While Central Eastern Europe is coming into its own by realising the value of intellect in business, South Eastern Europe continues to develop more slowly. We look at what this means for people managers working in the region.

Managers in SEE should be versed in the region's political history.

While Central Eastern Europe is coming into its own by realising the value of intellect in business, South Eastern Europe continues to develop more slowly.  The south remains a relatively tabula raza compared to its northern counterpart, which can mean huge opportunities and huge headaches for international managers.  
 
Years of communism have left South Eastern Europe with few corporate structures, said Nina Noeva, Bulgarian director of London-based SNM Solutions.  
"Everything thing was state regulated and all people were paid almost equally, so there was no corporate culture," Noeva said. "Years of that regime have a big impact. There was no human relations system to encourage people to be more active in the work place."

Central Eastern Europe has begun to find its niche in western business through its core group of well-trained native managers and corporate value of a highly educated populace.
 
As Central Eastern European countries find their footing in the EU and American markets, local managers have begun to phase out their expatriate counterparts.
 

Private sector developing fastest

On the other hand, South Eastern Europe's economic maturity remains several years behind their northern neighbours.  While these countries' economies continue to grow, they lack the north's level of infrastructure and streamlined training, said Elena Platon, a Romanian businesswoman with experience in both the public and private sectors.

"Everything is imported, [including] the American model of doing business," Platon said.

"But in the private sector, there is a lot more competition," which drives a higher level of development to sustain business growth, she said.

"In the private sector, it moves much faster and it changes much faster," which means foreign investors are much more likely to find qualified nationals in management positions. But this is still more the exception than the rule, Platon said.

The region has long been derided for its rampant corruption and lack of infrastructure and legislation to deal with these problems. 

Slovenia takes the lead

Slovenia has for the most part conquered corruption and other holdovers from communism, said Peter Szabo, Hungarian country manager for SpenglerFox Executive Search & HR Consultancy, who travels to the region regularly as a recruiter.
 
"Slovenia is a very little country, quite well organised, and well ahead of all the new EU members, in economy, growth, stability, and currency," making it the most developed of the southern European countries, Szabo said. "There will be a bigger percentage of nationals in senior management than other central southern European countries. Slovenia is not only striking out from the Balkans but also from more advanced EU countries."

But for right now, Slovenia is the exception and not the rule for South Eastern Europe, Szabo said.
 
Building the infrastructure

Map of South Eastern Europe

"With Balkan culture it takes a longer time for many of the [administrative and legal] structures to be installed and used," said Szabo.

The World Bank reports that despite corruption and bribery easing up in EU transition countries over the past five years, "judicial reform was often neglected in the early years of transition, and corruption in courts does not appear to have fallen overall." 

Countries are beginning to address this problem, reports the World Bank. For example, Croatia has done so "through adopting automated case management systems to improve efficiency and transparency."

Although transition countries are increasing political accountability, reports the World Bank, "excessive immunities for legislators—making Parliamentarians all but untouchable—remain a widespread issue." 

Serbia's development has been especially slow due to political instability and slow reforms, Szabo said, making it difficult to effectively establish international corporate presence there.

On a less extreme level, other parts of South Eastern Europe, particularly Romania and Bulgaria, continue to use expatriate managers in mid- and high-level management positions to install and moderate structures of capitalist business.
 
"Start with an expatriate manager who will bring a team [of people] for finance, administration marketing, and sales," he said. "In this way, expatriate managers can start finding nationals to take over, but otherwise they have their own people that they can motivate and travel with them."

A talent for languages

 Expatriate managers will have little problem communicating in the region as most South Eastern Europeans know several languages, including English, French, Italian and German. But while speaking is no problem, understanding South Eastern Europeans can be very difficult for Western expatriates with no endemic understanding of the holdovers of communism.

Importing Central Eastern European managers into South Eastern Europe has become increasingly common, Szabo said. "If someone is coming from a Central European country, it will be easier because they're used to how these cultures function," he said.
 
"If a person who is working for [an international] company has proved him or herself in local subsidiary like Poland or Hungary, this would be a quite wise choice to promote him or her this way," said Szabo.

31 August 2006

Victoria E Fine is a freelance writer based in the US.

Subject: HR management in South Eastern Europe, recruiting in South Eastern Europe