Business — Banking — Management — Marketing & Sales

(the reasons why changes can be difficult and the conditions for their successful achievement)

The economic, technological and methodological changes of C.I.S. banks necessitate a human resources change in the behaviours, but also in knowledge’s, skills, competences and qualifications of employees.

Simultaneously, the induced change of attitudes (need for development, autonomy, power and responsibility) affects the value system in the workplace and requires risk taking by motivated employees.

But what are the strengths and weaknesses of C.I.S.’ banks staff considering adaptation to these changes?

We often found that they had in majority the characteristics that are summarized in the following table. But some aspects require some explanations.

General education is usually high in the C.I.S. countries and provides a good background for banking business’ competencies (even if there is, here and there, a shortage of economics-based education in the universities). Training in banking techniques (even for young people) is still a great need (see further).

Due to the systems in which most people were raised, old beliefs remain very strong. Thus, attitudes and psychological aspects are of a major importance to achieve the required changes in the C.I.S. economy and banking. It has been noticed that, in some countries, most of the Soviet-era bureaucracy remains untouched. Il is then vital that local banks learn how to change their cultural backgrounds to adopt the (often unconscious) behaviours and values inherent in banking in the West. For instance, the neglect of the concept of client and of the importance of the customers’ demands has also to be overcome.

So, westerners and easterners, not only speak different languages, but also have different historical backgrounds and references and thus, different mentalities and interculturally diverging behavioural patterns.

Fot instance, the relations with managers in use in the C.I.S. banks have obviously to change. In fact some traditional cultural weaknesses have to be overcome:

In working groups or meetings, it appears that the participants feel it impossible to express opinions that differ from what older or senior participants say.

THE MAJOR CHARACTERISTICS OF MOST C.I.S. BANKS STAFF

	Trumps	Handicaps
Quantity	Sufficient and relatively cheap manpower High medium potential of women	Little disponibility, taking into consideration private activities and difficulties for housing and transport
Qualifications	Well educated, with good intellectual, general and scientific intitial education	Gaps in banking technical and practical competencies: little banking experience and shortage of relevant banking expertise.
Adaptation abilities	Great openness among young people Important aptitudes to learn new things	Inertia of interiorised routines Tendancy to rigidly respect the assigned function — Lack of flexibility
Listening	« Slavic » interest to what can be learnt from abroad	Over-estimation of local specificities High self-esteem
Attitudes		Limited motivation to work and difficulties to understand the need for incentives
Interpersonal relationship		Naive perception of how democratic organisations are functioning
Management and sharing responsibilities	Noticeable possibilities of autonomy	Hierarchical relations based on autocratic dependency Find it extremely difficult to take initiatives
Cooperation between functions		Used to living in vertical and centralised structures
Economic culture		Lack of « sense of the clients » Little practical ease with financial optimisation (and low interest for profit)
Performance orientation		Low productivity involvement Quality frequently not sufficient

Banks have often to face the devaluation of the individual contributions to the performances of the organisations: for instance, the participants in the training courses have difficulties in talking about themselves and even in expressing personal views, ideas or feelings.

It is also often obvious that team spirit is non-existent, due to insufficient communication skills.

Banks’ employees are used to lack of trust and punishment of initiative in the old society. So, it is difficult for them to « make decisions, not just carry out orders ».

Thus, the absence of a decision-making culture, within the middle management of the banks (mainly those who are issued from previous state structures within National Banks) was mentioned several times as being the major factor explaining the difficulties to change.

We have analysed these tendencies more precisely among managers from East Europe and C.I.S.

That does not mean that there is when we tried to explain such behaviours, « we have seen four characteristics of eastern European managers:

1- Attitudes linked to the historical slavistic culture:

An assumption that their situation is unique and a strong perception of the special nature of their problems. Russians, for instance, feel that their country is a very special one, quite unlike any other country, as a result of a combination of:

Russia’s ancestral suspicion of the West,

what Dyker (1992) calls «Xenophobic populism».

We found several proofs of this wariness of accepting foreign solutions to Russian problems. Some eastern managers don’t even feel that they have anything really valuable to learn from western management experience.

This is also linked to a high self esteem and belief in themselves, etc. which is at a terrific degree in some eastern countries which have, in fact, a prestigious past. Sometimes, the local managers seem to behave as if they had nothing to learn from anybody (particularly westerners) — as if they were wanting to protect their self-esteem, somehow destroyed by their history during the twenties century. The consequences are that:

they are not yet convinced of the value of what they are taught,

for them, the west is seen first of all as a source of techniques, not of ideas!

Indeed, the eastern countries have a history which didn’t lead them to be commercially minded. For example, from the middle ages, the countries of eastern Europe, which had to face frequent invasions coming from the east, were societies with a high proportion of warriors and lords, and a very small part of the population dealing with trade. Thus, the population has occupations, and were undertaken by the Jewish population.

We could add that slavistic interpersonal relationships are also unique, as the Russian theatre and literature have illustrated. No doubt there is some reflection of this today in the persistent disagreements among individuals such as politicians and frequent conflicts between factions (pressure groups, etc.).

2- Misunderstanding induced by concept previously learnt during the Soviet era.

As most Russian managers were Party men, and have experienced a minimum of ten years under the central planning system, old practices inevitably persist. It is, therefore, understandable that most of C.I.S.’ managers reject advice which conflicts with their own managerial experiences. It is essential that courses deal with the following issues:

The treatment of individuals is ideologically inspired, and devaluates the importance of the individual, because of the primacy of the communal spirit. This is probably the reason why they avoid referring to themselves in the first person, as we have observed.

Many of the eastern managers have been trained to consider as normal the «old hierarchical and gerontological system» (Aslund and Layard, 1993), mainly administrative and associated with the heavy political and economic machinery of the central planning system. They, thus, perceive themselves as «bosses» (i.e. authoritarian leaders) wondering only at what is thought in the upper level of the structure, and not interested at all, about what their staff’s feelings are.

They are also used to living in a system in which one had to wait for all instructions from the top, and to strive for the fulfilment of «plans», and in which personal initiatives could be punishable offences. This encourages self-effacement, and lack of initiative. It is, thus, normal that the eastern managers have some aversion, or, at least, are ill-equipped, to take personal creative initiatives. It is a direct consequence of this fact that the whole system, where no-one taught the managers to think, failed to encourage innovative and dynamic managers. It is what some authors describe as the «helpless syndrome», resulting from constantly operating within the barriers of the old socioeconomic system which hindered initiative, independence and entrepreneurship (Hanin, 1991).

This is also consistent with the fact that we found it hard to convince eastern managers of the significance of the strategic and tactical dimensions of management activity, and of the fact that information is regarded as a key management tool in the west. Self-direction seems to be a problem for Russian managers.

We also found that many eastern managers have very little appreciation of, or even, no consideration at all for the human aspects of management: human resources management, industrial relations, communication, motivation, leadership styles, etc. They have no idea that, management being «the art of getting things done through people», leadership and motivation are a crucial part of modern thinking on management. We can thus understand why we often had to face:

poor interpersonal skills,

lack of motivation,

total ignorance of what Organisational Development can produce.

Some eastern managers are perpetuate a deep-rooted practice that deceiving higher authorities is part of their work, and have tendencies to colour the truth, and try to demonstrate apparent short-term output maximisation, with output-oriented success indicators.

3- Effects of the dominant initial trainings

Many eastern managers are qualified as engineers, and have, therefore, some tendency to be solely technical and production-oriented, that is mainly concerned with -or even dominated by- the needs of production, and not considering the requirements of the clients, or financial matters. Additionally, for 75 years the rule book always prevailed. It is thus normal that most eastern managers have no commercial awareness and ignore what true marketing is: one could say that, for some Russian managers «customer orientation is notionally and operationally meaningless» (Mejevitch, 1993). We had an example of that when we saw, in Warsaw, in 1989, a lot of people waiting in a queue, because there was only one cashier working. It was not planned that the other cashiers, who were there, should open their desks at that time! There is still a huge amount of training to do to transfer the necessary knowledge of the fundamentals and practice of marketing and advertising, the understanding of the customers’ requirements, the search for clients, the presentation of companies and corporate image, customer relations or commercial relationships with banks, etc.

The inflexibility of this way of thinking, has appeared strongly as the current business situation in Russia became worst, until the present crisis, with eastern Europe becoming now non-planned and non-market economy, with an emerging recession which dismantled the social system and disillusioned the population.

To adapt their thinking and behaviour, the most important aim of the eastern managers’ development is to change their attitudes. Eastern managers are in need of new business practices, new ways of thinking and doing things, they require a radical change of attitudes towards the world of work and professional activities, and new forms of interpersonal relationships.

But eastern managers are still wondering about what they should do. They are still working under uncertainty, without a clear and complete perception of the «rules of the game». The future role of management largely remains undefined: eastern managers have no concept of what their actual status is, and of what their own personal future development (their career) could be. »

Do you agree with this description concerning your bank? Of course, you should think that some points are accurate and some are not. Wouldn’t it be useful, now, to take into consideration the points you agree with and to refer to the models previously presented? Use them as check lists to assess whether your bank should be highly flexible or not and to identify the major hindrances you should encounter.

Tagged as: CIS banking in transition, HRM