Three Companies Management Styles - Case Study Example

A Comparison of Three Companies’ Management Styles Introduction Semco is a Brazil-based company that is among the leading firms in the country in terms of growth rate. After recovering from a significant financial crisis in 1980, the company recorded a profit margin of 10% on sales of about $37 million (Semler 2). The company has five factories that produce a variety of sophisticated products such as digital scanners, commercial dishwashers, marine pumps, truck filters and mixing equipment. Google Company was founded and incorporated in 1998 by Larry Page and Sergey Brin. Google offers internet related products and services. The services and products include software, online advertising technologies, search and cloud computing. On the other hand, Apple Company specializes in the production of computers and computer-related devices such as software and mobile smartphones. Apple Incorporation designs iPads, Macs (personal computers), iPhones, iPads and various versions of operating systems such as OS X, iLife and iWork. With a current market cap of $105 billion, Apple is slightly behind Intel and ahead of Dell. iPods sold by the company account for over two-thirds of the MP3 player market (Kahney 1). The three companies not only share a host of similarities but also exhibit a range of differences. Discussion Similarities The two companies; Google and Semco, share a similarity in the degree of freedom given to employees in order to design or influence the end products of production. The engineers working at Google have significant independence in terms of the types of projects they chose to work on. The engineers are encouraged to allocate up to a maximum of 20 percent of weekly working schedule time to the pursuit of personal software ideas. Records indicate that the products, Google News and Gmail first came out as individual endeavors of Google’s employees (Kahney 2). On the other hand, Semco has eliminated the aspect of using time clocks in management. The employees operating on the factory floor enjoy the freedom of coming to work and leaving when they feel like doing so. The management of Semco makes the assumption that all the employees are trustworthy adults and as such, do not need direct supervision on time-keeping. It is unbelievable that the employees could come to the factory every morning and fail to get down to work as expected by the management (Semler 6). The expected observation by the very management (counselors) is that the workers would eventually start coordinating the working-hours scheduling by themselves. The workers have freedom to the extent that, upon achieving the set targets, everybody is free to go and engage in leisure activities. In terms of establishment and application of rules, Semco and Apple Inc. operate in a similar way. At Semco, the counselors abolished the normal manuals, rules and regulations (Semler 5). In the place of the regular rules and regulations, the company introduced the application of common sense as the universal rule. The argument in that case was that most of the rules and regulations are pretty poppycock. For instance, the company has not put in place any mandatory dress code for the workers. The employees are required to wear clothes which feel comfortable and acceptable to common sense to work in. The complex rules that govern travel expenditure have also been scrapped off. The employees are free to choose whether to live in a four-star accommodation facility or reside like Spartans (Semler 5). Additionally, the veteran workers are never subjected to rigorous petty cash account scrutiny procedures. One worker may choose to spend $200 a day while another may realize that $125 is pretty sufficient to meet the necessary daily expenses. Apple Inc. also allows flexibility in the application of rules as best exemplified by the company CEO, Steve Jobs. The firm has in place an egalitarian parking lot; therefore, there are no reserved parking spaces. In that respect, it is expected that the CEO would have to circle the parking lot tirelessly to secure a parking spot for his Mercedez Benz. Interestingly, Steve Jobs often parks in a handicapped space at the company’s front entrance, thus defying that rule of parking (Kahney 1). Steve Jobs approach to business is a perfect resemblance of his attitude to parking. At Apple Inc., the regular rules do not apply, and the workers have some level of freedom in executing various tasks. Differences A comparison of Semco Company and Apple Inc. shows a sharp contrast in the management styles employed. Semco offers employees freedom to work without supervision. The company’s organizational structure has a third circle comprising of associates (Semler 4). The associates do various jobs that include sales, design and manufacturing work without regularly reporting to any supervisor or coordinator. On the other hand, Jobs is a renowned supervision-oriented micromanager (Kahney 2). There is no single product that leaves Cupertino without meeting the CEO’s very exacting standards. Steve Jobs defines details such as the curve of a personal computer’s corners and the number of screws on the lower side of the same laptop. A former manager at Apple Inc. once complained that Steve Jobs would check everything including such minor factors as the pixel levels of a personal computer. The manner of handling expectations is also another point of contrast for Apple Inc. and Semco. Apple Inc. does not allow employees to give insights as to the products that buyers should expect in the future. At the age of 13 years, Nicholas Ciarelli created a website with the particular intention of exposing Apple’s covert product plans (Kahney 2). The website ran for approximately 10 years, publishing some correct predictions and a few embarrassing inaccurate predictions. During the 10 year period, Apple served Nicholas with numerous letters containing charges of trade secret disclosure and copyright infringement. The company even took Ciarelli to court on charges of illegally soliciting trade secrets from employees. However, at Semco operations are run in a transparent manner. The coordinators are allowed to establish clear budget estimates prior to the evaluation of the actual performance by the company. The employees of Semco are thus encouraged to be curious and harbor positive expectations about the firm’s financial performance. Entrepreneurship Semco It is an undisputable fact that every entrepreneur requires a mix of ingredients such as hard work and luck in order to achieve success in the ever challenging business market. The company employs the three fundamental values of profit-sharing, democracy and information in basing its 30 management programs (Semler 3). The three function as a whole and as such, are dependent on each other. The company’s adherence to the principles has yielded a unique corporate structure, union relations, employee freedoms and limitations of factory size. Semco manages to survive in the highly competitive business world because the company’s structure, borne out of a mix of the various fundamental values, cannot be duplicated. The firm is either too big, too young, too old, too far away or too obnoxious (Semler 3). The exceptional structure of Semco Company, which is nearly impossible to duplicate, enables it to survive competition posed by multinational companies such as Worthington Industries, AMF, Carrier and Mitsubishi Heavy Industries. Democracy, one of the values of Semco, allows individual employees to control the conditions of the work-place environment. In order to achieve that, the firm groups the workers into manageable small units of about one hundred fifty people. The smaller units in turn lead to a feeling of importance to the organization by the employees. Through the small groups, workers can make decisions that directly affect the organization profits. To effect the whole process, Semco had to break down the factory operations into three separate plants. Personnel, management information systems, inventories, internal control, receiving docks, entrances and telephones were separated (Semler 4). Also, three Personal Computer based systems replaced the mainframe computer previously used by the company. Within a year of the changes, sales revenue doubled, rejection rates fell from 33 percent to one percent, product quality improved and inventory days fell from 136 to 46. The feeling of importance derived from participatory decision making by the workers serves as an incentive to influence the company revenues positively. The very fact that Semco generates high-profit margins means that the company can comfortably compete with other companies in the market. The management of any company using profit sharing as a motivational tool is tasked with ensuring that the workers understand how their work is related to the profits and how the same profits are divided. Should the managers fail to convince the workers on such aspects, then the workers will see the profit-sharing tactic as a management gimmick (Semler 8). Semco has different divisions whereby each one has a profit sharing program that is distinct and separate from the others. Every half a year, the company computes 23% after-tax profits for each division and surrenders the same to three employees who get elected by a majority vote. The divisional employees then vote to decide on the appropriate use of the money. In the end, after investing the money, the returns are shared equally among the employees regardless of their various positions. Semco has managed to continue harvesting significant business returns due to the significant employee participation program outlined above. Semco utilizes the virtue of transparency to boost its financial performance in the highly challenging market. The management furnishes employees with relevant performance-related statistics on a regular basis. Some of the statistics include taxes, costs, overhead, payroll and profits, delivered in short and frequent reports (Semler 8). The company also offers lessons to the workers on how to read and interpret the financial reports. The information enables the employees to tell where their decisions are right and where they are wrong. Employee participation; empowers the workers, profit-sharing provides the need for improvement and information serves as a corrective measure where need be. Apple Inc. Apple thrives on applying secrecy in its innovation and product development processes. Unlike other companies that have embraced radical transparency, Apple has stuck with a different approach known as radical opacity (Kahney 2). Not only is the company’s relationship with the media dismissive but also adversarial at times. Steve Jobs speaks to a small selectively chosen number of news reporters occasionally. The company does not tolerate the idea of blogging about its operations or products. In 2004, the CEO dismissed the idea of enhancing the iPod devices through addition of video capability qualities. Contrastingly, a year later, the organization unveiled into the market the fifth generation iPod which supported video capability. Similarly, Jobs refused to admit that Apple was working on a possibility of moving the Mac to Intel chips. Months later after that refusal, the company announced its intentions of doing the same in the future. Apple restricts the areas accessible by employees within the organizational buildings. Hardware and software designers are housed separately and as such as, prevented from viewing each other’s work (Kahney 2). Therefore, it is not possible for the employees to have a complete picture of the projects developed at any single time. Even Jobs himself once carried home a prototype of the iPod Hi-Fi but still had to hide it under a cloth to prevent his family from seeing it. Secrecy enables Apple to catch its competitors unawares with the release of new sophisticated products and thus grab the largest proportion of market share in good time. It is through the use of secretive methods that Apple has managed to sustain the stiff market competition. Secrecy also saves Apple Inc. millions of dollars’ worth of advertisements. There is always a built-up feverish anticipation preceding all announcements made by the company. The media is always full of predictions about Apple’s newest products weeks before the MacWorld Expo. On the actual day of the announcements, several media outlets cover the same. A professor at Harvard, David Yoffie, once estimated the cost of headlines covering the unveiling of a particular version iPhone at about $400 million. That signified the amount saved in advertisement expenditure by Apple Inc. Most of the firm’s competitors cannot mimic radical opacity and as such, Apple has managed to continue surviving in the ever-increasingly competitive market comfortably. Google Google has quirk recruitment practices that, however, much criticized, have proved to be successful in the past. The company employs odd practices such as asking 45-year-old prospective employees to reveal their GPAs (Lashinsky 2). Google uses unconventional methods in carrying out operations and apparently the management seeks to keep things that way into the foreseeable future. For instance, when Sean Knapp and the Lepe brothers came up with a new idea of handling web video, the company was willing to pay them to stay without even disclosing the very details of that project (Lashinsky 1). The use of unconventional methods cannot be duplicated by Google’s competitors because of the risks involved and thus enabling the company to continue surviving in the market. Leadership Styles Used Semco The style of leadership employed by Semco Company is Laissez-Faire. The employees have the freedom to wear whichever clothes they want, go to work whenever they want and do whatever the hell they want (Semler 10). The firm is in the manufacturing industry and, therefore, a significant number of employees belong to the engineering category. The fact that the workers are engineers necessitates the use of Laissez-Faire Leadership style. The top managers are not necessarily engineers and as such, it becomes very difficult to supervise and review the activities of the workers. Apple Apple Inc uses the Autocratic system of leadership. Steve Jobs, the CEO is very domineering and inspects all products before release into the market for sale. Jobs manages to keep Apple’s employees devoted through a balance of autocracy and charisma (Kahney 2). Even the most favored of employees gets stick from Steve Jobs once in a while when things are not working out as expected. The company is in the IT/computer industry and as such, mostly hires system developers and hardware manufacturing experts. Since the IT industry is very competitive, employees must work within strict deadlines to deliver timely results. Thus, Autocratic Leadership is the best fit for Apple Company. Google Google Company employs Autocratic leadership in its administration. Employees get sacked at the rate of about 100 people per week (Lashinsky 2). Some of the top workers have left the company to establish new companies while others have moved to other firms such as Facebook. The company operates in the IT industry and as such, mostly employs software engineers. Software engineers need to be pushed to work fast and efficiently in order for the firm to compete with its rivals effectively. Thus, regarding the demanding nature of the IT industry, Google is justified to employ Autocracy in its leadership. Conclusion All the three companies, Semco, Apple and Google, have different entrepreneurial means of ensuring survival in the highly competitive markets in the business world. The entrepreneurial means used are unique methods that are not easy to duplicate by competitors. Semco adheres to the application of the three values of democracy, profit sharing and information. On the other hand, Apple uses radical opacity while Google uses odd hiring practices and unconventional methods to survive in the market. Works Cited Kahney, Leander. "How Apple got everything right by doing everything wrong." Wired Magazine 16.04 (2008). Lashinsky, Adam. "Where does Google go next?." FORTUNE 157.11 (2008): 104-+. Semler, Ricardo. "Managing Without Managers." Harvard business review 67.5 (1989): 76-84. Read More