Exploring The Management Of Lean And Agile Organisation Business Essay

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Management is the use of technique based on the measures artfully applied.(Harris 1994).Ideas usually come from individuals but it needs a large multi-disciplined Organisation to develop it into the product and take it to the market.

1.ii Organisation :

An Organisation is considered as a group of people with define relationships to each other to achieve aims or goals or to achieve specific objectives for example Club ,Bank or Manufacturing Company etc. Organisation can be also referred as a structure defining the division of work and interaction between individuals, groups and resources. (Dunderdale 1994).

1.iii Organisation Behaviour :

Organisation behaviour determines the study of people in organisation and their behaviour that affects the performance of the organisation.(Robbins 1998-99)

This Assignment identify Organisation and its elements that define the Management of Lean & Agile Organisation Behaviour introducing the SEMCO Manufacturing Company as a Organisation.

A Leader Should Know How to Manage Failure - APJ Abdul Kalam

In Practise, Theory and Practise are different.(Leadership Human touch 1998)

2.Background of SEMCO:

SEMCO also called as Semler & company was founded in the 1950s by an Australian engineer Antonio Curt Semler as an Organisation manufacturing centrifuges for the vegetable oils industry and engineering machines. Ricardo Frank Semler(1980 Brazil), the founder's son, takes over at the company and implements a series of changes. During the years that followed, Semler dismantled the rigid management structure imposed by his father in favor of a more flexible organisation based on three interdependent core values: employee participation, profit sharing, and the free flow of information.

Organisation has modernized by expanding its range and investing in other businesses, moving heavily into the services area and always in association with world leaders. After successfully developing several businesses in the environmental consultancy area, facilities management, real estate consultancy, inventory services and mobile maintenance services, Semco as Organisation is currently market leader in the industrial equipment area and solutions for postal and document management.

3. Open system model of Organisation-

Open system theory was initially Stated by Ludwig von Bertanlanffy (1956), a biologist, but it was immediately applicable across all disciplines. It defines the concept of a system, where "all systems are characterized by an assemblage or combination of parts whose relations make them interdependent" (Scott 77)

But according to Laurie J Mullins (1999) Management and Organisational behaviour can be explained and classified using an Open system model for an organisation. This Model of Organisational was beneficial to many organisation including Semco.

Open system Model is outlined as follows :

Fig-1.1 General Layout of Open system model of Organisation.(Mullins)

The systems approach was quickly applied to the study of organisations by Semco, and with it an acknowledgment that the environment surrounding and permeating organizations had important effects on organizational behaviour and structure (and vice versa).Semco as an Organisation fits in the open system model of Organisation Perfectly. As show in fig 1.1,Semco was built up on by the factors such as Environmental influence, Semco had a competition from Elgin group equipment and Very few Engineering equipment manufacturing companies but Semco Management inputs (staff, products etc ) that enables transformation phase to contribute a needed results.

Various Organisation adopted the open systems perspective to grow their respective Organisation. This approached cached the eye of Semco and as result of this, Semco biulded as an Organisation from 1950 to 2009. Semco initiated with manufacturing centrifuges ,hydraulic pumps in 1950 and reached the heights of manufacturing refrigeration units, food processors, etc and as effect of these there share values increases which later built up into making of Semco consultancy ,Semco schools which manages a foundation that mentors and catalyses educational, cultural, environmental and strategic projects.(semco.com )

However, most organizations do not function according to system. External environmental influence might play an vital role in progress of Organisation.

i. External Environmental Influence :

Often normative structures are only loosely connected to actual behaviour, at both the individual and group level. Pfeffer and Salancik noted that "The organization is a coalition of groups and interests, each attempting to obtain something from the collectively by interacting with others, and each with its own preferences and objectives "(Pfeffer and Salancik, 1978 p. 36).

Businesses operate in an external environment in which competition from rivals businesses companies have to take account of legal, political, social and economic influences.

A PESTEL (Social, Legal, Economic, Political, Technological) analysis is often carried out by business planners which enables them to develop more informed strategies. This strategy can be also called as long term plans.

Environmental influence may affect or Improve any Organisation on factors such as Competition, Legislation, Culture or different styles of working individual.

4.Division of Work :

Division of work can be defined as the extent to which an organisation's task is separated into jobs to be done by different people. (Moorhead and Griffin:1998).

Division of work in any Organisation rely on following points as follows :

Main function of Organisation.

Product or Service.


Common time scales.

Common processes.

Staff employed.

Customer or People to be served.

Semco as Organisation follows the above division of work by designing the work with respect to its nature and interests of staff and job satisfaction (Ricardo Semler).

4.i Organisational structure :

According to Mintzberg the main elements of structure which serves as co-ordinating mechanisms for the work of Organisation are Mutual Understanding, Direct Supervision, Standardisation of Work processes and its output's and Worker skills.

Business needs to be organised in a specific form of shape that is generally referred to as organisational structure. Organisations are structured in a variety of ways, dependent on their objectives and culture. The structure of the company often dictates the way it operates and performs (Waterman et al., 1980). Traditionally, the businesses have been structured in a hierarchical way with several divisions and departments, each responsible for a specific task such as human resources management, production or marketing. Many layers of management controlled the operations, with each answerable to the upper layer of management. Although this is still the most widely used organisational structure, the recent trend is increasingly towards a flat structure where the work is done in teams of specialists rather than fixed departments. The idea is to make the organisation more flexible and devolve the power by empowering the employees and eliminate the middle management layers (Boyle, 2007).

Mickensy's 7s invented model for his Organisation Mickensy's and Company which was used on Semco Organisation. Model structure of Semco is very much similar to semco .The structure of the model of an Organisation is as follows :

Fig : Simple 7s Structure of Organisation by Mickensy's

Semco as Organisation does not emphasise on hierarchy or Organisational chart but they follow a general layout of 7s model as above.

4.ii Centralisation :

Centralisation of Organisation can be defined as process of centralising, or the state of being centralized; the act or process of combining or reducing several parts into a whole; as, the centralization of power in the general. 

In Centralised Organisation which decision-making power is at the top of an organization and there is little delegation of authority.

Advantage Of Centralisation:

Easier implementation of a common policy for the organisation as a whole.

Prevents sub-units becoming too dependent.

Easier co-ordination and management control.

Improved economies of scale and a reduction in overhead costs.

Greater use of specialisation, including better facilities and equipment.

Improved decision-making which might otherwise be slower.

4.iii Arguments against centralisation:

Centralised Organisation requires more mechanistic structure.

Lengthens scalar chain (number of different levels in the structure of an organisation).

However many Organisation fall somewhere between these two extremes, there is a pronounced trend toward more and more decentralization.

4.iv Decentralisation & Semco as Decentralised :

A decentralized organization is one in which decision making is not confined to a few top executives but rather is throughout the organization, with managers at various levels making key .

Semco as Organisation falls in the Decentralisation of Organisation, the leader Ricardo Semler believes that in Organisation each and every staff are free to make their own decision.

Full centralization means minimum autonomy and maximum restrictions on operations of subunits of the organization. Semco believes that while organization grows in size and complexity, decentralization is generally considered to be effective and efficient, operating decisions relating to their sphere of responsibility. Semco is a strongly decentralized organization in which even the lowest-level managers and employees are empowered to make decisions.

Semco does not stretch the standards of companies with a predefined hierarchy and excessive formality. At Semco, people work with substantial freedom, without formalities and with a lot of respect. Everybody is treated equally, from high-ranking executives to the lowest ranked employees. Hence the work of each person is given its true importance. However this way of working can be debatable and it might not work for some organisation. But in modern day Organisation people or staff want more freedom from there organisation for better performance, hence the author or founder believed in this type of working which improved Semco as Organisation.

Advantage Of Decentralisation :

Enables decisions to be made closer to the operational level of work.

Support services will be more effective if they are closer to the activities they are intended to serve.

Opportunities for training in management.

Tends to be easier to implement in private sector-organisations rather than the public sector -

accountability, regularity, uniformity.

5.Culture of Semco :

Culture of Organisation can be defined as common way of working of organisation with respect to thinking behaving and believing.

5.i Pattern of Work :

Semco's Culture follows a pattern of full democracy which is very unique. Semco are created and managed within an open management model, different from conventional models .

 The Semco Way, divided into what we see as major categories. Find out more about Semco and discover that give little credence to it as an important factors, such as appearance and formalities.

Semco culture of organisation can be identified follows :

Pattern of work.



And Some basic principles which are highlighted below.

5.ii Principles and Values

At Semco, a few basic rules which are believed ,dependable and reliable for Organisation to be successful.

Semco Group grows on the work on each one of employees understanding fully their place of work.

In practice, Semco have 10 principles and make a special effort to follow them:

1 - To be a dependable and reliable company;

2 - Value honesty and transparency over and above all temporary interests;

3 - Seek a balance between short-term and long-term profit;

4 - Offer products and services at fair prices which are recognized by customers as the 

best on the market;

5 - Provide the customer with differentiated services, placing responsibility before profits;

6 - Encourage creativity, giving support to the bold;

7 - Encourage everyone's participation and question decisions that are imposed from the top down;

8 - Maintain an informal and pleasant environment, with a professional attitude and free of preconceptions;

9 - Maintain safe working conditions and control industrial processes to protect our personnel and the environment;

10 - Have the humility to recognize errors and understanding that we can always improve.

(semco.com/br by Ricardo semler,sau Paulo 1993)


6.Major change of Semco :

The biggest challenge facing any business is change. Many managers consider the changes

that Semco went through to be too extreme and even unnecessary in light of the concurrent

global environment. Many argue that such drastic changes were not necessary to achieve

the same level of success. But Semco and Ricardo Semler had different thought which was unique on its own.

On his first day as the new CEO, Ricardo Semler fired two-thirds of the top management

of Semler & Company, many close friends of his father, and began plotting a product

diversification strategy for the newly renamed Semco.

Semler worked long hours to save the faltering business and made some limited progress

in his first year toward the eradication of the old Semler & Company and its organisational legacy.

However, it was not until he fainted while touring a factory in the United States and was

diagnosed with a severe case of stress that he decided to drastically change his lifestyle and

that of his employees. Semler had not yet postulated a strategic vision, but clearly perceived

"a sense of lifelessness, a lack of enthusiasm, a malaise at Semco, and [knew] that [he] had to

change it..."

During the years that followed, Semler dismantled the rigid management structure

imposed by his father in favor of a more flexible organization based on three interdependent

core values: employee participation, profit sharing, and the free flow of information.

By 1998 Semco maintained only a limited number of functions totally in-house. This included

top management, applications, engineering, some research and development, and a

few other high tech, capital intensive functions considered to be within Semco's range of

core competencies. The firm had moved all other functions to its satellite companies or had

completely outsourced to other firms. Many upper-level managers initially opposed

outsourcing on the grounds that it would produce information leaks and result in the loss

of competitive advantage. Semler, however, firmly believed that competition is inevitable,

and competitive advantage comes only from continuous innovation. Moreover, the close

relationship between Semco and its satellites meant that most competitive data effectively

remained within the organization. Semler felt that Semco held little in the way of strategic

information, and that excessive planning inhibited spontaneity and creativity. To support

his contention, Semler pointed to the fact that 10-15% of the company's profits came from

environmental consulting. It was likely that environmental consulting would have

appeared in Semco's strategic plan ten years earlier

Because of Semco's ever-changing nature, Semler felt that a corporate mission statement

was unnecessary.

i.Success achieved by Semco :

Semco's transformation from an autocracy to an entrepreneurial democracy took fifteen

eventful years. In the words of Semler, the change proves "that worker involvement doesn't

mean that bosses lose power;" it merely strips away "the blind irrational authoritarianism that

diminishes productivity."

Semler felt that the organizational change process at Semco was only about thirty

percent complete by 1998:

Still the rewards have already been substantial, taken a company that was moribund

and made it thrive, chiefly by refusing to squander our greatest resource: our people. Semco

has grown six-fold despite withering recession, staggering inflation, and chaotic national

policy. Productivity has increased nearly seven-fold. Profits have risen five-fold. Semco

had periods of up to fourteen months in which not one worker has left them. They have

backlog of more than 2,000 job applications, hundreds of people who say they would take

any job just to be at Semco. As a matter of fact, newspaper generated

more than 1,400 responses in the first week about Semco as an Organisation.

Most importantly, changing the company changed the lives of Semco Associates.

7.Conclusion :

This assignment conclude's that study of Management and Organisational behaviour are the key aspects of the successful Organisation. It therefore gives importance to understand how organisations function and influences by which they exercise over the behaviour of people. This assignments explains :

- Open system model (Mullins ) with Semco as an Organisation and its Environmental Influences.

- Division of work with respect to Centralisation, Decentralisation, Advantages of Decentralised and Centralised Organisation, Arguments on Centralisation, and Structure of Organisation with 7s model however it does not explains hierarchy or chart of Organisation as Semco does not follows those.

- Culture of Semco with respect to its pattern and Principle values.

- Highlights on Success defined change carried out by Semco & its staff which improved Semco as Organisation drastically.