborative and inclusive corporate culture. Today, Semco is often cited as a company that successfully integrated unions into its operations, creating a more equitable and sustainable business model.

Key lessons for future leaders

Here are some valuable insights and lessons that leaders can learn from Semco and Ricardo Semler about how to build positive and productive relationships with labor unions:

1. Share power through participative, democratic management

Just as Semco's approach to management emphasizes employee empowerment and decentralized decision-making, it can also help create a more positive relationship between companies and unions. When workers feel that they have a say in how their work is done and are able to take responsibility for their tasks, they are more likely to be engaged and committed to their work. This can reduce conflicts between management and labor and create a more cooperative work environment.

2. Be transparent and trust your people

Additionally, Semco's commitment to transparency and open communication can help to build trust and foster positive relationships between management and union. By sharing information and involving workers in decision-making processes, companies can demonstrate that they value and respect their employees, which can help to create a more supportive and collaborative work culture. The leader of some of the most militant workers explained on television, “Brazil had only one trustworthy boss - Ricardo Semler and Semco.” (Semler, 1991, p.235)

3. Equitable and sustainable business model

Semco is known for creating extreme stakeholder alignment with workers (and stakeholders in general). This entails creating generous profit-sharing schemes with employees and giving them the authority to decide how they want to share it. It is to be noted that employees often decide to just split it equally amongst the people, regardless of pay level. On the other hand, though, when times get tough, employees are also called upon to decide how to proceed.

4. Treat adults as adults - inclusion even in tough situations

As was just mentioned, during difficult times employees are also involved in making decisions about how to proceed. The key is to treat workers as adults, who can take on responsibilities to solve complex issues. For example, when market conditions change or there are economic downturns, employees are involved in deciding how to proceed. Here typically, employees show solidarity with each other and decide to cut pay instead of cutting jobs. When layoffs are warranted, employees are also involved in determining the needs of people, tenure, as well as other factors.

5. Leaders stay attuned to the renewing power of unions

Ricardo Semler emphasizes the importance of giving unions a voice, keeping all lines of communication open, and being in a continuous dialog. “The ostrich that buries its head in the sand has a bigger problem than a limited vision: its rear end is an enormous target.” (Semler, 1991, p.102). Semco actively invited unions in and recognized that they play a very important role. At the same time, Semco is also not a pushover when it comes to negotiations and does not shy away from courteously receiving union committees and then saying no to 18 out of their 19 demands. However, keep in mind that the starting point of negotiations is typically already a situation where workers are treated fairly.

This was a radical departure from the traditional and adversarial relationship that often exists between companies and unions. Instead, Semco and the union worked together to create a more productive and harmonious workplace.
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Practical solutions for a more adaptive workplace in Canada

So, in regards to the current situation in Canada… What would Semco do?

For starters, Semco would have tried not to bury its ostrich head but would have actively responded to workers’ calls for remote work possibilities, and be more employee-oriented when returning back to the office. Offering attractive remote work conditions could have really helped the management and potentially compensated to a certain degree for demands about pay.

But now that we have a strike, which Semco has experienced many, Semco would strive to create opportunities for informal dialogue between management and workers. The approach would be co-created and the goal would be to find solutions that are flexible and adaptive to specific circumstances. While keeping workers’ needs in mind, an orientation towards the taxpayers would also be key. A focus on the ultimate customer.

Question to reflect on: What does the customer actually need from us? Do the taxpayers value speed, quality, cost efficiency, and bilingual services? And, does this require people to be present? What about opening hours, what is needed there? What does the overall customer experience look like? How could technology be leveraged to address these areas?

Semco would definitely also work with management and support them in developing methods to be in control, while giving workers the maximum possible autonomy and flexibility. This would also impact productivity in a very positive way.

Ultimately, the result would be an improved experience for taxpayers, a more productive workforce, and a better workplace for management and workers. Let’s see how the situation with unions and management around the world evolves and maybe strikes can be avoided by learning from Semco Style?

Written by Christian Wandeler
Christian Wandeler
Associate Professor @FresnoState | People & Organizational Transformation Expert | US Partner of Ricardo Semler @Semco Style Institute USA | Positive Psychology PhD
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