The best known example is perhaps Semco SA. The Brazilian company saw its turnover rise from $4 million in 1982 to $212 million in 2003 after CEO Ricardo Semler, introduced industrial democracy, in which teams and employees were given all the space they needed within the confines of their assigned roles. To enable employees, each team received a variety of tools and training to support the process of being self-managing, for example IT solutions were implemented to help teams learn cost management and reporting.
Additionally, the teams had free access to all relevant business information. At Semco there are no departments that keep information to themselves – transparency and trust is key. Employees who finished their projects on-time, were able to spend their remaining time as they wished, even if that meant heading to the beach on a Tuesday afternoon.
In the literature, this phenomena is called self-coordinating teams, but they are also termed self-organizing and self-managing teams. According to Hans Strikwerda, professor of internal governance at the University of Amsterdam, this is not some "happy occurrence" that some teams fall into, but that this practice is supported by decades-old economic theories.
The Use of Knowledge in Society
The basis of these theories, is from the ground-breaking article The Use of Knowledge in Society by 1945 economist and Nobel laureate, Friedrich Hayek. The planned or centrally controlled economy, according to Hayek, doesn't function from a central authority pretending to know how resources can best be allocated. According to Hayek, every individual has relevant and unique knowledge to offer and the sum of that knowledge, within the confines of a free market, can determine the actual cost and more efficiently allocate resources. In other words, Hayek was a great believer in the free market economy and decentralisation, where each individual has access to all the information needed, in order to make optimal decisions.
Herbert Simon, Nobel laureate, further built upon this premise in the 1960s, with the claim that to survive as an organisation, leadership needs to loosen their grip on control. Furthermore, removing control destroys the grip an organisation has on adaptability, and in effect, resulting a loss of control freaks.
Self-management is a proven concept
The example of Semco shows that the effect of self-coordinating teams is not just a theoretical construct, but also is a proven concept. And there are more organizations that follow this practice: the American company W. L. Gore, the maker of the waterproof and breathable Gore-Tex goods, has been operating under this construct since the 1950s. Google and Netflix are also fine examples of implementing self-managing teams. These examples make at least one thing clear, according Strikwerda, "You're really in control, when you dare to be out of control."
For companies that attempt to implement self-coordinating teams, you often see that managers quickly fall back into old patterns. "It's logical," says Marjan Haselhoff, owner of training and coaching agency BuroKract, "this is because 95 percent of our lives are spent in automatic patterns,” therefore, proper guidance is necessary. Strikwerda further substantiates this by saying, "In all cases in which I saw this [pattern], I found that there was insufficient attention to what it means to lead in the classical sense when [a manager] has to work with self-coordinating teams." If you're used to focusing on the position you currently have, and less on the contribution you provide to an organization, you have to assume a completely different relationship to your team. "Most people can't do it independently," says Strikwerda. Intrinsic motivation is an important condition to entering into this process of change. In a self-coordinating team, you support the work process in an entirely different manner.
So ask yourself, are you ready to give up control?