Vcw Cm Spezial Rz

CONTROLLER®

Siegfried Gänßlen, Chairman of the ICV: Internationalization success continues

spez

ialSeptember 2009 | Ausgabe 6 | 01450-5900 | www.controllermagazin.de

CONTROLLER®

Stefan Kaiser: Controller statements worldwide – an analysis of national controller institutes

Poland: Controlling in hard times – taglines of practicians

Controlling InternationalControllers meet growing challenges

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Dear reader,

what we experience nowadays is a growing controller community ... world wide. Due to our cultural backgrounds, habits and experiences are different. Controlling is done in a slightly or even totally different way. Some ways will be more, others less successful.

We controllers have a common target though: Increase our companys’ success (short and long term), by providing service to the management!

Manager Controller

So I see that valuable opportunity, sharing some of these experiences ... on how to achieve the goals best.

Variety is the spice of life

Different strategies will help in different situa-tions. I believe, that one is not more successful because he has the best strategy, but because he or she can select from different strategic options, behaviour patterns, etc. That way perfectly responding to the situation one is fa-cing.

Sharing these experiences means learning from each other. The good thing about infor-mation is, that it grows when you share it.

Cont

rolli

ng

I am glad to support the International Controller Association (ICV) by publishing this Controller Magazin Spezial and say thanks to all the con-trollers, editors, designers helping to get it produced.

Wish you success in controlling

Editor of Controller MagazinCEO – Verlag für ControllingWissen AGTrainer & Partner – Controller Akademie AG

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Edito

rial

Content

2 Siegfried Gänßlen Chairman of the ICV board 3 Know-how Controller statements worldwide

6 Know-how Deyhle’s controlling goes international

8 Romania Controlling – the solution to overcoming

the economic crisis in Romania

10 Lithuania Conceptions and instruments

12 Poland Controlling in hard times – taglines

of practicians

14 Czech RepublicControlling careers in the Czech Republic

16 Russia The theory and practice of controlling

in conditions of crisis

18 Hungary“Navigating heavy seas in the Carpathian Basin”

20 SloveniaIt‘s time to meet the challenges

of controlling!22 Bulgaria

“Need and desire to learn is enormous”24 Estonia

Controlling in a downturn – the case of Estonia

1

CONTROLLER2 Spezial | Controlling International

ICV has made further progress over the past months; growth and consolidation are the order of the day, internationalization has been embedded in the association’s business plan for the coming years. With the foundation of the first working group in Slovenia in March 2008, ICV is now ac-tive in twelve countries. Poland is now abreast of Germany, Austria and Switzerland with eleven re-gional working groups and the annual “Control-ling Intelligence Advantage” conference. A key element of internationalization is exchan-ging products and experiences both within the va-rious countries and across borders. ICV supports the development of local controlling expertise with a range of activities. This benefits both corporate global players with their expansion in Europe and regional and local companies. The association’s declared aim is also to increase the individual be-nefits for personal members by allowing them to expand their knowledge, network and problem-solver skills with ICV. Creating a common language base is the prerequi-site for improving the integration of non-German speaking members in the organization. This is why ICV translates its main publications for controllers outside German-speaking regions into English or, from case to case, in the respective national langu-age. International ICV conferences in Lithuania, Estonia, Poland and Russia have already been conducted on a multilingual basis. The ICV website is multilingual. Association managers play an important role in all ICV countries. Our organization should therefore continuously improve its support especially to these

working group leaders and their management teams. I should like to take this opportunity to thank you all very much for your magnificent, voluntary commitment. Besides further personal memberships, ICV is also seeking cooperation and corporate memberships in the “new countries” where entire teams, especial-ly from the controlling or financial sectors will bene-fit from the expertise transfer in the association. Another development field is establishing contacts to academics and university teachers. With their help, the ICV concept of sustainable controlling is to be discussed, developed and disseminated: The ICV seeks their expertise for the academic under-pinning of its philosophy. And, as in the German-speaking countries, the association offers acade-mics and teaching staff a further benefit: access to business practice and project support.

This second issue of the “Controlling International” supplement reflects the successful internationaliza-tion of the ICV in recent months. The reports from the nine Central and Eastern European countries focus on the growing challenges confronting con-trollers as a result of the financial crisis. In doing so, the important contribution by controllers to-wards shaping a successful future is emphatically underscored.

Siegfried GänßlenChairman of the ICV boardCEO Hansgrohe AG

ICV Internationalization

success continuesWell-known and respected in German-speaking countries, controlling has been decisively shaped by Dr. Dr. h. c. Albrecht Deyhle and the International Controller Association (ICV). The key aim of ICV’s internationalization strategy is to root this controlling philosophy in neighboring countries.

Siegfried Gänßlen Chairman of the International Controller Association (ICV)

Controller statementsworldwide Kn

ow-h

ow

In the course of globalization, the number of multi-national corporations has increased constantly over recent decades. Whereas in 1980 only 17,000 multinational corporations existed world-wide, this number had risen to 70,000 multinatio-nal firms in 2004. These corporations are rarely managed only via the corporate headquarters in their home country. Instead often the management team of a subsidiary is in charge of the respective country itself. However, national headquarters of-ten manage their responsibilities based on a diffe-rent philosophy than the corporate headquarters and the management teams in other countries do. To disregard these national singularities in the ma-nagement system can therefore cause risky misin-terpretations and false estimations.

Comparative Management Accounting as a starting point

Since the mid-nineties the comparative manage-ment accounting research deals with controlling on an international level. Relevant research has been conducted for example by Stoffel, Bhimani or Hoff-jan. Traditional research methods include the ana-lysis of research trends, the execution of empirical

investigations and the

analysis of textbooks. Contrary to this traditional course of action, the basis of our study is an analy-sis of controller statements of different national controller institutes. A “controller institute” is a pro-fessional association which has members from corporations, public administrations and non-profit organizations. The main goal of a controller insti-tute is to connect and to support its members. “Controller statements” are comprehensive guide-lines on how to understand the role of the control-ler. These statements are issued by the national controller institute. In our study more than 20 con-troller institutes from all over the world were analy-zed. The gathered insights were derived mostly from the websites of the particular organizations. This fact guarantees that the identified controller statements are adequately spread in the corre-sponding country. However, it does not ensure that these published statements are really transferred into the organizations.

Two basic models

Figure 1: Two basic modelsThe analysis of the controller institutes revealed that nearly all of the institutes can be grouped un-der one of the following two basic models (see fig.

1). The “German” model is mostly driven by the members of the “Inter-national Group of Controlling (IGC)” and here especially by the “Internationaler Controller Verein (ICV)”. According to this model the controller performs strategic decisi-on support for the management. Here, a clear separation between controlling as a process and control-ling as a function is being made. Within the “Anglo-American” mo-del, especially at the “Institute of

2 models

1

„German model“ „Anglo-American model“

Controllers

tasks

Relation

between

controller

and

manager

in particular strategic decision

support for the management

mainly operational

responsibilites including

accounting and tax

controller does controllership

and thereby supports manager

in performing controlling tasks

missing dichotomy between

controlling and controllership

isolation of controlling /

management accounting from

the management

convergence

Figure 1

3

Controller statementsworldwide


Management Accountants (IMA)” and the “Char-tered Institute of Management Accountants (CI-MA)”, the controller had in the past mostly operati-onal responsibilities, including duties in financial reporting and taxes. Because of this high number of operational responsibilities, the Anglo-Ameri-can management accountant is to be seen in the organizational hierarchy further away from the top management than in the “German” model. How-ever, in recent years a convergence of these ap-proaches is evident. The German model of a con-troller is increasingly presented as best-practice in American journals. Just recently, the controller statement of the American IMA was redesigned and now presents the American controller as the business partner of the management, converting clearly to the “German” model.

Clusters of different national controller institutes

To classify all of the reviewed controller institutes we created the matrix shown in figure 2. On the ordinate you can see the market power of the re-spective controller institute in its country. High market power means that controllers need to be a member of the relevant controller institute in order to be a respected member of their profession. The strategic focus of the controller institutes is dis- played on the abscissa. You can see the already-explained clusters around the German ICV and the Anglo-American institutes. In addition, as regards content, France and Spain are evidently rather

close to the “German” approach. However, as in the past decades the controller statements in these two countries were strongly influenced by the gov-ernment, the market power of the dominant ap-proach is significantly higher than in Germany.

Figure 2: Overview of controller statements in different nationsIn addition to the regular x- and y-axes, our figure shows another abscissa and ordinate. These addi-tional axes are only relevant for the well-devel-oped controller approaches. With the help of the second abscissa, the strategic focus of the control-ler can be related to the uncertainty avoidance in-dex. This criterion can be traced back to the re-search done by Hofstede concerning the cultural dimensions of societies. According to his results, Germans usually tend to have a detailed plan of the future, whereas Americans or British can more easily cope with uncertainties. This circumstance could explain why the strategic focus in the “Ger-man” approach is stronger than in the “Anglo-American” approach. The second ordinate inter-estingly shows that in countries where there is a strong sense of community, the market power of the controller institute is significantly higher than in other cases.

This study was conducted at the International Per-formance Research Institute (IPRI) and financially supported by the Péter Horváth Foundation and the International Group of Controlling IGC. The entire document can be requested at www.ipri-institute.com. A PDF version is available free of charge.

Stefan Kaiser is a research associate at the Internatio-nal Performance Research Institute (IPRI). His explatory focus lies in the field of in-ternational controlling stand-ards, evaluation of RFID in-vestments and cost-benefit-sharing models.

different nations

2

Low market power

Strategic focus, management

accounting

Operational focus,

accounting

High market

power

*Dimension of the flag

indicates stage of

development of the

respective institute

Strong sense of

community

Weak sense of

community

High Uncertainty AvoidanceLow Uncertainty Avoidance

Figure 2

Literature:

Amat, O.; Blake, J.; Wraith, P. (2000): Environmental Factors giving rise to variations in national management accounting practice, working paper # 432.

Bhimani, A. (1996): Management Accounting: European perspectives, Oxford 1996.

Brewer, P. (2008): Redefining Management Accounting, in: Strategic Finance 03/2008, S.27-34.

Hoffjan, A. (2008): Comparative Management Accounting – Vergleich des anglo-amerikanischen Ma-nagement Accounting und des deutschen Controllings, in: Controlling, 20.Jg. 12/2008, S.655-661.

Hofstede, G. (2006): Lokales Denken, globales Handeln. Interkulturelle Zusammenarbeit und globa-les Management, 3. Aufl. München 2006.

Stoffel, K. (1995): Control-lership im internationalen Vergleich, Wiesbaden 1995.

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Deyhle’s c ontrolling goes inter nationalLast June we had 23 participants from 14 different countries in our Stage II seminar. They came from Mexico and Western Europe, from the most recent EU member states, from Lithuania to Rumania, from Russia – there were two from Shanghai. They all got to know each other. They had come here, to Lake Starnberg, to discover the common standard of controlling – unity in variety. And they all agreed that here we practise “state of the art” controlling, followers of the controlling pioneer, Dr. Dr. h.c. Albrecht Deyhle. The international network, lea-ding to exchanges with expert colleagues, plays a big part, along with the technical components. Our Eastern European colleagues in particular use us as a first approach to controlling as practised in Central Europe, as an alternative and supplement to Anglo-American Accounting. A participant from IKEA Poland told us they had christened her de-partment “Business Navigation”, in order to avoid future confusion arising from the word control.

Know

-how

Dipl.-Ing. Dietmar Pascher Controller Akademie AG www.controllerakademie.de/international

Controllers Song written by the last Stage II participants and performed with the music of The Killers: Are we humans, are we dancers?

It’s twenty years ago since Dr. Dr. h.c. Albrecht Deyhle, the founder of the Controller Akademie AG, and of our ICV, and his first partner, Dr Alfred Blazek, started wondering how the European Uni-on might affect the work of controllers and conse-quently of the Controller Academy. They soon rea-lised that it would lead to further international ra-mifications, first within Europe, but later further afield.

So there were two new challenges facing Financial Controllers. Firstly, the controlling philosophy would be bound to spread abroad as German, Swiss and Austrian enterprises entered the interna-tional sphere and established a harmonised atti-tude to controlling throughout the concerns they were associated with. Secondly, the controllers in the parent company would need to bring their command of the English language up to scratch.

This immediately led to the decision to offer the Controller Akademie‘s successful diploma course in English. So in March 1992 the first Stage I semi-nar was held in English, in the presence of our En-glish Language coach, David Gill. Even German-speaking controllers attended it, who wanted to polish up their English and acquire the necessary technical terms, so as to be able to communicate better with their clients.

Now the entire Diploma Programme (5 levels) is presented in English by Dr. Klaus Eiselmayer and Dietmar Pascher.In the course of many years an international com-munity has developed, which we like to call the “English Family”. The many different nationalities involved have led to an incredible enrichment of the work.

Deyhle’s c ontrolling goes inter national

7

Controller Song

What was your personal or your company‘s ben-efit of attending our Diploma Program (in the English language)?

Jan Šulc:Manager Financial Controlling, Continental, Chassis & Safety Division, Plant Jičín, Hradecká 1092, 506 01 Jičín

Experience exchange and discussions about sys-tems, processes and behaviour or habits in other companies whose members attended CA is the first what I call to mind. This in combination with very good training sessions of CA enriched and enlarged my personnel “data bank” of possible ways, tools how to control a business, company (or family) and as well various ways of behaviour which could by applied in business but as well in private life.

Attending CA uncovered also some my weak-nesses but as well strengths and it helped me later in my work.

The way of execution of training applied by CA trainees and method of presentation is “saved” in my memory. This experience help me in a prepa-ration and carrying out of training or presentation within own company or outside the company. Adrian Lacatus: Finance Manager, Heidi Chocolates Suisse SA, Bucharest, Romania

I have finished in 2 1/2 years one of the best controlling programs in English language. I’ve especially liked the detailed preparation of every aspect of the program.

Personal benefits:•I’ve learned fast relevant theory backed by

genuine business experiences;•Had the chance to mingle with people from

different countries, companies, with different profiles;

Company benefits:•Have a proper trained controller able to

challenge change within the organisation;•Bring in fresh ideas from other companies’

experiences;

So, piece by piece, the ICV’s approach to control-ling is carried out into the wide world by every in-dividual participant, who works as an “Ambassa-dor for Controlling” in his or her enterprise. And we note that these controllers simultaneously move up the international career ladder step by step. And it is precisely in this climb that we wish you

Happy Controlling!

23 participants from 14 countries attended the Stage II seminar last June.

CONTROLLER Spezial | Controlling International8

will be those who know how to make use of these chances. The advantage will be on the side of the companies which have implemented a controlling system, because this can present the management not only with risks, but also opportunities.

Unfortunately, Romanian companies have not im-plemented a controlling system so far and conse-quently they are now being confronted with pro-blems which the Romanian subsidiaries of internati-onal corporations do not have. The Romanian enterprises lack internal transparency and a clear image of their costs. The situation in the Romanian subsidiaries with a controller or an entire controlling department is very different.

So we are dealing with two situations. On the one side there are the Romanian businesses which have not noticed the necessity of controlling yet, which are not so eager to implement a cost discipline and whose staff are not yet ready for such a rigorous system as controlling. On the other side there are the corporation subsidiaries familiar with control-ling. So we can only talk about controlling in Roma-nia in the context of subsidiaries, most of which are in Bucharest and in the west of the country. We consider that it is precisely in these times of crisis that it is imperative for the Romanian enterprises to turn to controlling.

Controlling – the solution to overcoming the economic crisis in Romania

Rom

ania

Most of them are confronted with a dramatic fall in demand and sales, a situation which leads to finan-cial and economic constraints. The enterprises which have been granted loans for development or other purposes are now unable to pay them back, not to mention the difficulty of paying their debts to the distributors. The Romanian companies are presently lacking the necessary resources for paying off their debts; fa-cing the pressure of the creditors, they increase the pressure on their own debtors so that they can cash their receivables – and thus we are experiencing a chain reaction which mostly affects the banks and the car, telecommunication and industrial-goods in-dustries. A lot of companies are close to bankrupt-cy, so that a great number of Romanians will lose their jobs. Against this background the question arises: What is the solution to overcoming the crisis?

The importance of controlling in times of crisis

Is controlling really the solution to overcoming the crisis? We think it is, because in times of crisis the companies are more open to new solutions than ever and thus more open to controlling. The crisis also offers opportunities; the winners of the crisis

Associate Professor Valentina OARG PhD

Controlling & Human Resour-ces Management, West Uni-versity of Timișoara, Faculty of Economics and Business Administration, Department of Management

The worldwide economic crisis is nowhere near the end – it is getting worse and Romanian companies are suffering from it.

Both the operative and the strategic controlling need to be implemented in order to prove that they repre-sent the tool oriented towards solving situations of crisis, ensur-

ing the sustainability of a compa-ny and looking towards the future. The role of the controller has

gained in importance against the background of the economic crisis,

as everybody is paying great atten-tion to cost reduction. If in times of

economic growth the permanent increase in reve-nues, which has been especially high in Romania, led to a general euphoria resulting from a growth in profits and nobody thought about optimizing costs, now the cost control has become a matter of survival.

It is precisely now, in the present context of decreas-ing revenues, high financing costs, the need to re-duce costs, an unpredictable business environment calling for more forecasts, scenarios and budgets, that the great role of the controller can be easily understood.The number of reports and their frequency is grow-ing. The managers are much more interested in analyzing them than they were before. It is now more than ever that the focus is lying on keeping a tight hand over costs and on cutting costs where possible. But in order to take the decision of cutting costs, first of all one needs strict evidence of them. So in short: The future of the company will be decid-ed on the basis of the reports generated by control-lers.By means of its instruments and methods, control-ling is a system able to offer solutions to prevent or combat the effects of the crisis. The following aspects give evidence in this respect:•Controlling offers ideas for improving the activi-

ties of the company, which can be implemented immediately, as well as organizational solutions for the medium and the long run in order to ena-ble the company overcome times of crisis

•Controllers are aware of the weak points which need special attention

•Controlling offers better documentation and substantiation of decisions and a correct estimation of risks

•Controlling supports the elimination of losses and the increase in performance.

Controlling – the solution to overcoming the economic crisis in Romania



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Controlling in Lithuania: Conceptions and instruments

Most of the participants understood what strategy, balanced scorecard, and budgeting were. They did it in their everyday life but they did not call it in such a way. Aiming to spread the idea of control-ling in Lithuania, the pioneers of the controlling group were faced with the problem of finding out how people understood it. Pilot research which led to the disclosure of the essence of controlling from the perspective of conception, functions, signifi-cance in different management levels and tools was performed. Respondents were divided into two groups: Those who preferred themselves as controllers and those who did not. Results were compared from the perspectives of conceptions, functions, significance in different management le-vels, and tools of management accounting and controlling.

Analysis of the conceptions allowed us to ascertain that management accounting is interpreted as an informational methodical, analytical system. At the same time, controlling is a less determined object, the main function of which is coordination. The opinions of “controllers” and “non-controllers” were different. “Non-controllers” know more about management accounting and, accordingly, attri-butes of more clearly-defined management areas. Controllers argue that the role of management ac-counting is more informational.

Controllers have a clearly-defined understanding of what controlling and management accounting are. Non-controllers are not so assertive. Functions of management accounting and controlling analy-

sis show that in most cases controlling is associ-ated with control and management accounting, planning, and measurement. Analysis of signifi-cance in different management levels disclosed the difference of opinions. Non-controllers handle management accounting as significant in the stra-tegic management level, and controllers in the operational level. Analysis of tools leads to the conclusion that instruments for management ac-counting and controlling are the same. Summariz-ing those results, it could be maintained that con-trolling is a process the methodological basis of which are management accounting tools.

Recent fashions of management accounting are activity-based costing and balanced scorecard. Looking from the perspective of the 1990s, they are not so new. But anyway, the world hasn’t got anything more fashionable in the field of manage-ment accounting. The Lithuanian experience, while implementing those modern techniques, is not so different from other companies in the world. Peculi-arities of this experience could be pointed out from the perspectives of implementation level, disclosure of the main conceptual idea and functionality.

Modern management conceptions influence value creation for shareholders, employees and custo-mers when generated information supports ma-nagement decisions. On the other hand, the imple-mentation of a modern management accounting conception does not ensure its substantiation and application. The information is suitable for decision-making when conceptual principles of the sys-

Lithu

ania

Dr. Edita Gimžauskien, Kaunas University of Technol-ogy, Deputy Leader of ICV working group Lithuania

Two years ago when controlling workshops in Lithuania were just starting, the first question to arise was what controlling meant. Is it about control or about performance measurement, or about management?

“Lithuanian organizations use the terms management accounting and controlling in parallel. Modern manage-ment accounting tools are a precondition for effective controlling but it depends on how the essence of those tools are understood and realized in particular orga-nization and how they are integrated into decision- making processes.”

11

tem really work in an organization. The declarati-on that an organization had fully or partly imple-mented the conception does not mean that it is true. The question is whether adopters and users of the system understand the main idea and princi-ples of the system, and whether they have succee-ded with the realization of it in practice. The pro-blem is to find out in which cases the declaration about systems implementation remains a declarati-on, and which factors show that the systems (AB-CM or BSC) really work.

The survey covered a total sample of over 200 or-ganizations in Lithuania. Ninety completed questi-onnaires were suitable for future analysis. Most of the respondents were small or medium-sized orga-nizations. 48% of the respondents that took part in the research have been active in the market for ten or more years, and 39% from five to ten years. This parameter shows that the practice of management accounting and performance measurement is stea-dy enough. Furthermore, more than half of the re-spondents indicated that their turnover in the last year had grown by 50% or more. Fast growth re-flects changes in the structures and processes of an organization.

The first variable measured was the implementation level of ABC and BSC. About 38% of the re-spondents were adopters of ABC. The rest (62%) either knew about ABCM, but have not attempted to implement it, or did not know about it at all. The BSC conception has been implemented in only 13 companies (14.4%).

The main conceptual idea of ABC is the measure-ment of costs and performance in each part of an organization’s value chain. It can be presumed that if an organization measures the costs and performance in its prime activities but does not in its supporting activities, it means that the idea of ABC was not properly understood and implemen-ted. That is the case where the implementation le-vel of ABC is merely declarative.

The implementation of a theoretically descriptive method of management accounting in practice does not automatically imply its incorporation into decision-making processes. There are cases when organizations which have implemented such tech-niques do not manage fully all their capacities. In such situations the management accounting sys-tems become ends in themselves, not means to an end. On the other hand, the question is whether this information is accurate, relevant and suitable for decision-making in different management areas. According to the results it can be maintained that information generated with the help of manage-ment accounting concepts (ABCM or BSC) in Lithu-anian organizations assists traditional manage-ment areas: Problems identification solution (43%) and communication with shareholders (42%). It is logical that respondents don’t see management accounting as a means for communication with government institutions and controllers (4%) (they have financial accounting for this purpose). This information does not serve as a background for incentive and motivation systems and communica-tion between managers and employees (about 24%). The situation of strategic planning is better, because about 35% of respondents accept the role of management accounting and performance measurement process for strategy creation, harmo-nization with mission, vision, values and adjust-ment to short- and long-term tasks.

Figure 1

Members of the ICV working group Lithuania, 2009.

“In this chart you can see that adopters of ACB more frequently measure perform-ance in a wider range of activities than non-adopters. In some cases the implemen-tation level was declared but not really working. On the other hand, the results suggest that there are or-ganizations which measure costs and performance in prime and supporting activities but do not declare ABCM implementation.”

Measurement of activities in value chain Spearman’s R 0.467 Signifi-cance at .00 levels

CONTROLLER Spezial | Controlling International

Pola

nd

Proof in this respect is the impressive number of participants at the 3rd International Controllers’ Congress (18–19 June 2009 in Poznań, Poland), which was organized by the Internationaler Con-troller Verein. The interesting discussions of control-ling practicians, financial directors, consultants and experts provided excellent guidelines for con-trollers in many companies during the stormy times.Of course, there were numerous presentations to depict the experience and difficulties in the control-ling field within the financial and banking sector, which is regarded as the cause of the economic difficulties all over the world.Building controlling from the scratch and the rela-ted difficulties and successes were the subject of a lecture delivered by Witold Skrok, the Managing Director of Alior Bank S.A. Impressive ideas and solutions in the controlling field allowed this bank to carry the burden of the crisis despite going into business at a very early stage of the crisis.

Mikołaj Woźniak, Director of the Controlling and Risk Management Department of Volkswagen Bank Polska S.A., talked about two issues:

•How the current situation is modifying the perception of the Risk Manager, recently regarded as a “hindrance” to sales and today referred to as the “voice of (sub)conscience”

•How the controller becomes an internal adviser and a businessman in hard times.

The shift in positioning finance staff members to-wards business advisers who support the process

12

Edyta Szarska, ICV Delegate Poland, Controlling Partner, Warsaw

3rd International Controllers’ Congress

Controlling in hard times – taglines of practiciansIn times when black clouds gather above many companies, there is a growing awareness of how important it is to create a sustainable business value. These difficult times will certainly become a turning point for the development of the financial sphere and in particular for the Polish controlling.

performance could also be noticed in the speech of Paweł Kiełczykowski, CFO of Schenker Sp. z o.o., as well as in that of Aled R Wynne-Joyce, a BPP trainer in London in charge of such training as CIMA and ACCA, who additionally presented an innovative approach to the salary system for em-ployees involved in the inflow of receivables from the contractors. A practical model of such analyses was presented by Rafał Wilczyński, the Controlling Director of ROHLIG POLAND Sp. z o.o. Bogusław Krawczyk, the Manager & Advisory from KPMG; he referred to a possibility of improving the opera-ting performance using the example of IT depart-ments. The pursuit of different solutions in receiva-bles management was the topic of Dariusz Szulc from Coface Poland Credit Management Services Sp. z o.o.Dr Walter Schmidt, Member of the ICV Executive Board, presented sample methods of an everyday liquidity analysis and modern budgeting methods focusing on sales strengthening, wise analysis of the cost reduction and on innovation. The budget sets out a certain framework of action for the com-pany in terms of reaching its objectives. It can change along with the changing environment; however, it will not exceed the limits adopted, so that the goals assumed can be achieved. Control-lers working in the environment of foreign ex-change fluctuations can sense very well that flex-ible and multi-scenario planning of the financial standing is necessary. Przemysław Masłowski, the Financial Controller at ZT KRUSZWICA S.A., is one of them. During his presentation he showed a sample analysis of the

At the end of the congress the participants had the unique opportunity to see and listen to the re-

transmission of a speech by Dr. Dr. h.c. Albrecht Deyhle, Chairman of the Super-

visory Board of the Controller Akade-mie AG and Founder of the ICV. Whi-

le talking about his 40 years of experience in controlling, Dr. Deyhle pointed out the main aspects of the controller’s profession in an extraor-dinarily spontaneous way.

Despite the ‘stormy’ times, the congress certainly brought many ‘sunny’ ideas that could be applied by controllers in their everyday work. The whole meeting was held in an excellent atmosphere with valuable discussions, the continuation of which can be expected already during next meetings of the workgroups of the controlling practicians.

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foreign exchange exposure and solutions to the foreign exchange problem, which he encounters every day.The volatility of the controller’s working environ-ment, so peculiar to the current economic situation, was also emphasized by Magdalena Swoboda, the Financial Controller of KLIMA-THERM Sp. z o.o. The multi-scenario approach to the future planning provides guarantees that the company will be rea-dy for each and every case, this being quite diffi-cult for companies dealing with public procure-ment. Such problems are faced among others by Przedsiębiorstwo Dróg i Mostów SA (Roads and Bridges Construction Company, a joint-stock com-pany), which was represented at the Congress by Dariusz Gulczyński, Director for Economic Affairs. The years to come are going to emphasize the in-creasing importance of the controllers’ skills in terms of building the bridge between finance and business, partnership and integration of particular elements in the organization. Dr. Herwig R. Frie-dag, head of the ICV PR Committee, presented some guidelines on the subject, put in a systematic order, including the Management 2.0 methodolo-gy, which allows the controlling practicians to build accountability systems for the continuous company development.

3rd International Controllers’ Congress

Controlling in hard times – taglines of practicians

TV session at the congress in Poznań with Dr. Adrianna Lewandowska

Most of the polish work-group leaders attended the congress in Poznań

14 Spezial | Controlling International

Candidates for the position of a controller in the Czech Republic are usually university-educated. Most common is any faculty of VŠE (the University of Economics in Prague), and the Faculty of Opera-tions and Economics of the Czech Agricultural University, or other universities focused at least partially on economics. In certain cases, appli-cants are graduates of the Czech Technical Univer-sity. For applicants with secondary-school educa-tion, greater practical experience is generally ac-cepted as a sufficient foundation for working in this position. There is no special institute in the Czech Republic providing a controlling program, but private institutions and training agencies offer specialized training courses.

The most common requirements for the position of a controller include knowledge and experience concerning comprehensive accounting matters, several years of experience in controlling (depen-ding on the seniority of the position), knowledge of international accounting standards (IFRS) or – most frequently – US GAAP, good English skills (and only occasionally another European language such as German or French), a good knowledge of MS Office Excel with knowledge of setting up for-mulas and contingency tables, and the knowledge of an ERP system (SAP, Oracle).

The remaining requirements arise from the specific aspect of the field in which each employer ope-rates. In this regard we have noted, compared to previous years, an increasing emphasis on so-called soft skills – communication skills, presentati-on skills, and team cooperation. These skills play an increasingly important role both in the require-ments of our clients and in the selection of individu-al job applicants.Given the increasing number of multinational com-panies operating in the Czech Republic over the last 19 years, the demands with respect to the in-ternational experience of candidates have been increasing in practically all of the positions sought.

Salaries and employee benefits in the industry

Robert Half carries out an annual survey of sala-ries and employee benefits (Salary & Benefits Guide) in all of the sectors in which it specializes, including finance and accounting. A financial con-troller with 0–2 years of experience in the sector usually receives a gross monthly salary of CZK 25,000–35,000, and with experience of 3–5 years this range increases to CZK 35,000–60,000. If his experience is five years and greater, the gross monthly salary ranges from CZK 50,000–80,000.

Controlling careers in the Czech Republic

Tomáš Bergl, Manager Robert Half Finance & Accounting, Czech Republic

Czec

h Re

publ

ic

CONTROLLER

Controlling is a standard position required in the structure of the financial department of most medium-sized and larger companies and is filled across all market sectors: sales companies, financial institutions, and production companies. Controllers are clearly required in all types of business.

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In the case of a management position with respon-sibility for managing a large team, the salary ranges up to CZK 130,000. These amounts do not include rewards and bonuses.

The benefits and employee advantages in control-ling correspond, according to our survey, to the middle-management group. The first five most sought-after benefits include five weeks of vaca-tion (the statutory allowance is four weeks), lan-guage courses paid by the employer, flexible work hours, professional education, a 13th salary pay-ment, and also, with increasing seniority, a compa-ny car for private purposes. On the other hand, the most frequently provided benefits include meal tickets, mobile telephones, supplementary pension insurance contributions, and refreshments at the workplace.

Current situation

In the last five years, salaries in the entire industry grew at a relatively constant slow rate of approxi-mately CZK 2,000–5,000 per year, which fully corresponds to the careful and conservative nature of the field of finance, compared with other areas of the market, such as information technologies. Benefits and employee advantages played a sig-nificant role in those years in which we noted a high demand for specialists and a significant lack thereof (primarily 2007 and 2008), whereby com-panies enhanced the attractiveness of the position offered. An important specific aspect of this devel-opment was the gradual increase in the importance of the candidates’ “soft skills” compared to their practical and professional knowledge – so-called hard skills.

At the end of 2008, and especially at the begin-ning of this year, there was a significant turnabout in the thinking of companies on the Czech market. They discontinued or slowed the hiring of new employees and, as part of their preventive cost-saving measures, reduced the current head-count. The outcome is a partial reduction in the number of offers in the sphere of controlling, and a greater emphasis on the quality of the selection pro-cedures. Applicants are more careful in changing and choos-ing new positions. The im-

portance of “soft skills” is a clearly continuing trend. The importance of benefits is waning slight-ly, as work as such is more important at this point for candidates, in combination with adequate fi-nancial compensation.In concluding, I would like to point out the particu-lar stability and immunity of financial positions on the market during the present financial crisis, when the reduction of activities in the market is relatively reasonable compared to the pronounced drop in demand in other areas of the overall market.

Robert Half International in the Czech Republic

Robert Half Finance & Accounting has operated in the Czech Republic since 1994. We fill manage-ment positions throughout the country. In this field, we specialize primarily on financial management, controlling, accounting, audit, and tax specialists, the banking and insurance business, and on IFRS consulting and SOX projects.


The theory and practice of controlling in conditions of crisis

In Kaliningrad (Russia) on 22–23 May 2009, the 2nd International scientific-practical conference on problems of controlling in conditions of crisis took place. The conference was organized by the Kali-ningrad Club of Administrative and Financial Con-trollers with the assistance of the Kaliningrad Inter-national Business School, Russian Association of Business Education and International Controller Association ICV. There were about 60 representa-tives of Russian companies from Kaliningrad, Moscow, St. Petersburg, Kazan and Kaluga, and the ICV representatives from Germany, Lithuania, Estonia, Poland and Russia were engaged as the speakers.

Herwig R. Friedag (Germany) opened the confe-rence with the volumetric report on system ma-nagement of business with usage of the Manage-ment 2.0 model. The report was met with enthusi-asm by the participants of conference, as for many Russian companies the absence of system manage-ment is one of the main reasons for low business efficiency.

The Russian lecturers shared their experience of different controlling tools used by the companies with allowance for the crisis situation in the mar-ket. Uri Fedyashov (“Takt” group of companies – construction and building materials production) reported on the practice of BSC building, which works in the company to the full extent as the basis for the system management of business, by focus-ing attention on representative and often admitted errors:

•Absence of unified comprehension by the top and average managers of mission and strategy of the company

•Density on the financial indexations, instead of client perspective parameters (weak study of the marketing strategy, imperfect sales business process)

•Uncertainty of key manager responsibility zones•Absence of constant inner corporative training

processes•Absence of correlation between motivation

system and company goals.

The crisis tendencies have introduced corrective amendments to estimated parameter structures. So within the financial perspective framework, EBIT-DA was suggested instead of a net profit parame-ter. For client base quality monitoring quantity, new and old clients in a sectional view of market segments was offered. From the perspective of business processes for the definition of an optima-lity of goods briefcase, the goods stock limits para-meters are recommended instead of turnover. The customer’s service quality improvement has de-manded the introduction of a “percentage of fulfil-lment of delivery schedule” parameter. The use of the CRM system helps to identify, to differentiate and to control relationships with the client on the basis of full automation with “1C Rarus CRM” pro-gram usage.Uri Nahodkin (President of “GMG – real estate” group) spoke about strategic controlling methods used in his companies and the advantages which proprietors can benefit from with strategic control-ling availability: Transparency and controllability of business. A prerogative of the shareholders is the definition of the direction and purpose of com-

Russ

ia

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The theory and practice of controlling in conditions of crisis pany development (“Which jungle are we in?”).

The strategic controlling levels were marked, the approaches to the creation of strategic operations programs were considered, a system of motivation with usage of management by objectives and BSC were discussed, and the company budgeting phi-losophy was presented.

Alexander Lubinsky (“Holmrock” group of compa-nies – computer equipment supply) shared his ex-perience in a field of development, introduction and usage of CRM system in the company. The activity of project implementation processes has been increased by the financial and economic cri-sis, which showed that the client is the main asset, a unique source of profit obtaining and further company development. A low price, mass adverti-sing and conventional marketing no longer gua-rantee successful sales, even with a solvent buyers’ market in a phase of saturation. As a result of CRM system implementation, ma-nagement and staff finally gain a legible under-standing of client inquiries, which gives an indispu-table competitive advantage in conditions of fal-ling demand. In conditions of decreasing demand and restricted liquidity, many other methods are used alongside conventional controlling tools: Important restructu-ring of duties or percentage payments, sale of un-profitable assets, and company tax load control. The joint report of Anton Vaishnurs and Alexey Mel‘nikov (Deloitte & Touché, St. Petersburg) was dedicated to these problems. The features of finan-cial restructuring in Russia were classified.

On the part of the borrowers is:•Denying of financial problems•Reduction of a working capital for service of

the debt, inefficient amortization policy•Absence of transparency in relation to the

creditors•Absence of the coordinated negotiations

with banks•Focus on “soft” restructuring (“crisis – temporary

phenomenon and situation will change soon”)•Hope for state support.

On the part of the creditors is:•“Each to their own”•Absence of transparency in relation to other

creditors•Effect of average general costs on the size

of bank reserves•Difference in the approaches between Russian

and international banks•Preference to put aside the solution of problems

for the future.

As the guidelines on optimization of tax payments in a part of the profit tax, the following is offered: To make changes to amortization policy, to make an order in liabilities interest calculation, to use factoring, to integrate the profitable and unprofita-ble companies, and to create reserves on doubtful duties. With value-added tax, special attention is given to the control of the basic documents for operating, obtaining of the right on “deduction”, capability of release from tax payment at a de-crease of sales up to 2 million rbl. per quarter, and minimization of tax at implementation of import deliveries outside Russia.

The Western speakers (Slavimir Pieloch, Poland; Aiste Loergen, Lithuania; Harald Kitzman, Estonia; Hans-Peter Sander, Germany) showed practical materials on controlling methods. The problems of budgeting system implementation, costs accoun-ting, and controlling development tendencies in the West were considered.

Conference participants gave positive feedback on the presentation depth and practicality for the Russian companies in tackling their problems. Its important to say that the conference underlined a miscellaneous level of controlling development in Russia and European countries: If the Russian com-panies are still engaged in the search and primary introduction of controlling methods, European companies are at a stage of tuning the set-up of these tools. This makes listening to one another all the more interesting.

Alexander Barinov, Rector of KIBS

The ICV conference speakers had an excursion to the Courland Spit.

Galina Usenkova, Secretary in charge, Club of administrative and financial controllers;

General Director “Audit Service”


Hun

gary

“Navigating heavy seas in the Carpathian Basin”

The global financial crisis also hit Hungary at the end of last year, rolling out the familiar effects. Ini-tially, companies in Hungary responded with the classic instruments of drastic cost reductions, short time and, finally, job cuts. It was also typical that many business plans drawn up for 2009 accord-ing to a traditional model became meaningless, as the economic situation changed on a daily basis, the future unpredictable and increasingly uncer-tain.

Against this backdrop, the situation of companies in Hungary is developing very unevenly in the indi-vidual sectors. Particularly affected is the produc-tion industry that relies heavily on exports. It has practically no liquidity reserves and is both ex-tremely price and cost sensitive. Due to the popula-tion’s loss of spending power, retailers are just as hard hit by the financial crisis. Even huge discounts fail to attract buyers because they simply have no money. The services industry is affected insofar as its contract risks have risen considerably and its contracts and costs with companies subject to direct impact at short notice, i.e. they can be curtailed.

The financial crisis has caused a mammoth upheav-al in both companies and the market in Hungary. Besides the risks, however this change dynamic has created many new opportunities for new products, services and business models with higher value cre-ation, higher quality and long-term prospects in the future. Nevertheless, this spells a huge challenge and makes high demands of corporate manage-ment, controlling and specialist departments.

Are difficult times and stormy weather a good climate for controllers? What contribution does controlling make to crisis management and company survival? What is controlling like in practice here and now in Hungary?

Controlling in foreign group subsidiaries is to a large extent shaped by the organization and guidelines of the parent company’s group control-ling department. That entails a strong dependency and little room for local initiative. Duties are mainly focused on supplying data for group controlling in the course of operative and mediumterm plan-ning, and for operative, monthly report-ing. The fate of Hungarian sub-

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“Navigating heavy seas in the Carpathian Basin”

Andreas Kovács Head of the ICV working group Hungary 2;

Managing Director MCS Management & Controlling-Service Vezetési Tanácsadó Kft.

In SMEs, where entrepreneurs and management are characterized by entrepreneurial spirit, will and responsibility, controlling has now also as-sumed an important function in Hungarian compa-nies, and the controller is an important dialogue partner for management in strategic and business administration matters. The role of the controller as “navigator” even in turbulent times largely corre-sponds to that in a Western European country. Duties cover supervising classic controlling proc-esses like operative and mediumterm planning, re-porting, results and cost accounting, contribution margin accounting, and products and services calculation. Controllers, however, are also showing a growing interest in learning about and applying proce-dures, methods and tools. The aim being to im-prove performance and cost efficiency, increase the value creation component in the process chain and individual company functions, support the company’s strategy development and co-develop new innovative business models. A rising genera-tion of controllers is learning how to master the modern controlling method spectrum and can thus efficiently and competently support and assist management and specialist departments in their activities. Controlling as a career springboard into management circles places these controllers in an excellent position to make better requirements of controlling later on from a managerial position, to promote and use it for themselves and the good of the company.The qualification of controllers in Hungary, com-municating West European-style controlling is sup-ported both at the universities and, intensively by the controller academy of the IFUA, Horváth & Partners. A brisk exchange of experiences be-tween controllers takes place on the platform of the Hungarian controller association. The latter is backed by two active ICV working groups. These hold two professionally demanding biannual work-shops that enjoy a high level of interest and attend-ance in an atmosphere of Hungarian conviviality and savoir-vivre.All this provides the best possible prerequisites for developing controlling, even in Hungarian compa-nies. Turning controllers into important, competent and sought-after partners of management, with the aim of jointly weathering out the financial crisis to leave it stronger than before, armed with new op-portunities and prospects in the future.

sidiaries greatly depends on the weal and woe, strategy and crisis management of the parent com-pany.The situation is a bit different for controlling and management in Hungary’s foreign SMEs. Although here, too, the strategy and crisis management of the parent company is decisive, local management has greater freedom to make decisions on the im-plementation of strategic provisions and crisis management on the spot. Controlling is predomi-nantly in the hands of the foreign parent company. The procedures, methods and tools of head office controlling are adapted for local use.

A new generation of controllers Central planning has a long tradition in large Hun-garian companies. Although after the Peaceful Revolution in Germany and in response to the com-petition of the emergent market economy, control-ling functions did develop, from an organizational and operative point of view, these are mainly in-corporated in the finance and accounting sectors. Controlling activity is mainly restricted to opera-tive and mediumterm business planning, supplying data and reporting.

The situation of manage-ment and controlling in

Hungarian SMEs is far more positive. Hungarian

SMEs, founded after the Peaceful Revolution, that were successful in gaining a foothold in the domestic, regio-

nal and international market, are more flexible at adapting themselves to

the fast moving, dy-namically changing

market and economic conditions. Fast reac-tions and adaptabil-

ity in terms of prod-ucts and services in -

crease companies’ chances of staying in

the running and sur-viving the financial

crisis.


A few days ago it was reported on the news that the crises was over. Despite that, we should not close our eyes to one fact: In June in Slovenia, a lot of people lost their jobs. Companies cut the ex-penses and number of employees during the crisis. Alternatively, managers decide to cut working hours, from 40 to 36 a week or even to 32 hours a week.

But the situation is not hopeless. After all, the economy has not stopped, just slowed down. Dif-ficult financial situations require more hard work to be done from all: Companies should try to find “re-serves”, to cut down expenses, to intensify effi-ciency and to adapt their offer; consumers should think twice before buying things. Liquidity is a huge problem; terms of payment extend to three months on average. Entrepreneurs are angry: Pay-ment discipline has reached the bottom.

Workers should work more for the same salary; they should be more effective. But the knowledge of the employees is respected more. Managers discover that the ideas and purposes of their em-ployees are a great source of growth, develop-ment and progress. Some economists even predict that during the crisis new, innovative ideas for the

presented problems will be created. And history shows that some ideas are always very good (and even before time), just because of the distress.

Of course, companies take great care of their good name and the reputation of their products, but they act rationally in the matter of donation or sponsorship. Some companies invest even more money than before in training. Above all, compa-nies pay attention to the base activities. They try to learn more about their business processes and how to rationalize them. This crisis will not last for-ever; they try to learn and improve business in the meantime. Already-tested methods are “discov-ered“ again (for example, Break Even Point, Target Costs, Key Performance Indicators, etc.). Innova-tive companies invest in technologies and in progress all the time, even now, during the less advantageous times. Some of them do not feel the crisis: others are in a very bad situation.

More and more companies try to see an opportu-nity in the crisis. In Slovenia, innovative companies can be even more innovative nowadays because the regulation helps them, providing them with (state-subsidized) funds for equipment, projects or new employees.

Slov

enia

It’s time to meet the challenges of controlling!It’s time to meet the challenges of controlling!

We could read (bad) news about the financial situation in practically all the newspapers. In Slovenia it is the same; the crisis hasn’t spared us either.

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the global financial crisis and interest in controlling has been noticed. More analysis is needed. It seems that everyone is interested in indicators nowadays. Even those who otherwise do not like to hear about controlling.

So, controlling is important, but how about the controller? In many companies, controllers don’t have a noticeable role or the position doesn’t exist at all, but there is a strong connection between CEO and CIO. I think good cooperation and team-work between CIO and the controller is also ne-cessary. But this is another story, a story about knowledge and the competence of controllers.

How can controlling help? Is there a recipe? I hope we will get fresh and innovative answers at the 9th controller meeting in Ptuj, 24–25 September 2009. “Meet the Challenges of Controlling” is the topic this year. We cannot avoid the crisis, because it is already here. But we should think and find oppor-tunities and challenges in it. The main guidance at the meeting is praxis for praxis. Great emphasis is laid on education, exchange experiences and dis-cussions about the ideas and difficulties in a controller’s everyday work.

Dragica ErčuljHead of ICV Work Group Slovenia, crmT d.o.o. [email protected]

More analysis is needed

In a time of crisis, many business decisions are un-der evaluation. In a period of growth, decisions seem to be easier; managers could reach their goals with higher investments, or takeovers, or en-tries into a new market – even without precise consideration of all advantages and weaknesses. In the period of crisis, decisions have to be made more carefully and, hopefully, only good decisions are the ones that are enacted. There is always a risk; there is no business without it. The problem appears if the risk is too big and not under control. Managers should consider their decisions very carefully, and to do this they need the right infor-mation. Every wrong decision could have negative consequences or create a domino effect. At that point, controllers should help. As organizations make cuts, executives will only get once chance to make the right strategic decisions: “Measure twice, cut once”, is an old phrase.

What is the role of controlling? Controllers provide managers with all relevant controlling information. However, many companies (i.e. managers) take decisions mostly on the basis of previous experi-ence. On the other hand, a correlation between

It’s time to meet the challenges of controlling! ICV Work group Slovenia,

June 2009. We were lucky. The weather and the wind were ideal for sailing.

It’s time to meet the challenges of controlling!

22 Spezial | Controlling InternationalCONTROLLER

Bulgaria is currently experiencing a sharp down-turn in the economy and a rise in unemployment because of its deep trade, capital and labour mar-ket integration with the EU and the world economy. Due to its dependence on capital inflow and ex-port the country is suffering more from their de-crease than from external financial problems. The credit boom in recent years has also increased the debt of the population, businesses and the country itself. Economists from the Bulgarian National Sta-tistical Institute recently said that the country has entered recession and will not rebound for at least one more quarter. Bad external economic condi-tions, reduced appetite of foreign investors, high cost of credit and its repayment and limited financ-ing (the banking industry in Bulgaria is dominated by Western European banks which hit by the finan-cial crisis can no longer provide extensive financ-ing to their Bulgarian subsidiaries any more and may even withdraw their financing) will hamper the recovery of the Bulgarian economy. Neverthe-less, the fall in GDP and the negative effects of the global economic crisis are less than those in most Western European and other Eastern European countries. The drop in capital inflow and exports

has led to a drop in the total production in Bul-garia by approximately 20%. Many industries have been severely affected by the global eco-nomic and financial crisis. In some of them busi-ness has been reduced by 50% or even more.

Challenge for the controller

The main challenge for companies is the drop in sales numbers and overall turnover. That decrease is dramatic for companies producing for export and depending on the economic recovery in the EU markets. Companies have therefore focused on better management of their expenses therefore. The main task for the controller is to strictly control all expenses and find ways to reduce costs where possible, especially overhead. That also includes reconsidering all planned investments and to deci-ding which ones are necessary and which ones can be cut or postponed for better times. Some companies even have to freeze their investment in-tentions. As many subsidiaries can no longer rely on investment or financial support from the parent company, the controller has to find new sources for

“Need and desire to learn is enormous”

Bulg

aria

Milena Staeva, ICV working group Bulgaria

Bulgaria has not been an exception in facing the effects of the global financial and economic crisis. The financial system has avoided financial meltdown; the economy has been hit, though, by the recession in high-income countries.

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financing. Bank credits have become very expen-sive though and even if the company can afford them, it is difficult to be granted one. The task of the controller is to calculate the new credit costs or re-calculate the new costs (as the interest rates have risen considerably). Alternatively, the controller must look for other forms of financing. Liquidity has been given special attention during these hard times. On the one hand suppliers expect immediate or at least quicker pay-ment. On the other hand customers cannot pay im-mediately and ask for deferred payment. That of course risks the liquidity of the company. The col-lection of (outstanding) customer payments there-fore has priority on the controller’s “to-do list”. An-other measure is to renegotiate the existing trade agreements with customers and suppliers.

Personnel costs are another alternative for cost-cut-ting. The strategies are different for each company in the various industries. It depends mainly on whether the employees are qualified and whether the company wants to keep them. Many compa-nies, especially small and medium companies, have cut jobs. Others have frozen salaries for a specific period or have even reduced salaries. In some companies the working hours have been re-duced which in turn results in a reduction in salaries as well (reduction by up to 30%). Another measure has been to cut temporary staff or to retire the staff who is due to go in retirement. Many employees have been offered unpaid leave. Benefits such as food vouchers have been cut In order to avoid job cuts, employees are sometimes sent to other depart-ments in the company. The government has offered its support to the businesses as well. Companies

may apply for subsidies to avoid job cuts. Employ-ees work reduced working times but the government pays half of their salaries for up to three months so that they can receive their full salaries. The control-ler calculates for each option which one is the most cost-efficient and the most appropriate for the com-pany and gives advice to the management.

Identify new opportunities

To avoid further losses, a few companies must tem-porarily cease production and close production facilities for a specific period of time, usually a couple of days or weeks, 1–2 months, or until the next orders are expected. During that time the em-ployees are usually offered annual paid leave. Times of crisis often offer new opportunities, though. The challenge for the management and for the strategic controller is to look for and to identify these new opportunities or find new markets for the business, as this can be essential for the continued company existence. A company producing seats for the automobile industry, for instance, has re-cently started to also produce seats for buses, trucks and tractors. Others are developing products for other industries. During the crisis Bulgarian com-panies also have good opportunities to benefit from the tendency of Western European companies to outsource production and services.

The Bulgarian economy is expected to further shrink this year and most likely even next year. However, the rapid economic growth and the record high foreign direct investments inflow in the last 3–5 years and also the currency board (which guaran-tees huge currency reserves) have softened the ef-fects of the global economic crisis. The country has faced more difficult times in the recent history and sees the current downturn as a short-term period only. It will master the current challenges as well.

Members of the ICV working group Bulgaria, 2009.


Esto

nia

Controlling in a downturn – the case of Estonia

The Bank of Estonia described the situation in their economic policy statement as follows: •The economic downturn will average 12.3% this

year, with first positive signs of an end to the recession

•The main indicators of the Estonian macro economy have continued their fast movement towards a positive balance in recent months

•Estonia’s credit market volume is mostly shaped by the reduced consumption and investment intentions of enterprises and households

•The risks to the Estonian financial system stability have not eased against the backdrop of uncertain economic and financial conditions in the world

•The banks operating in Estonia have enough capital to cover possible loan losses induced by the difficult economic environment, should the loan portfolio quality deteriorate further

•The main preconditions for a rapid recovery of steady economic growth are the clear perspec-tives of joining the Euro zone in the near future and restoring fiscal balance and surpluses in the years ahead. With the inflation rate declining, Estonia has a good chance of meeting the Maastricht criteria at the end of 2009.

•The extensive inflow of cheap loan capital in recent years caused the overheating of the eco-nomy and enlarged external imbalances. This trend has now turned and the vulnerability of Estonia’s economy is diminishing owing to wea-ker domestic demand. The external environment will not enhance export revenues though, at least not for the time being. However, in the medium term, economic activity is expected to increase in the nearby regions and external demand is likely to recover gradually.

Vulnerable industries in Estonia were those who are dependent on big players in the automotive and electronic sectors. But also those industries who participated in the benefits of additional foreign

investments, like the real-estate and construction industries, are also now struggling to survive. Loo-king at the “negative” numbers more deeply, the so-called crisis is nothing more than a correction of the overheating in the economy. Hard but healthy. The tax system on the one hand, which allows the companies to focus on the real business and not supporting report creativity, and on the other hand managers who are more in the business than hun-ting shareholders and financing, are the main aspects of the Estonian business model and were the fundament of the Estonian success and develop-ment in the recent years. Controlling in Estonian companies is focused on the business, to figure out how to increase turnover, how to reduce costs, which activities could be changed or adjusted that the companies are com-ing stay on track and coming back on track. With this focus, Estonian controlling is different from the classical German controlling approach, which is more focused on the collecting of numbers and re-porting of the situation. The objective of optimizing the annual report to prevent and reduce outflow of liquidity in the form of taxes and dividends is one of the main focuses of German controlling. The same objective could found in the reporting to the banks and other financial providers. It is difficult to find any common objectives and fo-cuses between German and Estonian controlling, especially in the present downturn. These differ-ences need different bases in skills and knowledge which are hard to generalizes. It is therefore difficult to give general recommendations to find ways out of the downturn and to prevent significant negative impacts of downturns in the future.

But Estonian companies are focusing on the devel-opment of the economy; the economic revival has already started in Estonian companies. Controlling is certainly contributing to this development.

Harald Kitzmann, Chair of Operations Management, Tallinn University of Techno l-ogy; Leader, ICV working group Estonia

The situation in the Estonian and world economy has a big impact on the economic situation of the companies and therefore also on the undertakings of the management and the controlling.

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