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Local Subsidiaries and Vision

We are happy to see that more and more domestic production companies nurture a complex view of how they could shape the functioning of their organisation. What this means is that the management are not only trying to create a potentially successful mode of operations when pressured by current production levels but they are taking a further-reaching, holistic approach in this matter.

We have recently had the opportunity to work with Hungarian subsidiaries of large international industrial production companies. There are many such subsidiaries in Hungary, operating in various fields. The majority of the companies we come across usually either work as contracted manufacturers or are automotive suppliers building electronic or mechanical components or larger parts.

Our cooperation has allowed us to make some truly exciting and positive discoveries:

  • These companies are often built upon the ruins of older, usually community (state or cooperative) owned corporations which have been acquired by investors. (Although there are also many green field investments.)
  • Such organisations with ties to older times have unavoidably undergone a significant technological and organisational culture change, but there are still traces of the old culture that can be recognised.
  • They are usually managed by highly trained Hungarian professionals who hold modern qualifications (in engineering, economy)
  • Apart from their professional expertise these top tier managers are also increasingly open to modern leadership skills, something that is signified by the fact that they employ highly qualified HR managers. The role of HR is upgraded and HR managers are usually considered a member of the corporate top management.
  • This means that, apart from professional trainings for employees, there is an increasing demand for other types of (management) trainings that support better organisational operations.

All of these are highly positive trends, not only for the industries but also for OD professionals. What I would like to discuss at this point is a more recent observation that we have made as a recurring experience.

Almost all of the above mentioned companies perform well; they keep growing for the most part, and their parent companies are generally satisfied with their results and rate of growth.

Also, companies are typically managed alongside and in reference to performance targets defined by the central management. Naturally such targets are important for any economic entity, yet such a modus operandi tends to result in a narrow-minded top management. Having to keep monitoring statistical figures, and following a rhythm of monthly and quarterly reports forces the management into a short term approach. Soon the entire organisation will be overwhelmed by gauging data, worrying about temporary discrepancies and taking care of urgent tasks. This can easily create tension and conflict between organisational units, and there will be an increasing tendency for partial optimisation and a sectional approach. Typical interdepartmental conflicts (between engineering, logistics, production and QC) become regular, and instead of making rational decisions, managers increasingly try to enforce their own interests when problems need to be solved.

Such situations can be prevented and resolved by creating a localised organisational vision.

Usually it is parent companies that have a vision, setting forth their expectations towards their subsidiaries. However when such visions are formulated, usually no specific details are laid down regarding those subsidiaries.

When you ask local managers whether they have their own vision they usually say things like “We need to align ourselves to the vision of our parent company”, or “We are only contributors to the parent company, we cannot have our own vision”, or “Our scope is limited by the figures prescribed for us, that is our purpose.”, and so forth.

We have also seen cases where a subsidiary had its own vision, and the parent company not only supported them but also made them an example for other subsidiaries to follow. Often some of the managers may realise the importance of the company having its own vision but they lack the consensus and dedication to realise such a vision. Our general impression is that while most parent companies are only interested in results and economic indices, they do allow their subsidiaries freedom in how they organise their operations.

We believe a locally outlined vision is highly important for the predictable and stable operation of any organisation. Having a clearly defined vision will precisely describe the preferred future state of the entire organisation, which is far more comprehensive than just having to meet targets. Visions elaborate the ways of managing the company, the realisation of organisational cooperation, the details of leadership culture, how employees and the environment are treated, and so forth. Such a vision can be of immense help in the resolution of everyday corporate issues. It is much easier to make major decisions when there is a vision to align themselves to, and the contents thereof can also serve as a guide in resolving internal conflicts. Having a vision can also bear definitive importance in purchasing, hiring, training and career planning.

Creating the right corporate vision is an immense task that can be done right or wrong. Also, it is not enough to formulate a vision: leaders need to bring it to life and disseminate it across the entire organisation, making sure everyone knows their role in achieving the objectives set forth therein. This is a very difficult, yet at the same time highly rewarding task, because if done right, it can result in a positive, motivated and optimistic organisation. Do not hesitate; this is an investment worth making.

Mr. Sándor Pataki, senior consultant, trainer

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