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  • "Georgian Top Managers Take Too Much Burden On Themselves", An Exper

    "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
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