Introduction |
Romania
is in the midst of sweeping changes and economic transitions. The hustle
and bustle in the major cities, youth dressed in the latest trends, and
English language advertisements all demonstrate a vibrant global
economy. Since the fall of Communism almost two decades ago, a number of
Eastern European countries have made the transition from centrally
planned to emerging market economies. A Fortune Magazine survey shows
that 67% of U.S. executives now consider Eastern Europe to be a new
major market.
Investment in Romania has had reverberating effects on the public,
private, and governmental sectors. The Ernst & Young 2005 Attractiveness
survey noted that Europe as a continent attracted 3,066 instances of
foreign direct investment. Romania, Bulgaria, and Turkey accounted for
85% of regional foreign direct investment between 2001-2005, resulting
in over 19,000 jobs in South East Europe—equaling the number of projects
in Germany and Poland” (Catsiapis and Kouris, 2007). Business
leaders surveyed ranked South East Europe as more competitive in cost
(40% of those polled), and more labor effective (31%) than the rest of
Europe. Of those countries tallied, Romania is “in line with first wave
accession countries,” and was voted regional leader and most attractive
by international decision makers. Romania’s most promising qualities
have been its high productivity levels (27%) and its leader status in
foreign direct investment within the manufacturing, logistics, and
call-center sectors, resulting in the production of over 42,000 jobs (Catsiapis
and Kouris, 2007). Romania’s appeal is not solely economic, offering
a rich culture filled with social dynamics, historical heritage, warm
hospitality, and scenic diversity.
Despite these accomplishments, remnants of Romania’s difficult past have
not completely disappeared. Challenges include a lack of management
education, training and organizational knowledge, as well as a
difficulty in cultivating an efficient and productive workforce. The
following article acknowledges Romania’s difficult past and suggests
management strategies needed for a successful future. Companies
expecting successful outcomes in Eastern Europe—specifically in
Romania—should be aware of the cultural and economic challenges of this
young and dynamic market and be prepared to modify the organizational
culture, invest in human resource development, and revise the
traditional hierarchical management models. |
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Culture and Management |
The emergence of capitalism within post-Communist cultures created
genuine excitement and hope during times of change, but the economic and
political failure that followed during the transition quickly deflated
hope and amplified despair (Sapsford and Abbott, 2006,50-71). As
a result, former Communist countries have a legacy to overcome. Elements
of mistrust and obligation are deeply embedded in post-Communist
culture, leaving lasting effects that are still evident today.
Generational differences and a lack of an operational framework create
challenges when working within Romania’s market. In spite of the
cultural baggage of Communism, there are innovative business strategies
that offer hope for a fresh new start.
Although there is no magic solution or precise blueprint for companies
to follow, there are lessons learned, creating ‘best practices’ that
acknowledge the Romanian context. Multinational companies working in
Romania can overcome challenges by revising traditional hierarchical
management models, investing in human resource development and adapting
the organizational culture to the unique characteristics and environment
in Romania. |
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The Tradition and Structure of Management |
Much of Eastern Europe remains in the throws of transition and Romania is no
exception—trained to act collectively and take orders, employees as well as
managers often find if difficult to take initiative. Successful market
integration hinges largely on Romania’s ability to cultivate and expand its
growing economic sector, and develop management skills. Fear of “the boss”,
blame and punishment, and the tendency to hide mistakes are still common issues
in today’s workforce.
The workforce is divided into three hierarchical groups: the young, the middle,
and older generation. Most of the quality workers come from the middle—fighters,
survivors, “children of transition”—experiencing both Communist and
post-Communist Romania, and currently working abroad. Romania’s younger
generation makes corporate development and proficiency difficult with its high
turnover rates (three month average) and lack of commitment. Conversely, the
older generation is fully committed, yet slow to accept change producing other
difficulties by valuing stability over reform. The biggest challenge for human
resource managers is combining the generations in a mutually beneficial and
productive way. |
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Human Resource Development |
Companies cannot compete without powerful individuals or a mature
workforce. The most crucial factor in human resource development has
proven to be the ability to establish trust. Companies currently working
in Romania have realized the importance of inducing trust by keeping
promises, providing open channels of communication, and maintaining
regular involvement. Offsite activities such as team building retreats
and “Company Days” create valuable opportunities for employees to get to
know each other. Citibank Romania has a “Club-Citi” that organizes
activities such as soccer teams or picnic days, creating the opportunity
for employee involvement. “Managers that remain involved and have a
positive attitude have had the best results.” (Citigroup, HR)
In a culture that longs for praise and individual attention, on-the-spot
rewards and personal recognition have shown to be most successful in
motivating and encouraging staff. Benefits packages have also shown to
be effective motivational tools, while offers of higher education
opportunities—such as MBAs or professional training—are the greatest
incentive. Shareholders must look beyond short-term profit as
sustainable; efficiency depends on the development of their workforce.
Once workers are nurtured in a culturally relative corporate strategy,
organizational loyalty will naturally develop, ultimately leading to
long-term profit and stability. |
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Organizational Culture and Context |
Organizational culture is the foundation upon which a business strategy
is built. A powerful means to gain competitive advantage and sector
leadership is aligning organizational culture with corporate strategy.
Theories developed in the United States should not be generalized in the
European context due to the significant differences surrounding human
resources (Hofstede, 1980). Countries like the U.S. or U.K. tend
to have higher levels of individualism, masculinity, and power distance;
indicating a looser tie to society, and an emphasis on self with an
understanding that the distribution of power is not equal. The cultural
framework of European countries identify higher levels of uncertainty
avoidance, power distance, and individualism; representing the culture’s
level of tolerance for uncertainty and its search for truth. Romania’s
cultural framework also includes high levels of uncertainty avoidance,
power distance, and individualism; confirming Romania’s core issues with
the distribution of power, its search for truth and the need to survive.
Unlike other collective cultures, Romania scores low in ‘long-term
orientation’, indicating its perspective on the ability to overcome
obstacles in time.
Multinationals have often attempted workforce development reforms as a
way to reshape the corporate culture of a country. Yet, this ‘one size
fits all’ approach is not applicable to the Romanian context and has
often failed. Rather than copying the Anglo-model of management,
companies like Leadership Development Solutions have developed their own
authentic model from within, synthesizing it from other cultural models
and customizing it to fit the local context and restrictions of Eastern
Europe. |
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Recommendations |
The workforce development models that have proven most successful have
been those based on the understanding that an organization’s corporate
culture stems from the way management and staff communicates with one
another. An employee’s participation in these conversations influences
the way one views their work experience; which in turn determines how
they go about their daily work. All it takes is one misunderstanding at
work to completely ruin a person’s mood and willingness to work. By
creating a common method of communicating problems and opinions,
companies can influence the way people view their work—thus impacting
their actions. Shifting into this new method of communication
fundamentally alters the nature of the organization—reducing problems
such as gossip, and encouraging open communication and
productivity—resulting in an environment that enables growth.
Although Romania may differ from its fellow European Union members, the
workforce development issues it faces are not special or unique to the
challenges all companies face with organizational change. If a blue
print were to be replicated, the model used by Landmark Education
Business Development (LEBD) consultants in the case of BHP New Zealand
Steel, would serve as a powerful example. When Broken Hill Proprietary (BHP)
obtained ownership of New Zealand Steel in 1996, it was plagued with
industrial relations problems and frequent union-management conflicts.
BHP laid out a new initiative to increase steel production and cut
costs. However, even though their new strategy reduced costs, it did not
resolve the prior tensions, pessimism, and conflict that saturated the
workforce. As the General Manager of Human Resources pointed out, “We
were expecting the impossible from the employees. Headcount was going
down, change was everywhere, and the business was built on shaky
technical assumptions. Yet, we needed people to become proactive,
positive, energetic, and dramatically change their relationships with
each other” (Logan, 1998, 4-5).
Landmark Education Business Development (LEBD) consultants were brought
on to formulate a strategic direction for the company and address the
organizational challenges. LEBD held seminars with the entire BHP
workforce, teaching effective communication methods, and developing a
common language and to use when addressing personal and organizational
issues. From participation in LEBD training programs and initiatives,
employees realized that the root of their issues came from
interpretations based on the companies past, not the direction of its
future growth, illustrating a common business problem new organizations
face when blamed for the incompetence’s of the past (Logan, 1998, 9).
When these interactions are multiplied by the number of employees in a
company, it becomes evident that thousands of people are investing
enormous amounts of time and energy relating to one another negatively.
Such attitudes-pervasive in corporate environments—lead to disputes,
complaints, strikes, and an often dissatisfied work force (Logan,
1998, 9).
This type of intervention could serve as an example for replication in
Eastern Europe and Romania, if the models are adaptable to the context
of each culture. The organizational training programs and interventions
on interpretations and interactions produced impressive and measurable
results. According to BHP personnel, safety performance improved by 50%,
key benchmark costs were reduced from 15% to 20%, return on capital
increased by 50% and raw steel produced per employee rose by 20% (Logan,
1998, 25). |
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Final Thoughts |
Companies
investing in Romania must address the challenges of the past in order to
access possibilities for the future. Organizations need a model that
will create a strategic direction for the company on a local level, and
build an entirely new work culture supported by stakeholders and
constituents. Such strategies will create a promising future for the
organization tailored to the unique needs of a post-Communist
culture—focusing on performance, agility, and an ability to maintain a
competitive advantage. Profit and efficiency lie in the hands of the
workforce. Resolving organizational issues through training and
interventions creates organizational loyalty, which results in
additional profit. Companies that understand the benefit of revising
traditional hierarchical management models, investing in human resource
development and modifying the organizational culture, create their own
opportunities to tap into a new and dynamic market. Only then, can
companies fully address the limitations of the cultural past, establish
trust and enroll their workforce in the possibilities that await them in
the future.
This article was contributed by Ms. Oana
Amaria, a Masters Graduate of Public Service at DePaul University
Chicago, with a specialization in International Development. |
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Editors Note: It is our policy not to mention our clients by name in
The Romanian Digest™ or discuss their business unless it is a matter of
public record and our clients approve. The information herein is correct
to the best of our knowledge and belief at press time. Specific advice
should be sought from us, however, before investment or other decisions
are made.
Copyright 2008 Rubin Meyer Doru & Trandafir, societate civila de avocati.
All rights reserved. No part of The Romanian Digest™ may be reproduced,
reused or redistributed in any form without prior written permission
from the publisher.
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