Staff, not Stuff!

We continue the series of publications by Yuriy Rubtsov on management that was started in previous issues.

NOTE. The members of Nizhny Novgorod business club are the directors of the companies – participants of the program called “Develop your business”, run by the consulting group "SCORE". It’s an informal non-registered community of business people who are interested in developing their own businesses and who are aware of the events unfolding in Russian and regional markets.

The first Christmas meeting took place in the hotel “Strigino” on January 22, 2000. The second meeting featured the Swedish consultant Bengt Brodin on the 7-8 October 2000 at the recreation base “Mechta” (Dream). This meeting raised the issues of strategic planning in business. The last meeting took place on 5-6 November 2000 at the recreation base “Mechta” (Dream) and was dedicated to the issues of organizational management and staff management. American consultant Frank Pucelik took part in that meeting. With the support of the Swiss Fund for technical support “Swisscontact”, it has become possible to invite the best European and American consultants to the meetings of Nizhny Novgorod business club. Let’s remember secret of Mr. Panikin, famous Moscow businessman: "It appears to be extremely important to lead development of people following the Laws of Leadership ". Over hundreds of years chiefs, bosses, family heads, leaders of companies and countries were ruling people from the pedestal cracking a whip. In their heads they were deciding what share of freedom to delegate to their employees. Then certain books appeared in which psychologists clashed in hot disputes on “Which is better way of management: authoritarian or democratic? Do you have to delegate responsibility and if so how much?" During revolutionary holidays in Nizhny Novgorod there was a significant event that went unnoticed which essentially contradicted revolutionary communist ideology. Around 40 directors-owners of competitive companies from Nizhny Novgorod and other regions met at the recreation base “Mechta” (Dream). And the fact that representatives of competitive companies got together to think about the development of their companies is quite encouraging as far as the future of the country we’re living in is concerned. The most distinguishing feature of the best companies is that they start thinking about capitalization of their business today, which gives them a sense of confidence about their future. It also means that our long-suffering country is starting to get away from criminal, corrupted communist ideology and hopefully will enter healthy market free of the elements of politics, crime or corruption. I can name 10 names of the participants that might be familiar to you: Boris Gorelik (real estate agency "Triumph-realty"), Andrey Fedotov (JSC "Synthesis"), Oleg Grinin (Autobank), Igor Altshuler (consultant), Stanislav Lyapunov (JSC "Electronics and Mechanics Factory”, located in Cheboksari), Boris Esin (JSC "Trud"), Marina Pylina (real estate agency "Terem"), Natalya Loginova (CJSC "Oka"), Andrey Gorbatov (Trade house “Medved”)... There was a lot of focus on staff at the meeting, again so contradictory with revolutionary communist ideology. Pay attention: the staff, not “kadry” which in Russian means “belonging to a branch or particular professional environment” thus making “kadry” something not personified, some stuff… “Kadry” become part of a crowd. I guess that’s why this was the favorite term in our country for over than 70 years. When perestroika was over many offices changed their office boards from “Kadry department” to “Staff department”, although nothing personal came with it. I suppose most often those who changed these boards had very little understanding of the difference between “kadry” and staff. Those who were at the meeting in “Mechta” were interested in staff, and Consulting Group “SCORE” invited famous American consultant Frank PUCELIK to this meeting organized with the assistance of the Swiss Fund for technical support "SWISSCONTACT". Frank arrived in Russia for the first time 11 years ago. He brought along absolutely new ideas for the western business on developing staff and company as a whole with the ideas of the situational leadership as the main thing. 10 years ago they went unnoticed in Russia. In Europe, these ideas were treated with the same amount of caution. European business though displayed swifter reaction to these ideas, and today most European companies use mostly such terms as mission, personnel development, team, creativity motivation etc. 30 years ago a director of the best western companies was a professional in production technologies. Then a general director as a professional in economics and marketing took over. Today a general director in the best European companies is a professional in staff management. I happened to talk to an owner and a general director of a Swedish company "TONSJO". The company employs 110 people and provides equipment parts for the biggest Swedish companies: "VOLVO", "SAAB", "ABB" etc. Facilities at the company are equipped with robots and production amounts $200 000 per person a year. The leader of this company places focus on staff management and achieving highest productivity and quality, rather than robotic equipment. The best companies in the West realize today that workshops, equipment and pipes mean nothing. People are everything. Your key employee goes home in the evening and doesn’t come back to the company in the morning. Your business is ruined because the value of an employee is his brain and loyalty to the company. Over the period of 10 years Frank Pucelik has worked with a number of Ukrainian and Russian companies. He knows and understands Russian business pretty well. He told me:"The future of the civilization and the future of business is being decided today in Russia". We can’t estimate our enormous resources and our role in the development of the global business. Main events are taking place in Russia today, that’s why Frank is here. Our directors deserve some credit. They are fully realizing their place in the market and start focusing on staff. Here are some of the questions addressed to Frank: - How can you overcome organizational crisis without major complications? – How to motivate and encourage staff members that are at different levels of development? – Is it possible to maintain friendly relationships with the staff? – How to kick start initiative in those employees who lack it? – How to convince an employee that his pay must be directly linked with his contribution to the final result? – Manipulating staff – is it good or bad? – Which are the efficiency criteria working with the personnel? – What’s the place and importance of a corporate culture in the system of company management and how to develop corporate spirit of the personnel? Interesting bunch of questions, isn’t it? They speak for themselves. The dominance of the two key tendencies in our business is in the past.

1. Staff is worth nothing, so not a penny should be invested in it. It’s easier to get rid of one employee and hire another, because we can make money without professional and loyal staff. Simply put, all people are animals and all you need is a whip to make them get in the flock.

2. The value of staff is much higher than the value of business. We are all friends and all like each other. All people are nice therefore, you should love them and take care of them.

The market today makes leaders of the best companies focus on staff, getting away from two extremes in management approach. Especially noticeable it gets in most competitive segments of the market. The more competitive is the market, the more successful is the businessman who is smarter, more flexible and intellectual and the more attention is paid to staff management. In a competitive market success isn’t calculated in 10% or 100%. Success is calculated in fractions of percent. Therefore, competitive market makes you concentrate efforts on the productivity, quality and first of all client which means that focus is shifting towards staff now. The longer our government will “be protecting” our market from external expansion, “protecting” closed market maintaining horrendous customs duties, creating unattractive conditions for the western business, constantly knocking down market competitiveness, the less attention will be paid to us as clients on that so-called “market”, and consequently less attention to us as employees. And currently as “consumers” and as “staff” we feel strangers in the country we are living in. The longer we’ll keep western cars from entering our market, the longer we’ll be buying auto constructor on the wheels with an instruction like “Think about how to assemble it” and the longer we, as personnel will be earning “three kopeks” at the car factories. Recreation base “Mechta” gathered directors who are creating competitive market against all odds, without any assistance from officials, overcoming obstacles that competitive market has, being ahead of times and creating their future success. These directors aren’t afraid of the competition, aren’t madly in love with their personnel but don’t hate it either. Together with their efficient personnel they are creating their own future, future of their employees and ultimately the future of the country we live in. If the questions asked by the directors seem interesting to you, read the next issue of “Birzha” (Exchange) where Frank Pucelik and us will answer them.

YURY RUBTSOV. //* Source of information: Birzha