"GEORGIAN TOP MANAGERS TAKE TOO MUCH BURDEN ON THEMSELVES", AN EXPERT

The Financial
http://finchannel.com/Main_News/Geo/110142_%E2%80%9DGeorgian_Top_Managers_Take_Too_Muc h_Burden_on_Themselves%22,_an_expert/
May 31 2012
Georgia

Written by Koka Kalandadze, The FINANCIAL

The FINANCIAL -- Ms. Mari Novak, an expert in performance management
consulting gave an interview to The FINANCIAL about Performance
Management Systems and some examples of how this is being applied in
some Georgian companies. Last week where she outlined that "Strategic
importance of delegating responsibilities isn't well understood by
Georgian companies".

Q. When did you first come to Georgia and what activities have you
been involved in?

A. I first came to Georgia through "Sister City Exchange Program" in
1984. Later in early 90s (1994-96) I returned back to Georgia working
on projects related to the privatization of state owned companies. It
was very different political and economic situation then. At that time
I was working on organizational structures and how to transform them,
in parallel with financial and privatization issues.

In the recent past, last 8 years or so, I had been working with
governmental units, universities, private consultancies to improve the
knowledge of Performance Management System approach and use it in a
business sense in the entities like civil registry, prosecutor's
office, ministry of finance, ministry of justice of Georgia. Right now
I'm working with GSE, Georgian State Electro Company, in partnership
with Policy and Management Consulting Group (PMCG), and with programs
sponsored by the US Agency for International Development. GSE is
making a transition, operating in the totally privatized energy sector
in Georgia, and focusing on regional opportunities. Now they are
extending their scope, with special focus on the export of energy into
countries in the region like Turkey, Azerbaijan, Russia and there are
many more regional opportunities with the excess Hydro electricity. So
company is undergoing changes to meet the changing demands and
changing trends in the sector.

GSE has been constantly improving on several levels, certainly before
I started working with them. Of course they were used to traditional,
more hierarchical system approach to performance management. And this
was appropriate for the problems they were dealing with earlier
including financial, technical upgrade, multiple
distributors/generators, etc. Now there are new demands and industry
development.

Q. What problems do you see inside organizations today in Georgia?

A. Planning is the most difficult part of all organizations in Georgia
as well as in the region. The issue of planning doesn't only deal with
internal planning. STRATEGIC planning must be focused on the results
that the company envisions to achieve and deliver. Strategic
objectives deal with outcomes, for clients. It is a common mistake to
focus strategy on internal operations whilst forgetting what the end
result should be. A company always has to be focused on delivering
value to clients.

Second one is that companies do stop at the strategic level. They
don't understand that then it has to cascade and retransform into an
operational plan. Companies mix up ends and means. Operational plans
indicate how processes have to work, what tasks are required and how
people have to perform their responsibilities. Afterwards operational
plan gets broken down into projects. Unfortunately many of us are not
taught how to run projects, what works better - and what doesn't work,
so we make it up as we go along. A lot of what is called "project
management" is really just documenting failure - pushing out deadlines
and recalculating percentage complete. That is why project management
exists; that is not the valuable tool. It is ideal for the company to
have an organizational (company) approach to project management, and
linking it to their own strategy basically. Then they monitor to keep
all this work, and the outputs of the work contributing to progress in
the same direction. This is a constant challenge, and rarely is
perfectly done; that is the nature of organizations. And we all try
to keep our energies focused on what we want to achieve. There are
several successful companies which do that very well, and so we all
strive for this.

Q. How about delegation of responsibilities in Georgian companies, are
they successful with that?

A. No. It is a very big issue in Georgia. I think that there is a
heavy burden of responsibility placed on senior managers. What happens
in this case is that when senior managers are working on departmental
and division level of work, then they are not doing their job -- which
is strategic thinking. However, yes, things are getting done and there
is an incredible amount of talent in Georgia.

Q. Is it sort of a mental thing that top managers take responsibility
thoroughly on themselves?

A. I don't know. When I first moved to Europe about 21 years ago, I
lived in Prague and Bratislava from the last month's 1990.

Czechoslovak republic at that time had the highest per capita amount
of PhDs in the world and they had a lot of smart people. But I never
met so many smart, savvy, business oriented people as I have in
Georgia. The latter is one of the reasons I love to work here.

However, people put a lot of the burden of managing the company on
themselves. Thing is that you can't do everything, well, maybe in an
ideal world it would be wonderful if the human resources equaled to
one! But we have learned it is possible to do much more if we involve
a group, a team. There is always a cost & benefit involved in staffing
and delegating which is that if you're doing one thing then you are
not doing something else. And what you should be doing is what is the
best benefit for your company. Decisions should be made as close to
the work as possible. Of course managers have as one of their key
roles, monitoring, and this balances the delegation. Of course we have
to know what is going on.

And what you should delegate is for people who are technically
competent in that area.

So overall, this strategic importance of delegating responsibilities
isn't well understood by Georgian companies. This is partly because
many of these functions were not viewed the same way - or had the same
capabilities -- in the previous regime and it's relatively new, 10-15
years and people are now getting used to understanding what human
resources should be doing, what finance should be doing, how
procurement should work connected to maintenance. When these
connections are made, companies will be much stronger to meet their
planned goals.

Q. Can it be because there is much less cost involved when doing
things on your own?

A. Changes I mentioned above have to be implemented well, and if done
well, it guarantees greater cost efficiencies. If you try to skip
steps and try to be quick about them then you may make mistakes and
create greater problems. Anyway you've to experience that change. Like
"horizon planning" (planning only so far out that you can guarantee
performance) - you go out so far that you can actually commit to and
then you re-group, and extend the plan further. The latter is true
when implementing such change.

Some of big businesses here asked me - how long does this process
take? - and I said well you can do it in 6 months, I've done it with
companies within 6 months when we had an urgent problem. But it's
brutal; if you take 9-12 months then you can actually build up such
system. Despite the fact you make such system work - after some time
passes like 2-3 years you have to recalibrate and when you do that,
going through the process 2nd and 3rd time then it's much easier and
much faster.

Q. Do you see such changes taking place in Georgian companies?

A. Yes, I see it in very small number of companies here; I have had an
opportunity to talk with some members of American Chamber of Commerce
(AmCham). (I am a past president of AmCham/Slovakia). There is a lot
happening here. In terms of making change, I is a difference between,
let's say United States -- when we went through every level of
technological innovation, about telephones. Here you jumped from not
everybody having landlines to everybody having cell phones, and that's
the same thing with management approaches. People are leaping into the
21st century.

Q. How about countries in the region like Armenia and Azerbaijan?

A. Well from regional perspective, I think Armenians are very
entrepreneurial and they have been succeeding worldwide but they have
not been able to bring up the standards fast enough in Armenia and I
don't really understand what has happened to their entrepreneurial
spirit there. I have not had as much opportunity to know more about
Armenia. I know that they have huge difficulties as a country but
they don't have a cutting-edge, sharp drivenness that I see in
Georgia.

In Azerbaijan there are a lot of big businesses local or foreign owned
but still I don't feel the similar spirit as it's in Georgia and I
think it's unique.

Q. What advice would you give to company managers in these regards?

A. I think they've to understand if the burden/challenges of the
business are divided properly then things will get happen much
quicker. There is a power in a company when everyone is interlinked
and doing their part. Changing this traditional architecture towards
being able to manage crisis coupled with good planning is the ideal
situation, something that everybody striving to achieve. Georgians are
very good at managing crises. And so don't lose your strength but add
additional strength.

Q. In much of developing world, you often meet merging of company's
departments like finance department determining salaries for workers
thus taking this function off the human resources department, etc - do
you see the similar trend in Georgia?

A. This is a horrible trend. If the function is not critical to the
success/completion of the processes or functions, then you don't need
such department at all in the organization. But my guess is that these
departments exist because you do need them in some fashion. If you are
not using them well then that is making your product more expensive -
your burden on one person or department is too heavy, not sharing and
integrating appropriately. By not recognizing the contribution and
interconnection between these functions - what they add to the output,
that's a big gap in Georgia. This is something that is still being
learned, what these functions offer and how they should be integrated
in the organization.

Q. Could you bring one or two war story examples which you've
encountered while working in Georgia?

A. I was working with one organization (private company) which didn't
have any understanding of strategic human resources planning, internal
audit function and how procurement best interacts with departments
needing supplies and equipment- three different departments - that
were not really linked to operations. They were going to merge these
three different departments or even get rid of them. But then what
happened was that they brought me an issue - there was a huge issue of
salary levels, bonuses and turnover and they were losing their best
talents - they thought that this had to do only with salary level but
what we discovered was it had everything to with the quality of
products going out the door which were not well designed, because all
of the pieces were not fitting together, I mean that the work that
these departments do, adding to the quality of the product and service
were not really connected. Decisions were being made without all the
information that was needed. They were actually delivering sub-par
products and people were not happy about that. Customers started
giving complaints but the company managers realized it only when the
staff - the best talents started to leave the company.

So what we did was we stepped back, saying - you're not going to solve
this problem with bonus system or better hiring practices - that's not
an issue. And we went to all appropriate people into the organization
to solve the problem so that the clients were satisfied at the end.

It's is actually a typical problem in Georgia, it is typical problem
everywhere in the world!

Another story was about tourism - in the old town of Tbilisi there are
a lot of shops (on Maiden) - some of the stores are very well
merchandised; they display things well, they're customer friendly and
know how to deal with people and others do not.

I've been talking to all managers on what were their criteria, how did
they manage artisans and crafts people who are giving them the arts.

And it was very clear which stores were making more profit employing
best performance management practices, delivering better service on
whatever price points.

Background of Mari Novak, CPT M.A. -- Mari Novak has worked in the
area of improving organizational and individual results for over 30
years. Mari has worked in the corporate, development, and governmental
arenas. Over the past 16 years, she has focused her work
geographically on the transitioning social, economic, and business
challenges in Central and Eastern Europe, Central Asia, the Caucasus,
and the Middle East. Mari has successfully applied "systems thinking"
and structured performance analytical methods (including performance
improvement, system dynamics, scenario building, cybernetics, etc.) to
all aspects of the development cycle. She has advised donor country
and headquarters offices on policy and strategic planning and
implementation.

As illustrative examples, Mari Novak has worked in the Caucasus and in
Central Asia analyzing and revamping the HICD approach into the 5 year
development strategy; suggesting improved approaches and
implementation. In cooperation with World Bank , she worked on the
training projects in the area of micro-financing as a trainer of
trainers. In the mid 1990s, she was a trainer of management skills for
key employees of Departments in Palestine. In addition, she worked as
a trainer and consultant for non-government organizations (e.g. US
Peace Corps in the Czech Republic and Slovakia), small and medium
enterprises, and projects focused on transformation of state companies
in Georgia, and preparation of financial advisors in Armenia. She also
cooperated as a trainer on workshops organized by the Environmental
Agency in the Czech Republic and Poland.

Ms. Novak has experience applying these concepts and skills for
improved results in 24 countries throughout Central and Eastern
Europe, across the former Soviet Union, Central Asia, and the Middle
East. Mari Novak has an M.A. in Training and Development from Western
Michigan University 1979, and completed all course work for a
doctorate in System Dynamics/Performance Improvement. She is also a
Certified Performance Technologist, accredited by ISPI, since 2003.




From: A. Papazian