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Efficiency, Quality, Knowledge

Robert F. Pu?elik - trainer with a world name in the field of professional growth and personal development, expert in PR and advertising areas, professional coach and consultant with a 30-years experience with multinational corporations of the USA. Frank has been working in Russia and the CIS as the corporate consultant. He has been training professionals and businessmen in the spheres of psychological technologies for more than 10 years.

E-xecutive: Frank, you've been working for more than 10 years in the market of CIS. You've got many constant clients there. You've been observing their evolution. What side are these changes directed to now? What is their vector of development?

Frank Pucelik: Basing on my supervisions, I can say, that evolution is directed now towards quality, efficiency and professionalism in business. Times when people relied upon an old habit to influence by means of aggression are leaving. It does not mean that people have ceased being arrogant and energetic, no; they have just begun to behave more professionally, and work with better quality. People have realized that they can't know everything and have recognized that the help is necessary for them, and began to study. Many Russian companies have started to send people on trainings; they have started to invite consultants even to foreign companies, i.e. doing everything, to become effective.

During the last years there have been a true break in the field of professional evolution in Russian business; especially it concerns large cities, such as Moscow, Saint Petersburg, Novosibirsk, Yekaterinburg, Nizhniy Novgorod. These changes are taking place in other regions also, but they are less noticeable, this process takes more time there.

E-xecutive: I.e. are businessmen interested more in new knowledge now?

F.P.: First of all Russian businessmen are interested in how much effective and competitive they are. They begin to understand, that their profit depends the level of their professionalism, on those skills they possess. Not only Western experts are addressed in searches for new technologies, etc. People want to receive knowledge, and it doesn't matter where does it comes from.

E-xecutive: Traditionally sore point: interaction between the owner and top-manager? Have you observed evolution in this sphere? Have you observed transitions of people from one category to another?

F.P.: In many cases top-manager is the owner. Such state of affairs can't be correct because these are two completely different parts, which slightly contradict each other.

Being an owner of a business, I have completely other duties, rather than being a manager. When these roles are divided, especially in larger companies, the chief manager aspires to clear those specific goals, which were given him/her by the owner, and tries to let him know, that it is not necessary for him/her and he/she will not be bale to penetrate into all details of company's life, without doing harm to business.

I think that directly business owners are those people who lag behind the general tendency. Don't get me in a wrong way, there are wonderful owners who really understand what means to be the owner, but in general, there is a tendency in the Russian market when owners are managers and they are still trying to control and penetrate up to trifles into everything that top-managers do.

E-xecutive: Business owners in Russia do not want to leave manager position, do they?

F.P.: In most cases - yes. They have a belief that they are to take a great amount of detailed, small decisions about daily work of the company. But it is a priori not true, and it is necessary to work on it.

E-xecutive: Why does it happen this way? Are owners afraid to entrust their company to someone else or consider themselves better than any managers?

F.P.: It is difficult to say what they are thinking of, but I'll try to assume.

It is my company and my money, as it is my money I decide what to do with it and how to do. Such approach has been cultivating in Russia for many years. Conditions for doing business and economic situation have changed, but the consciousness of people has not. They still think in these categories, especially people who have real money. This is the first. The second. If you have money and you can't control each and every cent, it means that it will be definitely stolen from you. And the only way to be sure that nobody will steal anything is to control everything that happens to money. It is true for a huge number of companies, unfortunately.

The problem is that such state of affairs exists in the poor companies and it makes them bad. The vicious circle takes place. Preaching such approach I make the company poor but if I shall not do it, my bad company will plunder all my money.

It is difficult to find good owner and good company; it is even more difficult to unite them. But when these two things join together, the company becomes so successful, that it quickly takes leading positions in the market and as consequence, supersedes the bad companies. The number of such successful companies grows gradually, because they are more competitive and effective in business. The problem will cease to exist and after a while good companies with good owners will dominate over the market. We move towards this gradually.

E-xecutive: Recently foreigners are invited for top-manager’s position. Is it right? Will foreign professionals be able to work effectively in the Russian market?

F.P.: That’s a difficult question. If the expert is really good in the unique way, then he/she will be effective in any market. But he/she should understand this environment, know Russian, and understand what exactly is happening under his/her direction. The majority of the invited experts are not able to do that. They don’t know Russian and consider, having given the instruction, that it will be done fast, precise and correctly. They don’t realize the level and depth of corruption, which they would face. The company quickly adapts to the foreigner: employees give him/her only what him/her would like to see and continue to play “their game” – doing what is profitable for them. Probably, foreign manager will have opportunity to control some percent of people under him/her, but it will be relatively small.

Similar processes occur to the foreign companies, which come to the Russian market. They have 3-4 experts from head office, but people, whom they hire here, invalidate all their beginnings. They play usual games; give one-sided or irrelevant information, doing what they want under a carpet ". I’ve been observing this picture many times. It is sad. The idea itself is good. But the way it works today… Unfortunately, there are no examples when foreign managers successfully coped with the work.

I was invited several times to look at the organizations, which were managed by foreign managers. Once I have decided that came to super company in spite of the fact that they were having serious problems at that moment. But they coped perfectly. The key to success was that the company selected managers to each position in the most careful way. First of all, they sent these employed people abroad on training or studies. This company has branches all over the world and they took the Russian employees and allocated them abroad before turning them back to Russia. And it worked. Then they went further and began to transfer the best managers from Russia in the foreign branches for a permanent job.

E-xecutive: Is the economic climate in the center of the country different from that on periphery? If yes, in what way?

F.P.: Distinctions are enormous. Competition is rather developed in the main, densely populated cities; the same competition makes companies to do business effectively. The market, in such cities, is developed sufficiently enough to lay down the following conditions - if you will not run the business in the least correct way, you will simply not survive. There are exceptions. The oil-and-gas branch, manufacture of tobacco products, energy carriers - these spheres run the business the same way they did for ages. I.e. it is the necessity to pay to necessary people, necessity to follow unwritten rules, etc., and they block any competition. Without considering all mentioned above, the rest of more competitive directions have to train.

If you leave large cities, you come back to seventieth - eightieth years. In provinces the business is conducted the same way as during Soviet times, the same game: whom you are familiar with, who allows you to do business, who controls you, who your boss is … I’ve been watching it for almost 20 years already. There are small regions, which are satisfied with the way things go. They don’t have old system at name, but they have old system in their mentality if you look at people. Only the tablet name changed.

E-xecutive: Are there any changes or preconditions for them?

F.P.: Certainly. The old system has definite problems. Today's young people have grown out of this system, they even have not been born in it, their world is different, they have different perception, they are more arrogant, more open, have better education, and they have no desire to be tolerate with nomenclature orders. Certainly, some people are involved, but most of people aged 20-35 build their world without considering old regimes. There are not many of them, but they exist.

Young people of 23-25 years old change this country, step by step they build much more open and fair world, company after company. And they win gradually, but inexorably. Fans of old regimes may continue corrupt and transmit some part of game further, but not everything, and each time this part decreases. Game dies. Young people create new Russia and succeeding. They don’t have control over the market yet, they do not have those opportunities, which they should, old system still dominates, but it loses its power faster than people realize it. Young people create new companies, give them 10-15 years and they will grow and in 20-25 years start to control the market. It is not visible and the tendency is not dominating yet, but the process is in progress.

E-xecutive: Why did you open the business not in Ukraine instead of Russia?

F.P.: Honestly? I love Black sea. I was born in San Diego. I’ve been living on ocean shore for all my life. Odessa is my type of city. It is easy to get anywhere out of there.

Besides Ukraine is not as uncontrolled as Russia, Russia is a great giant, the movement is too fast there, Ukraine is smaller and more domestic. Probably, I’m the person who loves domestic conditions.

E-xecutive: What is the difference between the Ukrainian business climate, the Ukrainian management from Russian?

F.P.: The difference between cities is more obvious for me rather than between countries. For example, I can compare running the business in Moscow and in Kiev. They are very similar. But if to take Kharkov, for example, it is closer to Samara - the same atmosphere, the same methods of pressure on people, connections play the same part. I see the same distinctions from city to city both in Ukraine and in Russia. I can lead the parallels. It is necessary to take into consideration such moment: I’ve been working in the progressive companies, which are willing to work and develop effectively, that’s why I cannot judge the situation in general. My point of view may not be truly objective. Besides, I almost don’t work in originally Ukrainian regions, therefore, I may have no traditional understanding of Ukraine.

E-xecutive: What is the weakest part of Russian managers’ competencies? Is it ignorance of marketing bases, weak financial preparation or the chaotic approach to people management?

F.P.: Probably, it will sound ridiculous, but Russians possess good knowledge and not only in those areas you’ve mentioned. The only thing they lack is knowledge of elementary, basic procedure of running a business. Few people talk about it, but it is really so. How to make a business - plan, how to hold the meeting, how to control behavior of subordinates, how to be engaged in the resolution of conflicts inside the company? Nobody considers it necessary even to mention such trifles in Western companies, because applying for a job there person already knows what will be required from him/her in details. It is common truth in the West; it is studied with the level of development. Fundamentals are not interesting for them; they come to Russia and speak of what is interesting for them in marketing, merchandising, ISO system, etc. About complex, new and advanced systems. They didn’t have to study relatively basic skills at the age of 50. Here is different situation and very few people understand it, unfortunately. To my mind, absence of competent fundamentals is the most destructive for the given market. Primary fundamentals of closed market are still functioning in Russia. You won’t be able to construct effective company if you have old principles in the basis.

E-xecutive: What is the reason for ignorance of fundamental basis?

F.P.: You have two worlds came across - the open and closed market, or the competitive and monopoly markets. These two worlds don’t understand each other, they work together, try to help each other, but none has made any efforts to learn each other.

Western open may learn a lot from Russia. Frankly saying, the Western world can learn much more from Russia, than Russia from West.

E-xecutive: For instance?

F.P.: First and most important - higher education is considered to be incredible value in Russia as well as the art to be a professional in some particular area. Experience and high class professionalism makes one respected person among associates. It is not like that in America, unfortunately. Probably, this answer is banal, but nevertheless. The quality of interpersonal relations between relatives and friends especially admires me. Do you help without being asked for it? It has stopped being common in America. People became so self-sufficient that everyone stands for himself. It is your problem - you solve it.

E-xecutive: In what way have principles of human resource management changed, in your opinion?

F.P.: At present, there is a great amount of companies in Russia with a sufficient level of HR management. It is one more attribute of qualitative company. The requirement for HR management in the West is much stricter, than we have now: if you work with people in a wrong way - you are ruined.

The main problem is that transition market in Russia allows companies to run poor-quality business and not only in the sphere of HR management, it is only one of the components. And many use it. Speaking about Russian general - 20 years ago there were about 95 % of such companies. 10 years ago there were still about 90 %, today about 75 %. And it is thousands and thousands companies, maybe, even hundred thousands, and reaching qualitative improvement for even 20 % of them is huge achievement. Efforts, which should be applied to change existing position, will be huge - total fundamental reorganization is required. Getting back to the education issue, foreign experts, probably, won’t be able to help Russian companies with this process, because nobody of them was engaged in it before. Nobody knows how to do it correctly as similar situations didn’t occur.

There is a dynamical evolution in Russia, it is positive, in spite of some negative numbers. The size of a problem itself speaks about how much has been made. And due to the process of development rates of growth will increase in geometric series, as it is the most difficult in the beginning, changes are happening very slowly in first 20-30 years, but they are the basis; after the basis is formed the curve of changes starts to go upward sharply, i.e. speed and volume of changes will grow. All of this is a long and complex process, but the most difficult part you have almost passed already.

E-xecutive: Tell me, please, what kinds of western approaches, in your opinion, are most suitable for Russia? Do they require adaptation?

F.P.: You know, I’ve never considered theories as separate self-sufficient tools. I think of running business effectively as a whole, I try to analyze both western and eastern experiences. Last years competitive market principles were distributed worldwide incredibly quickly, almost all of originally closed markets became open. Cuba, China, Vietnam… At present, China is the most growing market, competition there is tremendous. That’s why I’ve differently formulated this question for myself: What are the competitive practices I consider to be more effective and necessary here?

In my opinion, it is necessary to get back to fundamentals. Refined, complex, magnificent systems are still inappropriate in conditions of the Russian market, it is still too early for them, and they won’t be effective here. It is necessary to begin with the fundamentals of leadership and professional procedures, then, it is necessary to add motivation and communication. The third step is the accounting system, marketing strategy, information systems, systems of quality monitoring… But without fundamentals the rest will be just a waste of time. There is lack of simple things education offers in Russia, more complex education already exists.

E-xecutive: You’ve been working with leadership for many years. What are the qualities, which make the leader?

F.P.: There are some simple characteristics of wonderful leader. First, one is to like other people. Second, leaders are people who invest in their employees and constantly train them. Third, they trust people, always. Fourth, they are constantly developing, all their life. Following these rules makes people the most effective leaders in conditions of competitive market.

Interview www.E-xecutive, 2006
Interview by Alexandra Sycheva, Moscow

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