”Georgian Top Managers Take Too Much Burden on Themselves”, an expert

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The FINANCIAL — Ms. Mari Novak, an expert in performance management consulting gave an interview to The FINANCIAL about Performance Management Systems (PMS) and some examples of how this is being applied in some Georgian companies.


The FINANCIAL — Ms. Mari Novak, an expert in performance management consulting gave an interview to The FINANCIAL about Performance Management Systems (PMS) 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.

See also  Time Shifting 

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?

See also  Time Shifting 

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.



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