Changing the face of HR

Rostya Gordon-Smith, one of GlobalHR’s top 50 international HR directors,
talked to Pepi Sappal about her intention to help build a new democracy in her
native Czech Republic

Most HR directors flinch at the thought of having to implement yet another
change programme. But change programmes in Central and Eastern Europe (CEE)
have been far more complicated in recent years, as they have had to deal with
more than just a change in the direction of the company or corporate culture.
Like APP’s VP of HR, Rostya Gordon-Smith, many HR directors in CEE are
grappling with people management issues within organisations that are trying to
adapt to an economy in transition from a socialist to a market model.

"It hasn’t been easy," admits Gordon-Smith, "because we are
charged with the responsibility of shifting the mindset of employees who are
stuck in the working ways of a planned economy. But if companies in CEE, many
of which have attracted Western investors, are to retain that investment and
meet their profit targets to survive in a market economy, they must change and
conform to the new economy.

"We at APP (a Czech IT software integrating company), for example, had
to reorganise the company by slimming down, cutting out unnecessary positions,
being more productivity-driven and aggressive in getting clients, and generally
being more customer-focused to be profitable and satisfy our US investors – all
things that we have never had to do here before."

To help APP achieve all that, Gordon-Smith has had to help its employees get
to grips with the workings of a market economy. Luckily, unlike most of her
Czech colleagues, she has benefited from an international perspective. Before
she returned to her homeland in 1996, she spent 30 years working in countries
like Hong Kong, Japan, Brazil, Canada and Britain, in several training,
educational and HR roles.

"After taking my four sons back to the Czech Republic to show them
their roots in 1991, I discovered that my roots were stronger than my wings. So
I decided to move back to the Czech Republic, as I wanted to be part of
building a new democracy," she says.

Four years on, having worked in a couple of HR posts in the Czech Republic
for both KPMG and RadioMobil, she admits that things aren’t as bad today as
when she first got there: "I arrived to discover that HR had a rock-bottom
reputation. The job of HR was often filled by communist stoolies put there to
keep an eye on workers. HR people were simply there to police the workforce,
take care of admin, and arrange social events like picnics and Christmas
parties."

It is at APP, where she was charged with the responsibility of changing the
culture of the organisation, that she’s been able to put her international
experiences and knowledge of the workings of democratic systems into practice.
For example, she has given some of APP’s leaders exposure to the outside world
through international conferences and secondments. She’s also helped staff
understand the synergy between the culture within the organisation and the way
its outside image is perceived by customers.

"Yet employees at all levels have found it difficult to deal with
issues of transparency," claims Gordon-Smith. As outside investors require
companies in the CEE to become more transparent, open and honest about
dealings, the concept of "brown bags" and bribery – features left by
a communist past – are not tolerated any more, especially if you have US
investors. "So, if we say we are transparent and ethical, we can’t have
salesmen who bribe, and we had to instil that within our corporation."

And it’s not just APP’s staff who are struggling with matters like ethics
and values, employees all over the CEE are facing the same problems, claims
Gordon-Smith. "HR directors here simply can’t muster the strength to stand
by their values.

"For example, when announcing redundancies, they still find it
difficult to convince the powers that be to pay for outplacement services. As
they lack the bigger picture, they are not always aware of the repercussions of
their actions. They don’t understand that if they let go of people in an unfair
manner, it may backfire if they then go and work for a prospective supplier and
influence future business. They could even bad-mouth the company to potential
recruits."

Letting go of the old structures left by a centrally planned economy,
especially by those who haven’t benefited from such international exposure,
hasn’t been easy. "Like most other professions, HR in the Czech and Slovak
Republics is not yet confident when it comes to dealings with the outside
business world because of a lack of business understanding.

"So it’s not surprising that HR is finding it hard to move away from
policing their workforce to aligning HR with bottom-line benefits," she
adds.

It’s not a problem of intellect and brains, but one of management.
"Although we have extremely educated people – 90% of the workforce are
university educated, mostly in technical fields – they have lacked the exposure
of the workings of a market economy, so they’re still skeptical and suspicious
of the outside world. For example," she points out, "HR is dubious
about concepts like outsourcing. Their main fear is, ‘if we outsource, we are
making ourselves redundant or we’ll be viewed as not being able to do our job
effectively’. They are finding it extremely difficult to give the housekeeping
away and concentrate on the strategic stuff."

The lack of resources to help people get a grasp of these basic business
concepts hasn’t helped. "There’s a lack of information in this part of the
world. Even when it does become available in books or on the Internet, it’s not
always of use, because either it’s in English, a language that is not
understood by everyone here, or, if they do have the linguistic ability, they
do not have access to the Internet," explains Gordon-Smith. "Of
course, these issues are less of a problem for those working for
multinationals, as they receive help from HQ."

But she’s doing her bit to help HR get to grips with these issues through
her role as vice-president of the Czech Society for HR Development at its
annual conference, which is gaining ground every year. At last year’s event she
launched their first HR Excellence Awards.

"We sent 1,700 letters to CEOs to nominate the best HR person and best
project, but the response was somewhat lacklustre. Out of 1,700, we got only
six nominations," reveals Gordon-Smith. "On the upside, all six were
actually very good projects. They all provided good best-practice HR case
studies. HR director Vaclav Jakes of Trinecke Zelezarny, a steelworks factory
in Northern Moravia, a town with very high unemployment rates, won. He set up
an overalls factory employing 42 people, the majority of whom were women and
disabled people.

"To the corporation’s surprise, the project was profitable within three
months. The project won because it touched people’s emotions and demonstrated
that HR can do something in a depressed area and be a change master. Not only
did he contribute to the social community but he helped to improve the bottom
line. And he’s already planning for 50 more jobs."

Gordon-Smith has certainly helped change attitudes towards HR, both at a
corporate and national level. "We’ve come a long way," she points
out. "We’ve progressed so fast during the past few years that we are
almost facing the same issues as the developed West. It’s finally dawning on HR
here that our job is not just making people understand that companies are there
to make money, but also to help staff understand that their jobs might not be
here tomorrow and that they need to take charge of their own careers and
development."

Her list of achievements is long. Apart from contributing to APP and the
Czech Society for HR Development, she’s been instrumental in several other
projects, including creating APP’s Corporate University and designing one of
its core courses – the leadership programme. She has also helped to launch a
Masters course in HR development with the Czech Technical University.

But she’s not about to put her feet up just yet. Shortly after this
interview, she resigned to set up her own consulting firm. "As I came to
this country with the idea of helping to raise HR standards and contribute to
its growth, I think I will be able to serve my mission more effectively if I
work with several companies rather than just one," concludes Gordon-Smith.

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