Are Companies in Kazakhstan, Russia and the Ukraine "Better Managed" than US Companies?

LOS ANGELES - Oct. 24, 2014 - PRLog -- Purpose

Although these projects were for the purpose of assisting these companies with their organizational development needs, it also permits us the opportunity to do some research on this "database." As part of this research, I utilized the Management Systems "Growing Pains Survey" and the "Survey of Organizational Effectiveness" (for information about these surveys see www.mgtsystems.com/surveys) (http://www.mgtsystems.com/surveys).

Stepping back for the individual company projects and analyzing the data derived as a whole provided some interesting insights about business in this part of the world. The principal questions I want to focus on is the title of this article: "Are Companies in Kazakhstan, Russia, and Ukraine "Better Managed" than US Companies"? The criteria I used to address this question is the degree of organizational development of each company and the "Growing Pains" of each company. These criteria will be familiar to clients of Management Systems, who have adopted the research based frameworks developed and empirically validated by Eric Flamholtz and used the methodologies offered by management Systems to its clients.¹

Research Findings

Based upon the analytic overview of companies in terms of their Growing Pains and Organizational Effectiveness, some of the characteristics of Kazakhstani companies, became apparent during the course of research and strategy sessions for developing strategic plans:

1)       In general, we observed a low level of development in Kazakhstani companies - evidenced by the scores of Growing Pains (and Organizational Effectiveness;

2)       Clearly outlined (or even summarized) business platforms do not exist at most companies, i.e. businesses are built without a foundation;

3)       The lower three levels of the Pyramid are more or less developed - Markets, Products, and Resources .Out of the four types of resources, the most urgent problem is weak and uneducated personnel;

4)       There are no long-term competitive advantages, because the top three levels of the pyramid - Operational Systems, Management Systems, and Culture - are inadequately developed;

5)       Operations (systems and business processes) are barely moving along. There are virtually no optimized business processes in any core area; everything functions based on extremely outdated methods and processes. The business processes are not monitored or controlled, and are therefore inefficient and not optimal. Business processes are usually not subjected to critical analysis, and customer complaints about the shortcomings of business processes are ignored;

6)       Management systems are poorly designed:

(A) the organizational structure does not clearly show what value the company creates for its consumers. It is just a formality, sometimes illogical, created for specific, "respectable" people.

(B) Strategic planning is disorganized.

(C) There is little development of management systems, and at best, they have a training plan/program.

(D) Often, there is a total absence of a performance control system;

7)       The company's core values are not defined, and corporate culture is not actively developed. Corporate culture is not oriented towards reaching strategic goals: widespread cronyism, mutual understanding and forgiveness without demands, nepotism, distrust of hired managers, almost mandatory presence of an "observer" (most often the CFO or an accountant);

8)        Management of companies is suffering from strategic myopia - the formation of goals and objectives for the strategic plan is focused on the short-term - a year, i.e. difficulties with the real strategic vision/planning;

9)       Based on the configuration of the Pyramid, management is mostly composed of "good supervisors," rather than "leaders" and "businessmen", i.e. many just survive, instead of trying to market or innovate.

The core question addressed in this analysis is: "Are Companies in Kazakhstan, Russia, and Ukraine "Better Managed" than US Companies"? The answer to this question is unequivocally "no."

Call to Action

The results of this research suggest a clear call to action on the part of both Kazakhstani company leaders and managers, and the leaders of the government to Kazakhstan. The implication for Kazakhstani company leaders and managers is to focus more on building strong businesses not just in market and products, but in that level of the Pyramid. The implication for government is that there need to be support for education and research to facilitate the development and strengthen of Kazakhstani businesses.

¹ See Eric Flamholtz, Towards Using Organizational Measurements to Assess Corporate Performance, Journal of Human Resource Costing and Accounting, 2009Volume 13, Issue 2, pp. 105-117.