Management under fire: the transformation of managers in the Soviet Union and Eastern Europe

Abstract

Executive Overview Imagine, if you will, managers, executives, and CEOs working in a stable, predictable, and centrally planned environment, where managerial functions such as production, pricing, exporting, planning, distribution, R&D, and personnel management are performed in a simple, almost mechanistic manner for more than forty years. Imagine, then, how bewildered these managers would become when, almost overnight, the static and predictable environment with which they have become so familiar and comfortable undergoes a total and drastic change. That is exactly what happened to managers in the former Soviet bloc. Since the summer of 1989, the socialist regimes of virtually all central and eastern Europe, as well as the Soviet Union, have been liquidated and democratic governments instituted in many of the countries in this region. Coupled with this change were the moves from a centrally planned and centrally managed economy to a market-driven economy, from a very low inflation rate to rates ranging from 30 percent to 3,000 (yes, three thousand!) percent, from officially nonexistent unemployment to latent unemployment rates as high as thirty percent, from positive rates of economic growth to GNPs declining by as much as forty percent annually, and from producing and selling without the threat of competition to working in a highly competitive environment. How exactly did these changes affect managers in state enterprises and their managerial decisions? How have they been coping with the sweeping political and economic changes? And how have they been adjusting to the evolving market economy? These were the basic research questions I set out to investigate in 1989, well before the symbolic collapse of communism with the fall of the Berlin Wall, and in 1991 when, once again, I interviewed managers in Czechoslovakia, Hungary, Poland, and Russia. What I discovered is a fascinating, professionally compelling picture of managers who are going through a very rapid transformation which would make even the most high-paced Western managers dizzy. And while the picture is still emerging from the film's negative, adding more details and contrasts to an already unprecedented phenomenon, it is possible to scope out the transformation among managers in the four countries, compare them, discuss what the future may hold, and make some recommendations for Western managers.

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