Transcript Managing Human Resources in Central and Eastern Europe David Chelly Msc. Business

Managing Human Resources in
Central and Eastern Europe
David Chelly
Msc. Business
and Management
in Europe
09/17/2004
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Aims of the seminar
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This seminar is designed to acquaint students with Human
Resources Management practices and strategies in Central and
Eastern Europe.
This course may be useful to them in their careers, as Central and
Eastern European countries offer excellent job opportunities for
students in management
The topics range from the political and cultural values to the
employee, with a special focus on how to manage people in foreign
multinationals.
Students are introduced to specialized research sources. The
documents of the seminar are fully available at the web address
http://www.centreurope.org
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Your instructor
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David CHELLY
Ph.D in Management Sciences, postgraduate diploma in Finance, degrees in
Money and Banking, Law, Accounting
and Sociology.
Head of a consultancy firm and a
website (http://www.centreurope.org) [email protected]
specialized in business with Central &
Eastern Europe
Professor of management in various
business and engineering schools
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The seminar’s outline
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Part I. The Central and Eastern European cultural and
political environment
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Part II. Managing Human Resources in Central and
Eastern Europe
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Methodology
• REQUIRED WORK AND FORM OF
ASSESSMENT
• Students will have to write a 3-page document
on how to do business in Russia (or any other
CIS or Balkan country). All the documents used
(or their reference) will be presented in the
appendix.
• The documents of this course will be fully
available through the internet, in English and in
French, at the web address
http://www.centreurope.org
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I. The Central and Eastern
European socio-economic
environment
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A rich and ancient history
• It is not because we (French people)
don’t know Central and Eastern Europe
history that these countries do not have
any history.
• Almost all CEE countries have played a
major role in Europe in their history
• But they have early fallen under the
domination of different empires, which
have shaped their future
Charles the IVth (13461378), King of Rome and
Empereur of the Holy
German Empire
Cyrille and
Méthode,
inventors of the
Cyrillic alphabet
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The empires and their influences
• Long dominated by the Habsburg Empire, the history of
Central Europe has been marked by education, art and
modernism.
– While in 1789 in France only a third of the citizens
were able to speak and read French (the rest spoke
local dialects), education in German had been
compulsory for a century in the whole Kingdom
• Eastern European countries used to live under the
Ottoman and the Russian Empires rule, which prevented
their economic development.
Vlad Tepes (1428-1476),
a Romanian figure of the
struggle against the
Ottoman Empire.
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The communist heritage
• Central and Eastern European countries have lived forty
(seventy) years of communism, which still influence local
behaviors and habits.
The communist heritage:
Corrupted civil servants, unreliable
businessmen, opportunist politicians…
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An inefficient legal framework
• In Central and Eastern Europe, the legal frameworks
are very similar to those of Western Europe.
• But in practice, the legal environment is a “jungle”.
Laws are:
– Incomplete (lack of case law, decrees…);
– Volatile and contradictory;
– Not enough enforced
On the main square of Sofia, one can buy
the most recent and expensive software
CDs for a few dollars.
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Exercise : Central and Eastern
European countries on the map
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Central and
Eastern
Europe map
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Exercise : sub-groups in Central
and Eastern Europe
• You are a consultant with the French Center for External Trade (CFCE).
Your task is to promote business relationships with Central and Eastern
European countries.
• Up to now, the CFCE had grouped the countries of this region in a
category called « Pays de l’Est » (« Eastern countries »).
• Until 1991, the region used to comprise eight countries: Albania,
Yugoslavia, Bulgaria, Romania, Hungary, Czechoslovakia, Poland, and
USSR. But now they count up to more than twenty.
• Your mission is to split them in different subgroups, that should be
geographically close and economically homogeneous. Explain your
decisions.
• The countries are : Albania Armenia Azerbaijan Byelorussia BosniaHerzegovina Bulgaria Croatia Estonia Georgia Hungary Latvia Lithuania
Macedonia Moldova Poland Czech Republic Romania Russia SerbiaMontenegro Slovakia Slovenia Ukraine
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II. Managing Human Resources
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Why do foreign investors invest
in Central and Eastern Europe ?
• Foreign direct investments in all sectors and from all
countries are welcomed and little restricted.
• Central and Eastern European countries benefits from
a cheap and qualified workforce and an advantage of
territorial location
– Investment incentives are offered for Manufacturing
investors.
• But the main reason for FDI is good access to
domestic and foreign markets
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Where and how to invest ?
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A few countries attract the majority of FDI
In Eastern Europe, some large companies are
scheduled for privatisation, but the best deals have
long been done
Joint ventures and licensing also offer limited
opportunities
The most profitable way of investment is the Greenfield
investment
Good personal relationships are crucial to succeed in
Central and Eastern Europe
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Restructuring and current
situation of financial and
production systems
• Privatisations of banks and companies are well
advanced
– But the industrial restructuring is still unsufficient
– Competitiveness is high in foreign-owned
companies
• Central and Eastern European economies shift
towards less industry and agriculture and more
services
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A qualified workforce…
• The workforce is
– Qualified, especially in technical fields
– relatively cheap, especially in Eastern
Europe
– respectful for hierarchy and rules and
able to stand hard working conditions
• So how can we explain such low salaries?
In spite of a high qualification
in technical fields such as
computer science, Bulgaria’s
wages are about 10 times less
than in Western Europe
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A low labor productivity
• commitment (especially towards foreign investors),
sense of initiative, mutual trust between workers,
customer satisfaction, ability to communicate and
ethics at work are low
– « pretend to pay us and we will pretend to work »
– « the one who does not steal, steals his family »
(Czech proverbs)
• People behave in a more productive way in Eastern
Europe
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How to recruit/sack people?
• Young graduates are targeted by companies
• Outsourcing recruitment is not as common as in Western
Europe
• Assessment centers, psychological tests and even cv’s
are not as widespread as in western Europe
• Sacking employees is easy, as labour laws and trade
unions have little influence ; But it is risky especially for
seniors.
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How to motivate? How much to
pay?
– Money is generally the best incentive to motivate
people
– Young graduate receive higher salaries than their
older colleagues with a long experience
– Bonuses are not much widespread nor much effective
– Cellular phones, company car and other nonmonetary allowances have more impact than salary
increases
– Honors and titles are appreciated
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What is the importance of training?
– Central and Eastern European human resources are
eager to learn
– Training is not perceived by employers as a strategic
investment, especially for « soft » skills
– Money spent on vocational training is very low
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HRM strategies
• Two HRM strategies coexist in Central and Eastern Europe:
– A culture-free model based on the global best practices
• Corporate cultures must be stronger than national
cultures.
– A cross-cultural management model based on contingent
strategies
• Different environments, cultures and attitudes towards
work lead to different practices : corporate communication,
pay systems, HRM…
– The new trend in IHRM: Think global, act local
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More information…
D. Chelly &
F. Lafargue,
Guide culturel
et d’@ffaires
pour l’Europe
de l’Est,
L’Harmattan,
2003
www.centreurope.org
East-west business portal
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