Semco Case Study

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Semco's compensation system is an innovative system which differs from the other companies systems. In fact, each employee determine its own salary in fonction to their work and what they provide to the company and also in fonction to Semco's financial position. They also determine the way that their compensation is provided. Their compensation system is based on productivity, which mean that the employees choose their salaries in fonction of how well they do in the company. Its also based on transparency, in fact all of the salaries are known from all the employees and are available on the intranet of the company. Moreover, Semler added that if the employees are not proud or «embarassed by their salaries» this means they don't really deserve it. Semco «sees its employees as grown ups», if any of them choose a salary that he/she don't deserve, because the work provided is not enough for example, they could not be selected to stay in the company after the first 6 months. Moreover, if the companies has financial difficulties, the employees and managers cut their wages in order to ensure the financial health of the company, it was the case during Brasil's crisis. Employees can also adjust their salaries based on their life situation (Up'n Down Pay), that means that they could reduce their working hours and their compensation will of course follow. Semco provide different compensation options, which are: Fixed Salaries Bonuses Profit Sharing Commission Royalties on Sales Royalties on Profits Commission on gross margin Stock or stock options IPO or sale Self set yearly appraisal/compensation Value added (% of the difference between the present and future) This compensation system had a great impact on the company and it creates value because it increases the motivation, the concentration and the productivity of the employees which has an important

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