How new executives destroy their trusted companies
This article is about the risks of leadership changes in large companies and characteristic phenomena when trying to ignore the law of effective property management:
But for those who come to the
world, covered in darkness,
Our story will serve as the key
S. Kalugin, Das Boot .
1. Risks of a change in company management
2. The emergence of a universal pseudo-efficient manager
3. Such unreliable reporting
4. Parallel management structures
5. Additional control over financial flows
6. Black box. Where does the need for staff reductions arise
7. False optimization criterion “Minimizing costs”
8. Abbreviations in branches
9. Path to outsourcing
10. Temporary employees squeeze the company. Reductions in revenue following cost cuts
11. Acquisitions and mergers
12. Beeline
13. Sberteh
14. Western consulting companies. External management
Sooner or later, in the life of a successful large company with a long vertical of power , a change of CEO takes place.
This process gives rise to specific risks that would be well taken into account by all its participants.
Having made a mistake with the choice of a new gene. directors, the owner of the company risks lowering profits; in advanced cases, it may lose the entire company. But, having sold the remnants of the company, most likely he will live comfortably, except without a second yacht and a football club.
The new CEO will receive guaranteed remuneration, the only question is whether he will receive a lot or a lot. Moreover, it is not a fact that his reputation will suffer - maybe he will leave in time. In any case, all of its jambs will be hidden if possible, justified by external factors. In the absence of a scandal, as a rule, everyone is interested, including the owner, who is interested in hiding the deplorable state of affairs of the company in order to sell its remains more expensive.
The most significant risk for the employees of the enterprise - they will fall to the destruction of what they created with their labor, lower incomes, layoffs to reduce staffing and the subsequent search for livelihoods.
The choice of the CEO’s candidacy is determined by acquaintance with the owner and the existence of a trusting relationship between them. And the more important these relationships are, the more skeletons in the closet of the company.
If there are no people with the right profession among the proxies, then relatives, sports coaches, country neighbors, classmates and classmates are called up. In general, people tested in the small are trusted to manage the big. But often big is not the same as small: the newspaper is not the same as the factory.
The owner of the company reassures himself by reasoning that his appointee will cope, he is also a good universal manager - one of those who, although he does not know the subject area, has completed MBA coursescan successfully manage with the help of pumped people management skills. All you have to do is follow the “traffic lights” in the reports: which of the subordinates has a red light for the non-performance of indicators, you need to call, demand to eliminate, punish, fire.
Let's look at the truth of this stereotype, using a close analogy from IT.
Not developing means degrading. These are the laws of both IT and the business as a whole.
Of course, you need to hire only someone who can understand the many relationships of system elements, and their internal settings, possible operating modes. We need someone who can build a model of the system in his head, which means, if necessary, and recreate it again. For example, if a virus or attackers destroyed everything.
In our example, someone who positions himself as a humanitarian (marketer, historian, philosopher, journalist) is not suitable for managing an IT system. If he was not interested in IT before, then he is unlikely to delve into a new job as long as everything works by inertia.
As soon as something breaks down, he will move to another place of work - not to waste his life for him to create a system uninteresting to him, which he does not fully understand, and does not want to understand.
Besides this “psychological” argument, I have suspicions that it is in fact only a manifestation (rationalization) of a deeper cause.
Not everyone can be programmers , not everyone can be theoretical physicists, not everyone can fit a large technical system in their heads. Not everyone can fit in the head a system that represents the relationship in the work of the units of a large organization. Not in the sense of who sat behind someone, whose relative, where financial flows, etc. go, but the interconnections of units in the production process. Otherwise, E. Goldratt wouldn’t have to write a series of books “Aim ...”.
But what’s there - not always the director can realize what kind of service his company produces. If Yandex couldn’t understand “what is it worth”, “Kinopoisk” bought by him and decided to turn it into another online cinema ...
Why is it important to fully understand the work of the whole organization? Because otherwise its work cannot be optimized - the already mentioned E. Goldratt in his “Theory of Constraints” proves that independent sequential optimization of individual sections is guaranteed to lead to non-optimal operation of the whole enterprise.
However, even if not optimal, but at least some kind of work was. But our case is harder.
So, for the new director, the work of some units is a “black box”, i.e. he understands only the inputs and outputs, requirements, requests and desired results. About some other units, he may mistakenly believe that he understands them, or will understand in 5 minutes “if necessary” - here the “ Dunning-Krueger effect ” will “help” him .
For example, for the new marketing director, IT will be the black box. We will keep this situation in mind further.
Let's see how trying to manage a company partially incomprehensible to him, the new director will lead to its destruction.
To manage you need information about the state of the company. And here a huge problem comes up - how can I make sure that the reporting is correct?
Reporting on the results achieved, the current state, and even more so the forecasts, are worth something only if they were made by a specialist who has confidence. More precisely, if there is confidence in the entire processing chain of information coming from reliable primary sources.
I will give 4 examples
1. About Beeline they write:
2. An example from the state. management:
3. And here is my favorite Satyam / Maytas case, with expensive, very expensiveleeches from PWC auditors:
4. About falsification of reporting in Soviet times, you can search by the keyword "postscript".
The problem of trust in reporting from the category of eternal,
The new director will invite his "trusted people" to his subordinates and advisers.
According to the same principle, the leadership change process is cascaded to the lower levels of power in the Company ...
But you cannot just take and remove the old leaders of the "black boxes" like that. Suddenly they are doing something important, and the time for “their own” to accept current affairs needs to be given.
All managers can be removed immediately unless in the branches, before their closure.
Therefore, the invitation of his friends to leadership positions translates into an increase in the managerial staff of the company, the creation of parallel management structures.
New structures created for soft interception of company management, trying to understand business processes, will load units with additional extended reporting. In essence, it will be stupid reporting - for reporting to be sensible, you need to thoroughly understand the production process. The reaction to stupid work is the annoyance of the additional “work in the trash”, a decrease in confidence in the company’s management, a decrease in the quality of work (since the management still does not understand what the work is).
Plans for a covert replacement of the management team may expand until the restructuring of the entire organizational structure, ostensibly in order to increase efficiency. Type really did not have time to enter, but already found inefficiency.
In this case, there are risks to get even more chaos - up to a misunderstanding of who submits to whom, how new units and new posts are called, and for which a person is responsible "in this position".
The director will need a separate special control over financial flows. Remember unreliable reporting? Therefore, new additional contours of control over financial flows will be created .
All purchases must be coordinated by a committee of trusted people from the new director. So that everyone and everything is bought only from the right suppliers.
And how will new trusted people figure it out, is it necessary to buy something requested for work from the “black boxes” at all, or can they be refused and thereby save?
And let's set up another committee for this to protect the need for procurement, etc. We will meet once a month.
The result is a slowdown in the production process, real financial losses from delays in deliveries ... But no one will take this into account.
The new director will put his people in high positions, at the central office - a salary, bonus, and other status support should be at the highest level, otherwise what will be their influence , who will listen and respect them?
He will also need to find funds for an increased bonus to the board of directors - they control his work, and should feel positive trends in his pocket.
As well as gold parachutes leaving the old team ...
So, something has already come out too much. Gold parachutes should be cut off, and better without scandal, "on their own." Press on their ... conscience.
An increase in the staff of top managers aggravates the payroll, and the new director hardly promised the owners an increase in staff costs, rather the opposite .
Therefore, whatever you may say, in order to maintain the previous amount of financing under the item “personnel costs”, it will inevitably have to make a decision on a small reduction in “working bees”.
How will we reduce - the same percentage for all divisions, or will we figure it out and reduce only the “wrong bees" that bring little honey? You understand that asking an effective manager such a question is simply indecent. So the question is how to distinguish drones from regular bees.
And what are the "black boxes" now transparent?
Nope. They bring calculations, but it’s still not clear how to check them. They stir up water about the different personal productivity of programmers, about training, stretched over 2 years.
They lead to an average level of productivity, and it turns out that they should not be reduced, but should be expanded!
And they will no longer argue, and will fulfill the order ... that is, already their goal of reduction.
If “their people” of the new director come to management positions from small companies, then they may not be ready for the increased flexibility of downstream managers ( see paragraph 2.2 ). Focusing on the usual amount of feedback from subordinates, they easily go too far in their “reforms”.
And the reporting will be “everything is fine”, right up to the very end - because responsibility for the success of the cuts was shifted to the leaders of the black boxes.
Besides, to whom should they now talk about internal problems? Those who previously did not want to listen to their arguments, those who essentially created these problems, but transferred responsibility from themselves to them? And what will it give besides harm?
We fix: The
new director will strive in the first place to reduce what he does not understand, which is “a black box” for him.
He will seek psychological pressure from the leaders of the "black boxes" to agree to reduce their staff.
The leaders of the "black boxes" will have to independently develop plans to reduce their units and take responsibility for all subsequent risks of their implementation.
The reductions will be held under the flag of increasing efficiency, but otherwise, but due to a lack of understanding of the internal laws of functioning of the "black boxes", they will not even be able to formulate criteria for this effectiveness, except for the wretched "minimization of costs".
Cost minimization is not a criterion of effectiveness at all. The criterion should either be a nonlinear function with a minimum at non-zero costs, or supplemented by reasonable restrictions on the allowable range of values of its arguments. Otherwise, the desired value will be found at the point where "cost = 0". And this is the stopping point, the death of the enterprise, which has nothing to do with the optimal mode of its operation.
The goal of minimizing costs without additional justified restrictions is the goal of destruction.
Staff cuts will take place primarily in the branches, because each manager seeks to have his subordinates nearby. He knows them, with themthumps established an emotional connection, they are really helpful to him, they cut sorry.
The main reduction in staff falls on the "black boxes" in the branches
... and it may turn out to be unexpectedly high.
I also propose to consider the truth of a stronger statement:
Almost always, reductions in a large successful company in Russia are associated with the desire of top management to increase their salaries and bonuses.
I ask only to distinguish such reductions from labor market filtering mechanisms, when the same Google or MS is gaining in the thousands, and periodically dismisses by the thousands.
Take into account that there is such a rule for large stable companies - the total payroll (payroll) should not grow faster than total profit. In this payroll, billions for bonuses to members of the Board of Directors and pennies for the salaries of ordinary personnel are summed up. According to my estimates, top management easily eats from 20% to 35% of the total payroll. And in our country, inflation ... and influential guys want to compensate for it ... and they can do it only at the expense of the rest ...
At some point, management will definitely visit the idea of minimizing the number of black boxes by combining them. Ideally, only one should remain, and a trusted person should be at the head of it. Along the way, this association will contribute to reducing the number of staff.
Reasons will be decided - like geographically divided teams work worse
In order to control the available KPIs of the work of a large "black box", the process of regulating the interaction at its inputs and outputs will be launched. They will create a “Single Window” for sending requirements to the “black box”. Naturally, right next to this single window there will be a “single queue”, for which, in order to avoid conflicts, a “single moderator” will be required that determines the order in which requirements are met, etc.
This will be accompanied by ruptures of horizontal (not always regulated) connections between units, bureaucratization, a drop in speed and an increase in the complexity of interaction between units.
In layers and contradictions of the old and new regulations, it will become more difficult to work and easier to strike in Italian, not even for the purpose of protesting "against senility", but with the aim of avoiding the likelihood of being accused of violating one of the possible interpretations written in the regulations (difficult, I understand).
For the development of the black box it is difficult to protect add. financing.
Such a request immediately brings with it a conflict - the director does not feel a dream or spirit to develop something unknown and incomprehensible to him, but then they come to him and ask for money. And he had other plans how to spend them! Given the flexibility of senior managers in the face of their superiors ... yes, most likely no one will go to justify and ask for anything. The subordinates will be told - oh, how I fought for our interests, but the gender, such a bastard, refused.
Those units that the manager does not understand and considers a black box will not receive development.
In the end, black boxes will be considered non-core for the enterprise and will want to be thrown into outsourcing to minimize their internal influence, formalize interactions with them, increase manageability and other "advantages".
By cutting off incomprehensible parts of the company, the head is trying to turn the company into one whose work he is fully able to understand, i.e. which he really is able to control.
Of course, there is a risk that the cut-off parts will be very important, and the company will not survive such a castration.
In large companies, there is always a lag between the consequences of management errors and the financial performance of annual reporting. Especially if there is an interest to hide negative phenomena.
Financial indicators speak more of the past rather than the future of the company.
As one friend said:
Therefore , a pseudo-effective manager will always be able to squeeze temporary increased indicators from a large company - he will cut staff, reduce operating expenses to the detriment of quality, and will not update fixed assets.
The flip side of this “economy” is staff turnover, loss of competencies, progressive internal degradation.
Following the loss of the quality of work, revenue is slightly sagging, which means there is reason to further strengthen measures for the so-called “savings” in order to maintain sacred profitability. This launches a spiral of interdependent reduction in income and expenses - the suicide of the company.
The larger and richer the company, the longer it is able to hide internal degradation, and the longer it can carry a team of pseudo-effective managers on its ridge.
By the time the company clearly shows problems, a team of effective managers can already “fly over” to a new job. They will have a head start - they nevertheless earlier than external observers have the opportunity to feel the approach fiasco .
After a few years, the true state of affairs finally breaks through crafty accountability. Then the persons who admitted to the management of people incapable of him begin to regret.
Jobs told us about his regrets about appointing a “non-core” Scully.
Jack Ma publicly regretted all the “professional leaders” he had attracted from outside.
But often, everyone will try to blame management failures for unfavorable external circumstances, although books are already written about the fact thatCompanies die primarily from internal causes .
Look, everyone about external circumstances speaks as if they do not see these internal reasons in their focus:
1. The results of the survey “What threatens business and how to avoid it.”
2. Megafon spoke about the main threat to its business.
Acquisitions and mergers are a favorite process of top management.
Often, the director understands that acquisitions and mergers threaten the internal environment of the company (this is taught on the MBA).
He knows that sometimes this results in the senseless destruction of the company to be joined, and he does promise to do it.
But there is great temptation, and hidden motives are hard to prove.
Yes, and for Whatsapp they suspiciously paid a lot compared to Viber ... well, the already mentioned Satyam case is an already investigated case.
So they buy companies, and then write off losses.
From the cuts of those who understood the IT system, there are consequences: the lack of service development, the lack of technical support, the delay in eliminating software crashes and bugs. Why be surprised when nobody knows corny where the server is located, or vice versa - the servers stand-buzz, but nobody knows what they are doing. And the monitoring was self-contained, and not all servers covered, and how to integrate it now ...
It looks like this:
1. VKontakte not only does not pay users for the vulnerabilities found, but does not consider them.
2. Why does Vkontakte not correct errors within a month?
Yes, I am aware that they were not leaked, but only outbid. But that’s exactly what exemplary outward signs of adrain look like.
Let's move on to specific examples.
First, I want to note a funny nuance.
Often, what looks like theoretical speculation in this article, in fact, is reality, and individual phrases are generally direct quotes ( I feel we will not work together, drivers should be understandable to management , etc.). But examples with references to specific companies are situations where I judge the state of things from the words of other people, and may be mistaken in my conclusions.
So, Beeline-Vympelcom.
Until 2011, the director was Alexander Vadimovich Izosimov, who in 1991-1995 worked as a consultant at McKinsey, and in 1996-2001 he made a career in financial sales in Mars Inc., rising to the regional president for the CIS, Central Europe and Scandinavia. In short, a universal manager-marketer-financier prepared at McKinsey.
After him in 2011–2013 the director of VimpelCom was Anton Vladimirovich Kudryashov, the financier.
The current director of VimpelCom is Mikhail Slobodin, an economist.
Mikhail is engaged in improvements in Beeline - he changes clothes in a new uniform , as he believes that the uniform will help the appearance of the content. Himself also does not shy away from cosplay- It’s “charging with positive, and useful for Beeline.” Spends subbotniks with the delivery of waste paper and scrap metal, etc.
As a result, “financiers-economists-marketers” optimized the work of the Beeline technical company to such a situation:
Let's translate from PR into Russian:
Beeline management was not able to competently manage its own IT, and this is already quite openly recognized.
I suppose that earlier goals were set to “save” on IT systems and IT professionals, there have been no IT development for several years. Now everything is so bad that it’s easier to start from scratch and give it to external management.
The content of their IT team would be cheaper for Beeline for future outsourcing of billing, let’s say caution, every 5 times. Of course, no one will ever count how many times in reality - there simply will not be such a task from the management, why know such a terrible truth.
Another report will be ordered from the authorities, showing the benefits of outsourcing, and be sure that they will count these benefits. As they say, "swam, we know."
The shareholder and management of Beeline, believe that this is profitable. But this is which side to look at. Outsourcing IT is how to lay your eggs in someone else's basket. Selling towers is like selling your kidney. But if the doctor-consultant said “anyway to the morgue”, then it is certainly beneficial for the shareholders - to sell it still alive.
It may seem to you that this desire to reduce regions and retain staff in expensive Moscow is somewhat contrary to the cost-cutting policy.
But let me, if the director and his team want to live in Moscow, then remembering about saving is no longer comme il faut. “When it comes to family honor, talking about money is inappropriate.”
This is the reason for the dismemberment of the company - the management does not believe in the future, hmm, the industry, and they want to extend profitability for several years by reduction of specialists. Well, along the way, get bonuses from the sale of towers and other liquid pieces. And, who knows, it can even get beneficiaries of outsourcing companies that in the future will keep Beeline for those very eggs and kidneys, and at the same time have a margin higher than Beeline itself.
Now a conditionally good example.
It’s interesting, why wouldn’t this charity “business” begin to hastily recruit IT specialists so much?
I suppose that earlier in 2010-2011, Sberbank's top management was given such signals from a roasted rooster that it was no longer possible to ignore them. As a result, to save the situation, IT management was given carte blanche to recruit the best specialists for any reasonable price. Well, in order to isolate IT from the incompetent influence of the top management of the main company, and at the same time not to confuse other Sber specialists with high salaries in IT, we decided to separate our IT into a separate company.
As a result, Sberbank’s IT got the opportunity to develop:
Yes, its IT in large companies is always more profitable than outsourcing, so that McKinsey Beeline would not whisper there.
By the way, how do you think, starting with how many IT employees it is financially profitable to have your own IT, rather than outsourcing? How about: starting with the size of a typical team - i.e. from 5-7 people, counting separately for each IT profession?
But a friend from Sbertech denies my gloomy suspicions, and Gref’s more complete interview also somewhat softens the impression.
There is reason to hope for the best, but let's not forget what even good ideas turn on the way from Gref to ordinary employees and what happens to those who try to give him feedback .
The new leadership will feel that it does not have authority among old employees who thoroughly understand their area of work (and even more so, several areas).
Once I saw the results of an anonymous independent survey among employees - the statistics there were such that the longer the employee worked in the company, i.e. the more he understood how it worked, the less confidence he had in the actions of the new leadership.
You yourself understand that relying on such survey results, the desire of the new leadership to get rid of these inert clever men who resist their “ingenious” plans to “learn how to teach an MBA” will only increase.
A typical solution to the problem of lack of knowledge in the technical field with the new director and his team is the help of Western consulting companies.
With their help, the director is not afraid of any deception from the "black boxes".
At the same time, these “blacks” will be less likely to bully their nose in front of the new leadership.
A friend of mine told me about Beeline that financing for network development there is carried out according to a certain “Development Model”, which was developed for Beeline by consultants from McKinsey, an international consulting company.
Everything happens supposedly like this:
Guess what this secrecy really hides?
There are no such secret models. If there was a model, then in this case it’s only linear, and for one, at most two budget campaigns, all its coefficients could still be calculated.
Most likely, McKinsey does not carry out calculations at all by its invisible model, which does not exist. Instead, McKinsey consultants take the calculations of Beeline specialists and indicate to Beeline management where to reduce costs, i.e. degrade network quality in the medium term.
Beeline paid for the development of the model, but instead received external control from a foreign company.
Transfer of responsibility for financial and organizational decisions on technical divisions to Western consulting companies leads to an external management situation, without any responsibility for decisions being made.
Yes, this management is not tough, and has great limitations, but if you influence it slowly, then in a few years ... we get the result: Beeline ditched its IT, Beeline sells towers, management does not believe in the prospects of the company and the wireless communications industry as a whole.
Oh yes, the ability to directly blow into the ears of technically illiterate leadership is a big deal.
Google believes in the prospects of wireless communications, Facebook believes , Elon Musk believes, and Beeline has lost faith.
Do you know what Google, Facebook and SpaceX may need to create a good network for billions of subscribers in addition to their satellites, balls and gliders? Ground infrastructure. The one that Beeline and MegaFon are now considering selling. Plus, it would be nice to get a transport data network in the kit.
Hmm, the American consulting company recommends selling towers that American companies will need in a few years ... Is there a coincidence here?
The second version of events - if Google really succeeds in exchanging speeds between drones more than 4G by 40 times , then it may be that the use of ground infrastructure for it will lose its meaning.
In this case, the partial loss of control by the opsos of its infrastructure will still play into Google’s hands - there’s a way to convert it into a deterioration in the quality of services, their cost, and therefore the willingness of subscribers to switch to the Google network (albeit less speed, but flat tariffs or even free , and works more stable).
By the way, the personnel management in Beeline is handled by another “consultant” - the Boston Consulting Group.
Introduces the principles of regulating the number of IT and technical staff, according to which once a year there is an adjustment - to dismiss or recruit specialists. It’s so great when IT or techie positions are cut so that after a year they will be reopened and new employees recruited. They’re just like janitors - they issued a new form, 1 day for training - the site showed, and on the 2nd day there is already 100% return on them, right, right?
McKinsey and BCG present their “developments” for Beeline to MegaFon and MTS as a model, already run-in, successful optimization of the company.
If you say that I am too lied about, that it cannot be that the Beeline is managed by foreign consulting companies, then it turns out that you definitely do not know anything about it .
You do not know that the Russian Central Bank is managed by the United States , that PricewaterhouseCoopers, KPMG, Delloitte, Ernst & Young are involved in advising and auditing in all ministries of the Russian Federation.
You do not know that even the laws of the Russian Federation are developed with the money of these consultants , more precisely - they are both the sponsor and the developers.
In these conditions, on the contrary, it would be strange if Beeline was independent.
I agree with the opinion, headlines like Kill us with our hands are America’s goal , too yellow.
I do not think that pragmatic people will go to such extremes. But our place in the world economy is clearly not advanced, and managing the competitiveness of Russian enterprises is a must for foreign consulting companies.
The goal of foreign consulting companies is to integrate Russian companies into the global economy in the place that Western elite think-tanks have identified. And so that no one jumps above the bar set by them, does not create unnecessary competition for Western companies.
For example, one they can assign a roleagricultural superpower , and the role of a gas superpower to others. Why do non-core enterprises need such superpowers?
At this point, we stop - it was an article about typical mistakes of people who turned out to be “not a hat for Senka,” but about the advice of the consultants we need a separate discussion.
UPD. 2016.03.10 - Fixed errors.
UPD. 2016.10.27 - Put a link to the continuation of the article - Tips of Western consulting companies. Part 1 .
Effectively manage only property that could create itself.Image to attract the attention of readers from generations Y and Z:
He who cannot create will only destroy!
I.A. Dedyukhova, Code of Khamurapi
Summary
The new director will invite his "trusted people" to his subordinates and advisers. An increase in the staff of top managers in the conditions of a fixed payroll will entail a reduction in ordinary employees by a significant percentage.
The new director will first of all cut back on those units whose work he does not understand. Under the pressure of psychological pressure, the leaders of these units will commit themselves to develop plans to reduce and take on all the risks of their implementation.
The reductions will be held under the flag of increasing efficiency, but for “divisions incomprehensible to the director”, they will not be able to formulate criteria for this efficiency, except for “minimizing costs”. The goal of minimizing costs without additional justified restrictions is the goal of destruction, and is not relevant to this optimization.
By cutting off incomprehensible parts of the company (outsourcing, etc.), the director will try to turn the company into one whose work he is fully able to understand, which he is fully capable of managing.
The new director and his team compensate for the lack of knowledge in the technical field with “help” from Western consulting companies. This will lead to a situation of external management, and without any responsibility for decisions dictated from outside.
External and internal reporting on the work of the company until the very end will not show any signs of problems, because the one who brought the bad news is not given a bonus, but is chopped off .
But for those who come to the
world, covered in darkness,
Our story will serve as the key
S. Kalugin, Das Boot .
Table of contents
1. Risks of a change in company management
2. The emergence of a universal pseudo-efficient manager
3. Such unreliable reporting
4. Parallel management structures
5. Additional control over financial flows
6. Black box. Where does the need for staff reductions arise
7. False optimization criterion “Minimizing costs”
8. Abbreviations in branches
9. Path to outsourcing
10. Temporary employees squeeze the company. Reductions in revenue following cost cuts
11. Acquisitions and mergers
12. Beeline
13. Sberteh
14. Western consulting companies. External management
1. Risks of a change in company management
Sooner or later, in the life of a successful large company with a long vertical of power , a change of CEO takes place.
This process gives rise to specific risks that would be well taken into account by all its participants.
Having made a mistake with the choice of a new gene. directors, the owner of the company risks lowering profits; in advanced cases, it may lose the entire company. But, having sold the remnants of the company, most likely he will live comfortably, except without a second yacht and a football club.
The new CEO will receive guaranteed remuneration, the only question is whether he will receive a lot or a lot. Moreover, it is not a fact that his reputation will suffer - maybe he will leave in time. In any case, all of its jambs will be hidden if possible, justified by external factors. In the absence of a scandal, as a rule, everyone is interested, including the owner, who is interested in hiding the deplorable state of affairs of the company in order to sell its remains more expensive.
The most significant risk for the employees of the enterprise - they will fall to the destruction of what they created with their labor, lower incomes, layoffs to reduce staffing and the subsequent search for livelihoods.
2. The emergence of a universal pseudo-effective manager
The choice of the CEO’s candidacy is determined by acquaintance with the owner and the existence of a trusting relationship between them. And the more important these relationships are, the more skeletons in the closet of the company.
If there are no people with the right profession among the proxies, then relatives, sports coaches, country neighbors, classmates and classmates are called up. In general, people tested in the small are trusted to manage the big. But often big is not the same as small: the newspaper is not the same as the factory.
The owner of the company reassures himself by reasoning that his appointee will cope, he is also a good universal manager - one of those who, although he does not know the subject area, has completed MBA coursescan successfully manage with the help of pumped people management skills. All you have to do is follow the “traffic lights” in the reports: which of the subordinates has a red light for the non-performance of indicators, you need to call, demand to eliminate, punish, fire.
Let's look at the truth of this stereotype, using a close analogy from IT.
Suppose that a sysadmin leaves a company with a well-developed IT system — several servers, software, network equipment, and telephony. Who needs to be replaced?
And then the owner of the company decides - I’ll take my marketing buddy - he installed boxed Windows himself, so he has experience. In general, the system is already set up, but you don’t need to support it much - the universal method of “rebooting” is enough, as the old admin always did.
For some time, everything will work by inertia, the new employee will report on the next successfully completed calendar period of work, and will receive his bonus. But if at least one really complex accident occurs, for which a reboot of the equipment will not be enough, will it eliminate it? Will he be able to develop the system?
Not developing means degrading. These are the laws of both IT and the business as a whole.
Of course, you need to hire only someone who can understand the many relationships of system elements, and their internal settings, possible operating modes. We need someone who can build a model of the system in his head, which means, if necessary, and recreate it again. For example, if a virus or attackers destroyed everything.
In our example, someone who positions himself as a humanitarian (marketer, historian, philosopher, journalist) is not suitable for managing an IT system. If he was not interested in IT before, then he is unlikely to delve into a new job as long as everything works by inertia.
As soon as something breaks down, he will move to another place of work - not to waste his life for him to create a system uninteresting to him, which he does not fully understand, and does not want to understand.
Besides this “psychological” argument, I have suspicions that it is in fact only a manifestation (rationalization) of a deeper cause.
Not everyone can be programmers , not everyone can be theoretical physicists, not everyone can fit a large technical system in their heads. Not everyone can fit in the head a system that represents the relationship in the work of the units of a large organization. Not in the sense of who sat behind someone, whose relative, where financial flows, etc. go, but the interconnections of units in the production process. Otherwise, E. Goldratt wouldn’t have to write a series of books “Aim ...”.
But what’s there - not always the director can realize what kind of service his company produces. If Yandex couldn’t understand “what is it worth”, “Kinopoisk” bought by him and decided to turn it into another online cinema ...
Why is it important to fully understand the work of the whole organization? Because otherwise its work cannot be optimized - the already mentioned E. Goldratt in his “Theory of Constraints” proves that independent sequential optimization of individual sections is guaranteed to lead to non-optimal operation of the whole enterprise.
However, even if not optimal, but at least some kind of work was. But our case is harder.
So, for the new director, the work of some units is a “black box”, i.e. he understands only the inputs and outputs, requirements, requests and desired results. About some other units, he may mistakenly believe that he understands them, or will understand in 5 minutes “if necessary” - here the “ Dunning-Krueger effect ” will “help” him .
For example, for the new marketing director, IT will be the black box. We will keep this situation in mind further.
Let's see how trying to manage a company partially incomprehensible to him, the new director will lead to its destruction.
3. Such unreliable reporting
To manage you need information about the state of the company. And here a huge problem comes up - how can I make sure that the reporting is correct?
Reporting on the results achieved, the current state, and even more so the forecasts, are worth something only if they were made by a specialist who has confidence. More precisely, if there is confidence in the entire processing chain of information coming from reliable primary sources.
I will give 4 examples
1. About Beeline they write:
“... all statements by the company about business, operations and prospects cannot be considered correct . ”
And they don’t recognize the billion dollar income! And they take a fine of 750 million dollars!
2. An example from the state. management:
... all experts make forecasts only in accordance with what the authorities want to see. I have been working in AP for six years. During this time, hundreds of analyzes, forecasts and plans went through my hands. I have not seen a single negative forecast during this time. All experts sing in chorus "All is well, beautiful marquise ...".
3. And here is my favorite Satyam / Maytas case, with expensive, very expensive
On January 7, 2009, Raju told the company's board of directors that he had been manipulating reporting for many years. In the end, he admitted that in total he overstated the company's assets in the financial statements by $ 1.47 billion. For several years, the company's revenues were “adjusted” almost every quarter.
PricewaterhouseCoopers audited Satyam reports from June 2000 until the recognition of fraud - that is, about nine years. Interestingly, Satyam paid almost twice the industry average price for PWC audit services. If one of the four largest audit firms for nine years has not noticed this major fraud - and Merrill Lynch discovered it in less than ten days - it is worth asking about the honesty of the audit industry.
4. About falsification of reporting in Soviet times, you can search by the keyword "postscript".
4. Parallel management structures
The problem of trust in reporting from the category of eternal,
... and one of its possible solutions has the same statute of limitations.
«Из всех искусств самое трудное – искусство царствовать... Как часто четырем или пяти советникам бывает выгодно объединиться и обмануть своего государя! Он отгорожен от людей высоким саном, и поэтому правда от него скрыта; он может видеть только их глазами, он слышит только их ложные объяснения. Он ставит на важнейшие должности порочных и слабых, а добродетельных и достойных подданных держит в немилости. Из-за таких позорных уловок самые лучшие, самые мудрые правители оказываются беспомощными перед продажностью и испорченностью придворных».
Неудивительно, что главной своей задачей Диоклетиан считал решение этого тяжелого вопроса, которое, в конечном итоге, и нашел. Верно рассудив, что одного обмануть легко, двоих труднее, а четверых, если они честны и единомышленники, вообще невозможно, он призвал самого верного, храброго и надежного своего друга и разделил с ним власть над Империей, не деля саму Империю, после чего оба они выбрали двух молодых, талантливых, надежных генералов и усыновили их, тем самым передав ему часть фарра и сделав наследниками-соправителями.
Неудивительно, что главной своей задачей Диоклетиан считал решение этого тяжелого вопроса, которое, в конечном итоге, и нашел. Верно рассудив, что одного обмануть легко, двоих труднее, а четверых, если они честны и единомышленники, вообще невозможно, он призвал самого верного, храброго и надежного своего друга и разделил с ним власть над Империей, не деля саму Империю, после чего оба они выбрали двух молодых, талантливых, надежных генералов и усыновили их, тем самым передав ему часть фарра и сделав наследниками-соправителями.
The new director will invite his "trusted people" to his subordinates and advisers.
According to the same principle, the leadership change process is cascaded to the lower levels of power in the Company ...
But you cannot just take and remove the old leaders of the "black boxes" like that. Suddenly they are doing something important, and the time for “their own” to accept current affairs needs to be given.
All managers can be removed immediately unless in the branches, before their closure.
Therefore, the invitation of his friends to leadership positions translates into an increase in the managerial staff of the company, the creation of parallel management structures.
New structures created for soft interception of company management, trying to understand business processes, will load units with additional extended reporting. In essence, it will be stupid reporting - for reporting to be sensible, you need to thoroughly understand the production process. The reaction to stupid work is the annoyance of the additional “work in the trash”, a decrease in confidence in the company’s management, a decrease in the quality of work (since the management still does not understand what the work is).
Plans for a covert replacement of the management team may expand until the restructuring of the entire organizational structure, ostensibly in order to increase efficiency. Type really did not have time to enter, but already found inefficiency.
In this case, there are risks to get even more chaos - up to a misunderstanding of who submits to whom, how new units and new posts are called, and for which a person is responsible "in this position".
5. Additional control over financial flows
The director will need a separate special control over financial flows. Remember unreliable reporting? Therefore, new additional contours of control over financial flows will be created .
All purchases must be coordinated by a committee of trusted people from the new director. So that everyone and everything is bought only from the right suppliers.
And how will new trusted people figure it out, is it necessary to buy something requested for work from the “black boxes” at all, or can they be refused and thereby save?
And let's set up another committee for this to protect the need for procurement, etc. We will meet once a month.
The result is a slowdown in the production process, real financial losses from delays in deliveries ... But no one will take this into account.
6. The black box. Where does the need for staff reductions come from?
The new director will put his people in high positions, at the central office - a salary, bonus, and other status support should be at the highest level, otherwise what will be their influence , who will listen and respect them?
He will also need to find funds for an increased bonus to the board of directors - they control his work, and should feel positive trends in his pocket.
As well as gold parachutes leaving the old team ...
So, something has already come out too much. Gold parachutes should be cut off, and better without scandal, "on their own." Press on their ... conscience.
An increase in the staff of top managers aggravates the payroll, and the new director hardly promised the owners an increase in staff costs, rather the opposite .
Therefore, whatever you may say, in order to maintain the previous amount of financing under the item “personnel costs”, it will inevitably have to make a decision on a small reduction in “working bees”.
How will we reduce - the same percentage for all divisions, or will we figure it out and reduce only the “wrong bees" that bring little honey? You understand that asking an effective manager such a question is simply indecent. So the question is how to distinguish drones from regular bees.
We give the task: each leader must draw up a report on the work of his units, in which he will prove with the help of calculations the amount of resources he needs. It decomposes the work into elementary actions, multiplies it by labor-intensive factors, etc. At the same time, we learn who does what, what processes the company lives in.
So, we look ... In the native and understandable areas everything is normal, well done. Well, in some places they attributed, but in moderation. Here is the reserve for the planned development of the direction, and this is a buffer for training young personnel ... Everything is justified, manageable. OK, accepted.
And what are the "black boxes" now transparent?
Nope. They bring calculations, but it’s still not clear how to check them. They stir up water about the different personal productivity of programmers, about training, stretched over 2 years.
They lead to an average level of productivity, and it turns out that they should not be reduced, but should be expanded!
There is nothing to catch, but obviously they are lying - they are now doing their volume of work with a smaller number.
Insolents. No, I feel that we will not work together.
Why did they write nonsense, you were told that the drivers should be simple, understandable to the leadership.
Listen to me - you still have to cut back. Hard economic times in the country, it is necessary to increase efficiency. We will not reduce sales units, they bring revenue, and your units only consume, you have the same costs in terms.
We are one team. What exactly can you do for the company? Give cost savings? Well, save it. It is especially important now to save staff costs.
Enough of idle chatter, what commitments do you take to reduce your unit? You are a manager, figure out who to cut yourself. Yes, it’s your responsibility - it’s about your area of responsibility. No, this is not ambitious enough. Either you can handle it, or another one will manage in your place, for such a salary there will always be those who wish. Reduce twice as much? What date do you set yourself the goal of completing the cuts? Ok, act.
And they will no longer argue, and will fulfill the order ... that is, already their goal of reduction.
If “their people” of the new director come to management positions from small companies, then they may not be ready for the increased flexibility of downstream managers ( see paragraph 2.2 ). Focusing on the usual amount of feedback from subordinates, they easily go too far in their “reforms”.
And the reporting will be “everything is fine”, right up to the very end - because responsibility for the success of the cuts was shifted to the leaders of the black boxes.
Besides, to whom should they now talk about internal problems? Those who previously did not want to listen to their arguments, those who essentially created these problems, but transferred responsibility from themselves to them? And what will it give besides harm?
We fix: The
new director will strive in the first place to reduce what he does not understand, which is “a black box” for him.
He will seek psychological pressure from the leaders of the "black boxes" to agree to reduce their staff.
The leaders of the "black boxes" will have to independently develop plans to reduce their units and take responsibility for all subsequent risks of their implementation.
7. False optimization criterion “Cost minimization”
The reductions will be held under the flag of increasing efficiency, but otherwise, but due to a lack of understanding of the internal laws of functioning of the "black boxes", they will not even be able to formulate criteria for this effectiveness, except for the wretched "minimization of costs".
Cost minimization is not a criterion of effectiveness at all. The criterion should either be a nonlinear function with a minimum at non-zero costs, or supplemented by reasonable restrictions on the allowable range of values of its arguments. Otherwise, the desired value will be found at the point where "cost = 0". And this is the stopping point, the death of the enterprise, which has nothing to do with the optimal mode of its operation.
The goal of minimizing costs without additional justified restrictions is the goal of destruction.
Oh, it’s effective how the company works if you reduce everyone and leave one director on staff. EBITDA will trample up ... all competitors will be jealous.
8. Abbreviations in branches
Staff cuts will take place primarily in the branches, because each manager seeks to have his subordinates nearby. He knows them, with them
What are they doing in the province? We are hard to see from the Capital, but there is a reasonable suspicion that they have relaxed there. So they can be, they are not sorry, and the screams of those being cut will not reach us - our sleep will be calmer.
The main reduction in staff falls on the "black boxes" in the branches
... and it may turn out to be unexpectedly high.
We will carry out a model calculation ...
Абстрактная компания на 10 тыс. чел. Головное отделение в Москве 2 тыс. плюс 8 тыс. – филиалы в регионах по стране.
Совет директоров из 10 человек.
Черные ящики – 50% общей численности (чем меньше процент, тем им будет хуже).
Берем на работу 10 «своих» доверенных руководителей в головном отделении в Москве. Это всего-то увеличение общей численности на 0,1%. Но нужно по 1 млн. затрат на каждого «своего» в месяц. Меньше никак – топ-менеджмент, Столица (знаю, что в реальности выше).
Специалист в провинции стоит 50 т.р. в месяц (з/п + премия).
Поэтому придется сократить этих провинциалов в соотношении 1:20 – т.е. итого порежем численность на 200 «единиц».
200 из 4000 тыс. – это 5%. Терпимо. Можно просто заморозить вакансии, и естественная убыль сотрудников сделает всё сама.
Ой, забыл про премию Совету Директоров. Годовую премию, хотя бы по двадцатке каждому сверх обычного. Общая 200 млн. – т.е. минус еще 8% – это 330 «штатных единиц». В армии солдат противника не называют людьми, а «живой силой» – чтобы совесть не мешала убивать. Со схожими целями на сленге HR сотрудников называют «штатными единицами» или «ресурсом».
Итого, нужно устроить сокращений на 13% в этих провинциальных черных ящиках.
Ждать, пока 13% сами уйдут – долго, но им можно намекнуть, к примеру, урезать соцпакет.
Это модельный расчет, в жизни оно наверняка смягчится – порежут немного и «белую кость» в Москве; сократят не только численность, а еще премию в филиалах. Постараются не перешагнуть психологический барьер 10% (15%, 20%...).
Для большего сокращения хорошо бы иметь железобетонное обоснование, а у нас как раз случай, когда остаются сомнения. (Знал бы за что – убил бы, а так – с вас пока всего 10%).
Совет директоров из 10 человек.
Черные ящики – 50% общей численности (чем меньше процент, тем им будет хуже).
Берем на работу 10 «своих» доверенных руководителей в головном отделении в Москве. Это всего-то увеличение общей численности на 0,1%. Но нужно по 1 млн. затрат на каждого «своего» в месяц. Меньше никак – топ-менеджмент, Столица (знаю, что в реальности выше).
Специалист в провинции стоит 50 т.р. в месяц (з/п + премия).
Поэтому придется сократить этих провинциалов в соотношении 1:20 – т.е. итого порежем численность на 200 «единиц».
200 из 4000 тыс. – это 5%. Терпимо. Можно просто заморозить вакансии, и естественная убыль сотрудников сделает всё сама.
Ой, забыл про премию Совету Директоров. Годовую премию, хотя бы по двадцатке каждому сверх обычного. Общая 200 млн. – т.е. минус еще 8% – это 330 «штатных единиц». В армии солдат противника не называют людьми, а «живой силой» – чтобы совесть не мешала убивать. Со схожими целями на сленге HR сотрудников называют «штатными единицами» или «ресурсом».
Итого, нужно устроить сокращений на 13% в этих провинциальных черных ящиках.
Ждать, пока 13% сами уйдут – долго, но им можно намекнуть, к примеру, урезать соцпакет.
Это модельный расчет, в жизни оно наверняка смягчится – порежут немного и «белую кость» в Москве; сократят не только численность, а еще премию в филиалах. Постараются не перешагнуть психологический барьер 10% (15%, 20%...).
Для большего сокращения хорошо бы иметь железобетонное обоснование, а у нас как раз случай, когда остаются сомнения. (Знал бы за что – убил бы, а так – с вас пока всего 10%).
I also propose to consider the truth of a stronger statement:
Almost always, reductions in a large successful company in Russia are associated with the desire of top management to increase their salaries and bonuses.
I ask only to distinguish such reductions from labor market filtering mechanisms, when the same Google or MS is gaining in the thousands, and periodically dismisses by the thousands.
Take into account that there is such a rule for large stable companies - the total payroll (payroll) should not grow faster than total profit. In this payroll, billions for bonuses to members of the Board of Directors and pennies for the salaries of ordinary personnel are summed up. According to my estimates, top management easily eats from 20% to 35% of the total payroll. And in our country, inflation ... and influential guys want to compensate for it ... and they can do it only at the expense of the rest ...
9. The path to outsourcing
At some point, management will definitely visit the idea of minimizing the number of black boxes by combining them. Ideally, only one should remain, and a trusted person should be at the head of it. Along the way, this association will contribute to reducing the number of staff.
Reasons will be decided - like geographically divided teams work worse
etc...
А давайте соберем «компетенции» в 1 центре. Нет, лучше в двух – для подстраховки и резервирования, а то вдруг какая катастрофа, или Сбертех всех разом переманит. Нет, компетенции мы при этом не потеряем, всем предложим переехать в другой город с сохранением должностей и зарплат – по нашим прогнозам 90% сотрудников на это согласится.
In order to control the available KPIs of the work of a large "black box", the process of regulating the interaction at its inputs and outputs will be launched. They will create a “Single Window” for sending requirements to the “black box”. Naturally, right next to this single window there will be a “single queue”, for which, in order to avoid conflicts, a “single moderator” will be required that determines the order in which requirements are met, etc.
This will be accompanied by ruptures of horizontal (not always regulated) connections between units, bureaucratization, a drop in speed and an increase in the complexity of interaction between units.
In layers and contradictions of the old and new regulations, it will become more difficult to work and easier to strike in Italian, not even for the purpose of protesting "against senility", but with the aim of avoiding the likelihood of being accused of violating one of the possible interpretations written in the regulations (difficult, I understand).
For the development of the black box it is difficult to protect add. financing.
Such a request immediately brings with it a conflict - the director does not feel a dream or spirit to develop something unknown and incomprehensible to him, but then they come to him and ask for money. And he had other plans how to spend them! Given the flexibility of senior managers in the face of their superiors ... yes, most likely no one will go to justify and ask for anything. The subordinates will be told - oh, how I fought for our interests, but the gender, such a bastard, refused.
Those units that the manager does not understand and considers a black box will not receive development.
In the end, black boxes will be considered non-core for the enterprise and will want to be thrown into outsourcing to minimize their internal influence, formalize interactions with them, increase manageability and other "advantages".
By cutting off incomprehensible parts of the company, the head is trying to turn the company into one whose work he is fully able to understand, i.e. which he really is able to control.
Of course, there is a risk that the cut-off parts will be very important, and the company will not survive such a castration.
10. Temporary workers squeeze the company. Revenue cuts following cost cuts
"Temperance" can be strictly defined as "a government that is gradually destroying / eating away the foundations of government."
In large companies, there is always a lag between the consequences of management errors and the financial performance of annual reporting. Especially if there is an interest to hide negative phenomena.
Financial indicators speak more of the past rather than the future of the company.
As one friend said:
Our company, like a large ship, can sail by inertia and generate income for several more years, even if the whole team is thrown overboard.
Therefore , a pseudo-effective manager will always be able to squeeze temporary increased indicators from a large company - he will cut staff, reduce operating expenses to the detriment of quality, and will not update fixed assets.
The flip side of this “economy” is staff turnover, loss of competencies, progressive internal degradation.
Following the loss of the quality of work, revenue is slightly sagging, which means there is reason to further strengthen measures for the so-called “savings” in order to maintain sacred profitability. This launches a spiral of interdependent reduction in income and expenses - the suicide of the company.
The larger and richer the company, the longer it is able to hide internal degradation, and the longer it can carry a team of pseudo-effective managers on its ridge.
By the time the company clearly shows problems, a team of effective managers can already “fly over” to a new job. They will have a head start - they nevertheless earlier than external observers have the opportunity to feel the approach fiasco .
After a few years, the true state of affairs finally breaks through crafty accountability. Then the persons who admitted to the management of people incapable of him begin to regret.
Jobs told us about his regrets about appointing a “non-core” Scully.
Jack Ma publicly regretted all the “professional leaders” he had attracted from outside.
But often, everyone will try to blame management failures for unfavorable external circumstances, although books are already written about the fact thatCompanies die primarily from internal causes .
Look, everyone about external circumstances speaks as if they do not see these internal reasons in their focus:
1. The results of the survey “What threatens business and how to avoid it.”
2. Megafon spoke about the main threat to its business.
11. Acquisitions and mergers
Acquisitions and mergers are a favorite process of top management.
Often, the director understands that acquisitions and mergers threaten the internal environment of the company (this is taught on the MBA).
He knows that sometimes this results in the senseless destruction of the company to be joined, and he does promise to do it.
But there is great temptation, and hidden motives are hard to prove.
Yes, and for Whatsapp they suspiciously paid a lot compared to Viber ... well, the already mentioned Satyam case is an already investigated case.
So they buy companies, and then write off losses.
So what saving measures do you propose to compensate for losses?
Well, do not reduce marketing units, agree. The products are different, one is positioned in the market this way, the other is commercial ...
Let's combine IT. Announce there that they’ll be cut off, let the IT companies of the main company hand over the matter in a couple of weeks.
From the cuts of those who understood the IT system, there are consequences: the lack of service development, the lack of technical support, the delay in eliminating software crashes and bugs. Why be surprised when nobody knows corny where the server is located, or vice versa - the servers stand-buzz, but nobody knows what they are doing. And the monitoring was self-contained, and not all servers covered, and how to integrate it now ...
It looks like this:
1. VKontakte not only does not pay users for the vulnerabilities found, but does not consider them.
2. Why does Vkontakte not correct errors within a month?
Yes, I am aware that they were not leaked, but only outbid. But that’s exactly what exemplary outward signs of a
By the way, the social network is also a tool for law enforcement agencies.
… которые ранее обеспечили справедливую сделку по смене нелояльного создателя популярной соцсети на нового владельца. И что этот новый владелец? Неужели правда, что начал „экономить“ и привел к падению качества работы инструмента, к появлению в нём уязвимостей? А что если этими уязвимостями воспользуется враг?
Надеюсь, товарищ генерал, новому владельцу уже сделали замечание, чтобы поднял качество работы ИТ-системы соцсети на должный уровень.
Надеюсь, товарищ генерал, новому владельцу уже сделали замечание, чтобы поднял качество работы ИТ-системы соцсети на должный уровень.
12. Beeline
Let's move on to specific examples.
First, I want to note a funny nuance.
Often, what looks like theoretical speculation in this article, in fact, is reality, and individual phrases are generally direct quotes ( I feel we will not work together, drivers should be understandable to management , etc.). But examples with references to specific companies are situations where I judge the state of things from the words of other people, and may be mistaken in my conclusions.
So, Beeline-Vympelcom.
Until 2011, the director was Alexander Vadimovich Izosimov, who in 1991-1995 worked as a consultant at McKinsey, and in 1996-2001 he made a career in financial sales in Mars Inc., rising to the regional president for the CIS, Central Europe and Scandinavia. In short, a universal manager-marketer-financier prepared at McKinsey.
After him in 2011–2013 the director of VimpelCom was Anton Vladimirovich Kudryashov, the financier.
The current director of VimpelCom is Mikhail Slobodin, an economist.
Mikhail is engaged in improvements in Beeline - he changes clothes in a new uniform , as he believes that the uniform will help the appearance of the content. Himself also does not shy away from cosplay- It’s “charging with positive, and useful for Beeline.” Spends subbotniks with the delivery of waste paper and scrap metal, etc.
As a result, “financiers-economists-marketers” optimized the work of the Beeline technical company to such a situation:
Vimpelcom IT systems are outdated, and the staff of relevant specialists is overstated by more than ten times , according to the largest shareholder of the company. In this regard, the company intends to outsource the maintenance of a number of systems, including billing.
Let's translate from PR into Russian:
Beeline management was not able to competently manage its own IT, and this is already quite openly recognized.
I suppose that earlier goals were set to “save” on IT systems and IT professionals, there have been no IT development for several years. Now everything is so bad that it’s easier to start from scratch and give it to external management.
The content of their IT team would be cheaper for Beeline for future outsourcing of billing, let’s say caution, every 5 times. Of course, no one will ever count how many times in reality - there simply will not be such a task from the management, why know such a terrible truth.
Another report will be ordered from the authorities, showing the benefits of outsourcing, and be sure that they will count these benefits. As they say, "swam, we know."
In addition, Reznikovich announced Vimpelcom's plans to sell tower infrastructure used for cellular base stations.
The shareholder and management of Beeline, believe that this is profitable. But this is which side to look at. Outsourcing IT is how to lay your eggs in someone else's basket. Selling towers is like selling your kidney. But if the doctor-consultant said “anyway to the morgue”, then it is certainly beneficial for the shareholders - to sell it still alive.
Vimpelcom will reduce the number of regional departments in the near future
It may seem to you that this desire to reduce regions and retain staff in expensive Moscow is somewhat contrary to the cost-cutting policy.
But let me, if the director and his team want to live in Moscow, then remembering about saving is no longer comme il faut. “When it comes to family honor, talking about money is inappropriate.”
... the company has not yet seen a drop in revenue.
Moreover, according to him, “it is obvious that this industry is at serious risk of a downward movement.”
This is the reason for the dismemberment of the company - the management does not believe in the future, hmm, the industry, and they want to extend profitability for several years by reduction of specialists. Well, along the way, get bonuses from the sale of towers and other liquid pieces. And, who knows, it can even get beneficiaries of outsourcing companies that in the future will keep Beeline for those very eggs and kidneys, and at the same time have a margin higher than Beeline itself.
13. Sberteh
Now a conditionally good example.
The company [Sberteh] was established in November 2011 for the internal needs of Sberbank and is now engaged in brutal and merciless hunting. The hiring formula is the simplest - the current salary of the attracted IT specialist is multiplied by 2.5 times. ... the expense of captured specialists goes to thousands.
It’s interesting, why wouldn’t this charity “business” begin to hastily recruit IT specialists so much?
I suppose that earlier in 2010-2011, Sberbank's top management was given such signals from a roasted rooster that it was no longer possible to ignore them. As a result, to save the situation, IT management was given carte blanche to recruit the best specialists for any reasonable price. Well, in order to isolate IT from the incompetent influence of the top management of the main company, and at the same time not to confuse other Sber specialists with high salaries in IT, we decided to separate our IT into a separate company.
As a result, Sberbank’s IT got the opportunity to develop:
Dec 03, 2012.
We are here in Novosibirsk developing a new core of the banking IT system, which, if it works as we plan, will become the largest IT project in Russia and one of the largest in the world in the banking sector.
... we all went to Milan together to meet with the developers of UniCredit Bank. ... the fact is that we came to learn from them, but in the end they listened to what our guys were saying.
... Sberbank decided to create its own developer company and refuse third-party services
...
- By the way, how much did Sberbank invest in its new brainchild?
- Exactly as much as he previously invested in IT development. Just instead of a number of contractors, there is now one Sberteh. It’s just a redistribution of the IT budget, no more, no less.
Yes, its IT in large companies is always more profitable than outsourcing, so that McKinsey Beeline would not whisper there.
By the way, how do you think, starting with how many IT employees it is financially profitable to have your own IT, rather than outsourcing? How about: starting with the size of a typical team - i.e. from 5-7 people, counting separately for each IT profession?
Alas, I see a risk that Sbertech’s good life will end soon.
Греф признал устаревшей новую IT-систему Сбербанка за миллиарды рублей
Обратите внимание на нюансы:
Эта критика Сбертеха показалась мне подозрительной. Выглядит как „нашел до чего докопаться“. Не нашел конкурентов среди банков, так пошел сравнивать с Амазоном и Гуглом. При этом не разбирая что они называют изменением, не разбирая какие финансовые риски по изменениям у Сбербанка и какие у Гугла, и какая разница в штате программистов и т.д.
Выглядит как попытка найти причину для последующей т.н. „оптимизации“ Сбертеха (читай — банального сокращения штата и зарплат).
Ну а что, страна у нас по словам Грефа — дауншифтер, так что у всех рядовых граждан жизнь должна пойти „в даун“.
И если экономическая ситуация позволяет нанимать специалистов ИТ дешевле (Билайн и подобные своих ИТ выгонит на биржу и уронит зарплаты), то псевдоэффективный менеджер обязан это делать — уволить своих дорогих сотрудников и нанять со стороны дешевых.
Обратите внимание на нюансы:
«В прошлом году мы сделали 40 тыс. изменений нашей системы. Если посмотреть на другие банки, мы в шоколаде. Но, если смотреть на Amazon, Google, мы ужасно отстаем. Amazon делает 10 тыс. изменений своей системы в день. И ключевая задача, которая стоит перед Сбербанком в этом году, — это увеличивать скорость. Мы опаздываем», — объяснил Греф.
Эта критика Сбертеха показалась мне подозрительной. Выглядит как „нашел до чего докопаться“. Не нашел конкурентов среди банков, так пошел сравнивать с Амазоном и Гуглом. При этом не разбирая что они называют изменением, не разбирая какие финансовые риски по изменениям у Сбербанка и какие у Гугла, и какая разница в штате программистов и т.д.
Выглядит как попытка найти причину для последующей т.н. „оптимизации“ Сбертеха (читай — банального сокращения штата и зарплат).
Ну а что, страна у нас по словам Грефа — дауншифтер, так что у всех рядовых граждан жизнь должна пойти „в даун“.
И если экономическая ситуация позволяет нанимать специалистов ИТ дешевле (Билайн и подобные своих ИТ выгонит на биржу и уронит зарплаты), то псевдоэффективный менеджер обязан это делать — уволить своих дорогих сотрудников и нанять со стороны дешевых.
But a friend from Sbertech denies my gloomy suspicions, and Gref’s more complete interview also somewhat softens the impression.
There is reason to hope for the best, but let's not forget what even good ideas turn on the way from Gref to ordinary employees and what happens to those who try to give him feedback .
14. Western consulting companies
The new leadership will feel that it does not have authority among old employees who thoroughly understand their area of work (and even more so, several areas).
Once I saw the results of an anonymous independent survey among employees - the statistics there were such that the longer the employee worked in the company, i.e. the more he understood how it worked, the less confidence he had in the actions of the new leadership.
You yourself understand that relying on such survey results, the desire of the new leadership to get rid of these inert clever men who resist their “ingenious” plans to “learn how to teach an MBA” will only increase.
A typical solution to the problem of lack of knowledge in the technical field with the new director and his team is the help of Western consulting companies.
With their help, the director is not afraid of any deception from the "black boxes".
At the same time, these “blacks” will be less likely to bully their nose in front of the new leadership.
A friend of mine told me about Beeline that financing for network development there is carried out according to a certain “Development Model”, which was developed for Beeline by consultants from McKinsey, an international consulting company.
Everything happens supposedly like this:
Detailed plans for the development of the company and the layout of the necessary expenses for the next year, calculated by Beeline technical specialists for each region, are given to McKinsey consultants “for verification”. And they answer, all this corresponds to their “Development Models", or it is necessary to reduce the planned expenses somewhere, because requested too much.
They even keep their McKinsey model a secret from Beeline’s leadership, they call the reason ridiculous - so that Beeline’s techs couldn’t, having studied the model, find a way to “trick her”, and therefore the company's management. Yes, yes, they’ll deceive and buy extra equipment, and communication will become better than necessary, and EBITDA - lower than possible.
Guess what this secrecy really hides?
There are no such secret models. If there was a model, then in this case it’s only linear, and for one, at most two budget campaigns, all its coefficients could still be calculated.
Most likely, McKinsey does not carry out calculations at all by its invisible model, which does not exist. Instead, McKinsey consultants take the calculations of Beeline specialists and indicate to Beeline management where to reduce costs, i.e. degrade network quality in the medium term.
Beeline paid for the development of the model, but instead received external control from a foreign company.
Transfer of responsibility for financial and organizational decisions on technical divisions to Western consulting companies leads to an external management situation, without any responsibility for decisions being made.
Yes, this management is not tough, and has great limitations, but if you influence it slowly, then in a few years ... we get the result: Beeline ditched its IT, Beeline sells towers, management does not believe in the prospects of the company and the wireless communications industry as a whole.
Oh yes, the ability to directly blow into the ears of technically illiterate leadership is a big deal.
Google believes in the prospects of wireless communications, Facebook believes , Elon Musk believes, and Beeline has lost faith.
Do you know what Google, Facebook and SpaceX may need to create a good network for billions of subscribers in addition to their satellites, balls and gliders? Ground infrastructure. The one that Beeline and MegaFon are now considering selling. Plus, it would be nice to get a transport data network in the kit.
Hmm, the American consulting company recommends selling towers that American companies will need in a few years ... Is there a coincidence here?
The second version of events - if Google really succeeds in exchanging speeds between drones more than 4G by 40 times , then it may be that the use of ground infrastructure for it will lose its meaning.
In this case, the partial loss of control by the opsos of its infrastructure will still play into Google’s hands - there’s a way to convert it into a deterioration in the quality of services, their cost, and therefore the willingness of subscribers to switch to the Google network (albeit less speed, but flat tariffs or even free , and works more stable).
By the way, the personnel management in Beeline is handled by another “consultant” - the Boston Consulting Group.
Introduces the principles of regulating the number of IT and technical staff, according to which once a year there is an adjustment - to dismiss or recruit specialists. It’s so great when IT or techie positions are cut so that after a year they will be reopened and new employees recruited. They’re just like janitors - they issued a new form, 1 day for training - the site showed, and on the 2nd day there is already 100% return on them, right, right?
McKinsey and BCG present their “developments” for Beeline to MegaFon and MTS as a model, already run-in, successful optimization of the company.
If you say that I am too lied about, that it cannot be that the Beeline is managed by foreign consulting companies, then it turns out that you definitely do not know anything about it .
You do not know that the Russian Central Bank is managed by the United States , that PricewaterhouseCoopers, KPMG, Delloitte, Ernst & Young are involved in advising and auditing in all ministries of the Russian Federation.
You do not know that even the laws of the Russian Federation are developed with the money of these consultants , more precisely - they are both the sponsor and the developers.
In these conditions, on the contrary, it would be strange if Beeline was independent.
I agree with the opinion, headlines like Kill us with our hands are America’s goal , too yellow.
I do not think that pragmatic people will go to such extremes. But our place in the world economy is clearly not advanced, and managing the competitiveness of Russian enterprises is a must for foreign consulting companies.
The goal of foreign consulting companies is to integrate Russian companies into the global economy in the place that Western elite think-tanks have identified. And so that no one jumps above the bar set by them, does not create unnecessary competition for Western companies.
For example, one they can assign a roleagricultural superpower , and the role of a gas superpower to others. Why do non-core enterprises need such superpowers?
At this point, we stop - it was an article about typical mistakes of people who turned out to be “not a hat for Senka,” but about the advice of the consultants we need a separate discussion.
Further in the program:
- The advice of Western consulting companies. Part 1.
- What should the new director do to correct the consequences of the board of the previous pseudo-efficient manager and his team.
UPD. 2016.03.10 - Fixed errors.
UPD. 2016.10.27 - Put a link to the continuation of the article - Tips of Western consulting companies. Part 1 .