International controlling - Romania
Romanian companies neglect liquidity reserves
Many Romanian companies could improve their liquidity considerably if they used the capital they have tied up in current assets - known as working capital - more efficiently. this is the main finding of a recent study carried out by Horvath & Partners among 143 participating Romanian companies. Read more here (Download PDF).
Meeting of the work group Bucharest in July 2010
On 2nd of July 2010 the work group Bucharest met in Busteni. Cristina Hodea, head of the work group, discussed and worked out different questions concerning strategy and business models. Herwig Friedag and Nicoleta Thomka, guest from ICV in Germany, also attended that meeting.
Study: Remuneration Eastern Europe 2010
The financial and economic crisis has an effect on the job markets in Central and Eastern Europe. Nevertheless, basic salaries are continuing to grow. Although altogether, annual salary increases are more moderate than in previous years at an average of 4.5 percent. It is above all the variable payments that have been significantly reduced. In the salary rankings in Central and Eastern Europe, Russian executive managers earn the most, closely followed by Poland, the Czech Republic and Croatia. In a business with more than 500 employees, a Russian CEO earns an average of EUR 189,258 per year. His colleague in Romania earns just under a third with EUR 57,322. In comparison with Austrian and German CEOs who earn between EUR 305,000 and 328,000, the countries in Central and Eastern Europe are still a long way behind. These are the results of the “Remuneration Eastern Europe 2010” study, drawn up by Kienbaum management consultancy. Data from 52,150 positions in 446 businesses was evaluated for the study. The survey encompasses results from Croatia, the Czech Republic, Hungary, Poland, Romania, Russia and Slovakia.
Highest remuneration in Russian and Polish companies
Across all positions and business sizes, Russian and Polish companies pay the highest salaries, followed by the Czech Republic, Croatia, Hungary and Slovakia. Romania brings up the rear.
Variable remuneration is noticeably lower than in previous years
While in previous years, salaries in Russia and Romania increased on average by up to 20 percent, they rose by only around ten percent during the last year. Although the fixed salaries increased in line with the inflation rates of the respective countries, variable payments dropped noticeably: If they came to an average of 24 percent of the total salary in Poland in 2009, in 2010 they constituted only 17 percent. “It is indeed in difficult economic times that variable remuneration models have a high significance: They offer businesses the possibility for personnel costs savings without having to immediately announce redundancies”, says the Kienbaum remuneration expert Maria Smid from Vienna.
Additional benefits are an important part of remuneration in all countries
Eastern European businesses retain additional benefits even in times of crisis, in order to keep good employees and recruit qualified personnel. The type and scope of additional benefits vary in the countries covered in the survey: While pension benefits are very popular in the Czech Republic, Slovakia and in Hungary – depending on the position, between 33 and 76 percent of employees in these countries receive old-age provisions from their company – this form of additional benefit does not exist in Russia and Romania. Company cars for the upper levels of management are, however, well established in the large internationally operating companies in all countries. More than 90 percent of CEOs receive a company car worth EUR 35,000 to EUR 40,000. Middle management, above all in the fields of finance and sales, are provided with a company car worth EUR 20,000 to EUR 25,000. In addition to this, further training, private medical insurance and corporate lending are used as additional benefits.
Considerable relief on the job markets
Whilst companies had to compete for personnel across all positions and industries in 2008, the situation on the job markets has significantly relaxed as a result of the bad economic situation. The number of applications has considerably increased in 2010 in comparison to 2009: Two thirds of the companies interviewed in Hungary and 52 percent in Russia registered an increase in the number of applicants. Despite this, qualified personnel are still in demand. Retention of good employees also remains a current topic. “In economically difficult times, it is easier for companies to retain their workforce because the security of a job gains even more importance in the eyes of most employees. It is especially in Russia and Romania, where employees change their work place very frequently as compared to the rest of the world, that this change in attitude could in the future provide for lower fluctuation and greater loyalty”, says Smid.
Kienbaum is the market leader in Executive Search and HR-Management in German-speaking Europe and it is one of the leading management consulting firms. On the basis of its integrated consulting approach Kienbaum accompanies enterprises from the main economic sectors during their processes of change from the concept to its implementation. Kienbaum unites verifiable personnel expertise with deep knowledge of strategy, organisation and communication.
For further information please contact:
Mag. Maria Smid, MBA
Tel: +43 1 533 5188-22
Women in the ICV: Nicoleta Thomka
There are a lot of women working for the ICV. Right here we would like to introduce you Nicoleta Thomka. Read more about her here:
The crisis through a controller's eyes
Report by Oana Aldea, Bucharest
In Romania the job as financial controller is always connected with multinational companies. This profession is still not so spread in our Romanian companies. We don't have schools where to study controlling. Our knowledge and experience come only from international companies.
In 2003 I was looking for a new job after I had worked for 7 years as "controleur de gestion" in a French company. This position is almost similar to that of financial controller and at that moment I thought I had enough work experience. I was in love with this job and I tried to learn more and more but, unfortunately, I didn't find any courses in our universities. I was very disappointed.
In 2004 I got a job as financial controller in a German company set up in Romania in 2002...
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Crisis! What crisis?
In Romania the worldwide economic crisis exposes the importance of controlling, as companies there are divided in two conditions. On the one hand there are the Romanian undertakers who don't have controlling-systems at all. On the other hand there are the subsidiaries of international companies located in Romania. They usually have a controller - or even an entire controlling department. Guess who's better prepared to overcome the crisis. The solution you may read in the article by PhD Valentina Oarga:
How I joined controlling
Before the Revolution of 1989, I used to be an engineer in metallurgical industry. So a hard environment for a girl. In Romania, that time there were 80% of professions as engineer. My first dream after the Revolution was to change my profession, and for that reason I attended an Executive Master in Business Administration (EMBA) at a French University. This was for me a big change in my career from an engineer to a controller. After I graduated this school, I was hired by Alcatel in the position named: "controleur de gestion". This happened in 1997 and it was my first step in controlling. The main project for which I worked was Orange, network equipments installed for mobile phone communication. From that time I decided that I wanted to work only in controlling and this motivated me to study more. It wasn't so easy for me. In Romania this kind of activity was completely new and it was not taught in our economic schools. I tried to find something in European countries to go in deep details and to learn more.
After some time I changed the French company with a German one where I worked as a financial controller. This was the moment when I had the first real contact with this activity. My main task there was to take care of and prepare reports for the managers. Starting with this new job I joined this beautiful activity. For the first moment it was a bit difficult for me, because the things were quite new in Romania. Here I worked a lot with Profit and Loss Statement, analysis of revenues and expenditures and their allocation of the cost centre. Daily I analyzed figures that affected revenues or expenses respectively. Monthly, I prepared a group of standard reports asked by the mother company. I didn't work that time in consolidation reporting, but I tried to find out more about this subject. I became very interested in this topic.
Unfortunately, the Romanian financial manager of this company didn't help me grow in this profession. I had to work much by myself to discover how the good things were running within the mother company. Accidentally I discovered some procedures meant for controlling purposes and international reporting. It happened in 2005, the year when the IFRS standards were introduced in multinational companies. I was very eager to learn more about their application, but in that company this wasn't possible. I tried to do some special courses and so enrolled at the end of 2006 in ACCA, an international school which formed financial experts.
Before the enrolment at this school something happened. I received an e-mail asking me to join a club of controllers. I had no idea that there was such an association. For me, the word "controlling" and the job "controller" were something new, and because of my difficult Romanian chief I couldn't imagine that this profession needs a club. I took part in this event and joined the International Association of Controllers (ICV) coming from Germany. It was an important moment in my life and in my career. I can write a lot about these days, but there is not enough space in this article for more details. I can only say that it is very important to join others professionals and to exchange knowledge, experience or new ideas, to know that there are other people who are "in love" with the same profession as you. At the same time one can meet new companies, learn about different controlling instru-ments, build networks, receive support in professional respects and, last but not least, enjoying the "club atmosphere".
In 2006 I changed again my job. I work for a Dutch company, as a financial controller. In that position I have to do more reports than before. Now I do consolidation and I work more on projects. Every 6 months I do consolidation of Profit & Loss and Balance Sheet Statements; every closing month I have to prepare management and financial reports. One of my responsibilities is also the liquidity of the company. I have to provide a report every week for our liquidity. After all my experience as controller I understood that a financial controller is responsible for the transparency of results.
My dreams for the future? - To learn more about this profession; to learn more and more and all about it. And to improve myself and become a top professional, to understand a business better by analyzing the results in deep details; to rapidly read out of results if a project brings future profits or if it might lead to los
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A TED on the current status and challenges in controlling
Multinational companies (MNC), especially from the German speaking countries, which have invested in Romania during the last years, have also spread the concept of controlling and Controllership in the country. While the local entities of the MNC have established controlling processes and controllers to generate transparency on costs and performance, Romanian companies have just started to develop controlling functions and processes.
With the occasion of the Romanian Performance Management Conference organized in Bucharest by Horvath & Partners on 29 January 2008, a Teledialog (TED) session was carried and discussed with the 80 present CFOs, controlling and finance managers. The TED session revealed some interesting results concerning the current status and challenges in Controlling. The majority of the participants regards the lack of knowhow and expertise in the Romanian market as the key challenge in developing controlling functions and processes. This is not surprising, since there is no university in Romania offering a specialization on controlling or at least a controlling course. Therefore it is a widespread misperception in the business community that controlling is a sort of accounting or audit.
As environment and market conditions get more complex, the existing Accounting functions do not assure the sufficient internal transparency any longer. Needless to say that this is increasing the need to implement and improve controlling also in Romanian companies. Asked what the most important factor is driving the need for controlling in incumbent Romanian companies, the answers are not very surprising. CFOs and controlling managers see the need to improve planning, management reporting and performance management tools.
A good example that reflects the status and challenges of Romanian corporations is the leading book, office supplies and fashion retailer in the country. Management decisions were not always based on reliable and accurate information about the future. Furthermore planning and reporting was not sufficiently oriented on costs and performance. Based on an initial controlling audit, a development plan and measures have been defined with the support of Horvath & Partners. One of the major challenges the company encountered in implementation of the defined roadmap was to find suitable candidates for the newly defined controller positions.
To sum it up: Romanian companies are actively developing their controlling departments and processes besides the search for knowhow and good controlling practices. This is seen as an appropriate strategy to improve management control and transparency of results, performance and costs.
Horváth & Partners Management Consulting SRL, Bucharest
Here you can download this article.
Postgraduate controlling studies at the West University of Timişoara (Romania)
In Romania, just like in many other countries, controlling appeared first at the level of economic practice and only later on at a theoretical level. Nowadays, the position of controller or even a controlling department can be found in almost every major corporation subsidiary in Romania.
In order to meet labour market demands, the Department for Continuous Education and Open Distance Learning within the West University of Timisoara - http://www.decidd.uvt.ro - has already organised the third postgraduate specialisation course entitled "Controlling - a modern subsystem of management", with a duration of 4 months. For the time being, there is no ICV workgroup in Timisoara. There is however an increasing level of interest in Controlling and the contribution of a number of young controllers.
The first course began in March 2007 and the second in November 2007. The present course started in December 2008 and shall be completed on the 4th of April 2009. This initiative belongs to the Associated Professor Ph.D Valentina Oargă, from the Management Department of the Faculty of Economy and Business Administration, and is coordinated by Professor Ph.D Nicole Bibu, Head of the Management Department, in his capacity of Course Manager. The course participants are both controllers and persons interested in becoming controllers.
Its success is ensured by the contribution and dedication of those involved: the scholars within the Management Department of the Faculty of Economy and Business Administration, as well as other specialists. Our approach focused both on theoretical aspects and on economic practice in the field of controlling.
Our future objective is the organisation of a course designed to give more insight into the field of controlling, aimed at further developing the capacities acquired at the completion of the present course.
For further information please contact:
Prof. Ph.D Valentina Oargă