Team Capital Guest Blog by Arnold Schiefer, former Board Member at Rail Cargo Austria AG and previously Head of Restructuring at ÖBB-Infrastruktur AG. Schiefer was lately CEO designate for the final stage restructuring at Alpine Holding and is an expert in restructuring and change management.

The best organisations, leaders and teams do not view change as negative. Instead they encourage it, act on it and use it as an opening to demonstrate their value in a competitive market.

South Eastern Europe (SEE) is no different. In an economy still suffering from the crisis of 2009, the need for change is clear – as is the existence of conflicting cultural identities across the organisation and the economies of this region. On the one hand you have the traditional economic culture (communist economic system combined with radical privatisation and a disillusioned population) and on the other hand the need to integrate the new enterprise in certainly a more Western culture supported by Austro-German style change leaders.

A different point of view

I remember the words of a Hungarian labour union member: “We have been reporting for decades to Moscow, now we have to report again to Vienna.” He was obviously disappointed that Hungarian companies were unable to run their own businesses, independent of international involvement. Limited cultural intelligence on international business; no real insight or understanding of Anglo-American style economic systems. The interpretation of their own position was more like a subject ruled by external forces.

This adds further complexity to a successful turnaround in SEE. Whilst intercultural differences complicate the overall change process, cultural conflict must  be managed in parallel to the restructuring process. These cultural differences exist throughout our region.

Work to launch an intensive communication process to build a plausible, common picture of the future. The goal or “intended destination” at the end of the journey has to be communicated clearly, consistently and on an on-going basis. A successful change process must be driven by the management together with the employees. For a turnaround to succeed, fears and uncertainties have to be identified, addressed and eliminated.

Common picture and the special role in the group organisation

Take the time to develop your “common big picture” and to pick up your employees and take them with you on your track to success. It is the responsibility of the management to design  and implement that picture – all the more so in a restructuring process. People want to feel proud of their work. They want to trust the management. Give them the chance to understand and to follow. Very quickly the management will have visibility on who wants to be part of the future and who does not or is not able to support the change process.

Change is also “fitness for the future markets.” How to grow again after the crisis.  International career paths should  be developed and shared with employees. Human Resources have a pivotal role to play in staff development and retention – and filling those crucial gaps where required. Restructuring is a tough business. But it is important not to lose contact with the real soul of the people and to build hope and buy-in across the business. In South Eastern Europe people need “symbols.” That might be for instance a regional diversification of the corporate identity during the transformation process. The acquired company  should equally create trust in the new management. The management style and the handling of the regional management is crucial.

The right management across key functional lines

The change process can only be successful if you have the right people with the right skills at the right time and place. Change management needs communication in  every key functional area of the enterprise. For instance when Austrian or German managers with poor English speaking skills attempt to communicate with Hungarian employees with equally poor English – what is the result? Exactly. Disconnect throughout. Try to involve as much as possible native speakers and regional staff.

Different languages, different histories and different pictures. For some managers it comes down to their poor social skills. Not everybody has the ability to communicate critical messages in the right way. Respect is another keyword. Integration and common success is the goal. Not an “unfriendly takeover” and not appearing on international markets as the “conqueror.” So it is important to select the right managers (expatriates) to deploy from central units to manage the integration across IT, finance and controlling as an example. They need excellent leadership and communication skills. Very often they have to manage a kind of “sandwich position” between the expectations at home and the understanding of the regional problems. Yes – tough decisions are needed but don’t do this at the expense of what makes the company truly special in the first place.

In the first step it is not possible to change all key constituents in one shot. Some will be allies for future projects. Establish the knowledge and potential that already exists and recognise that core to  the turnaround are elements still hidden in the enterprise. Share your vision for the future with key members of the management team as soon as you possibly can. And manage their expectations. People are always working for somebody. Not only for money and the enterprise. Assemble the right team and  leaders who are able to bring people along. Acceptance of the new management is critical to a successful turnaround.

Intercultural management and changing attitudes is a permanent challenge for the whole organisation, for all managers and every single employee. But it is the key to success in international markets.