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Still A Long Way To Corporate Competitiveness In Central Eastern Europe

Expats criticise bureaucracy, corruption and lack of customer focus

Press release, 21 April, 2015

25 years after the change in regime, critical corporate issues still stop companies in the Central Eastern European region from becoming more competitive. In spite of improvement in many fields, a pan-regional survey of foreign senior managers makes clear that still a lot needs to be done in terms of decreasing bureaucracy, eliminating corruption, focusing on customer service and taking more managerial responsibility. The study, commissioned by TARGET Executive Search and conducted by GfK and CEU Business School, highlights significant strengths in the hard work ethos of local management, attitude of women workforce and strong interpersonal skills, however, to become more competitive, in many respects the region still has to live to its promise.

In a recently published pan-regional study of the regional recruitment firm, the opinion of close to 1000 foreign senior managers and their local manager partners working in Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia in four key areas was researched: general business environment, management style, managers and the market, transparency and cross cultural issues. The survey is in many respects a continuation of a similar study commissioned by TARGET Executive Search in 2009, and allows for comparisons of findings and conclusions on trends.

Expats enjoy living in the region, while their reaction about working here is more mixed. ‘A great place to live, not always a great place to work’ commented one of the foreign managers. Respondents find that locals are usually sociable and setting personal contacts is important in making business. This is most apparent in the case of customer orientation where foreigners claim locals rank interpersonal relations with customers higher than actual customer focused work.

“Lack of strong customer focus seems to be one of the key reasons for companies not becoming more competitive. Interestingly, local managers believe this to be much less of a problem, but most of the foreigners consider companies lagging behind in this respect.” – explains Klemens Wersonig, CEO of TARGET Executive Search Group. “If this, together with decreasing bureaucracy and eliminating corruption, could be changed, companies in the region could take a head start. They could, with a good chance, regain the momentum they had after the change of the regime and the EU accession, and which they seem to have lost after the economic crisis in 2009.” – said Klemens Wersonig.

While hardly anyone supports the statement that business and commerce are highly customer oriented in these countries (support to the statement is in fact among the lowest of all questions), making friends with customers is a top criteria for being successful. Personal relations are also important within the company, where ‘an open exchange of views is often difficult as comments are usually taken personally’.

Bureaucracy and corruption remains a hot issue in the region. Slow and non-transparent decision-making limits competitiveness and efficient operations of the companies. Foreign managers claim that ‘local managers like to do things according to the old tradition’ and ‘corruption is common’.

“The study identifies certain important phenomena in terms of work ethics and company operations” – explained Zoltán Buzády, Associate Professor of Management and Organization at CEU Business School. “In spite of considerable improvements, still a relatively low number of local managers take a strategic view on company issues. Taking responsibility is still not general and working according to a systematic way is criticised in a number of countries. What is good, we see significant improvements in local managers valuing the company they work for, much more than they did 6 years ago. Appreciating the work place may not be unrelated to the effects of the economic crisis. From the academic perspective, the findings of the study are of importance. It is for this reason that at CEU we plan to use it in our further research, educational and professional activities. “– commented Zoltán Buzády.

Compared to 2009, the overall scores of satisfaction are lower in each of the countries, with Romania seeing a significant increase and Slovakia experiencing a drop in ranking. In many respects, the winner of the survey is Poland with the highest overall scorings. Expat opinions claim Bulgaria suffers of corruption, Czech managers seem to have issues with foreign customers and colleagues, while Hungarians lack customer orientation. Each country has their strengths as well, as described in the table below (ranked by overall scorings):



  Ranking 2015 Positive Negative
Poland 1 Very active and dynamic business environment, customer service oriented Individualistic in their thinking less cooperative
Romania 2 Humour is important in working relationships, important to make friendships Bureaucracy is serious problem
Czech 3 Work in a planned way, rules and policies tend to be more important than the specific circumstances Local managers less good at dealing with overseas customers and colleagues
Hungary 4 Creative, well-trained, with understanding for competitive markets Rather passive and less dynamic, lacking customer-orientation focus
Slovakia 5 Work in a planned way, act upon decisions that are agreed in meetings Lacking in training, less creative in problem solving
Bulgaria 6 Women tend to be more effective managers Corruption as a major concern, business in general is not well organized or efficient, deadlines are not taken too seriously


“For a headhunter, there are two interesting points from a demographic perspective to note’ – added Klemens Wersonig. “Young mangers below 35 seem to be open to new ideas, have a strong educational background and language skills but lack experience and the long-term vision, while many of the older generation like to follow things they have been used to doing. This is sometimes an obstacle for change. Second, the study does not reflect any apparent gender issue. The work attitude and the business role of female managers is well appreciated by the foreign managers. So, if there are any problems, these are not visible within those companies where the survey has been conducted. “ – explained the CEO of TARGET Executive Search.

A further analysis of the findings and the identification of trends Is planned to take place at a roundtable discussion with international experts in mid-May in Budapest.


Sponsors of the study


TARGET Executive Search www.targetexecutivesearch.com
TARGET Executive Search was established in 1994 and is one of the leading executive search firms in the CEE region, with offices in Austria, Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia. TARGET is a member of the INAC worldwide partnership of independent executive search firms (www.inac-global.com). TARGET is the sponsor of this study and coordinated the collection of data in all six countries of this survey and managed publication and distribution of this report.

 

 


GfK www.gfk.com/sk
GfK was established in 1934 in Nuremberg and is the 5th market research organization worldwide. GfK is the trusted source of relevant market and consumer information that enables its clients to make smarter decisions. More than 13,000 market research experts combine their passion with GfK’s long-standing data science experience. This allows GfK to deliver vital global insights matched with local market intelligence from more than 100 countries. By using innovative technologies and data sciences, GfK turns big data into smart data, enabling its clients to improve their competitive edge and enrich consumers’ experiences and choices. GfK Slovakia was established in 1991 and is a long term leader in Slovakia and CEE. GfK Slovakia realized the fieldwork and analysis of this study.

CEU Business School business.ceu.edu
At Central European University Business School, we look East as well as West. Our School represents a sophisticated hybrid—chartered in New York State while operating in the heart of New Europe for over a quarter century—and we are preparing executives and managers for the most attractive opportunities of the 21st century. The school is unique in offering both advanced and avant-garde global management practices and—based on our deep familiarity and long experience—the savvy and knowledge necessary to succeed in dynamic emerging economies.

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