BusinessMagazin

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  • The New HR

    The new HR strategies no longer have anything in common with what has been happening until now: no one is hiring, but instead making people redundant, salaries are no longer going up, but down, and skills for which training is held have changed. ”I think that now, more than ever, the general manager needs the human resources manager for strategy and involvement. It is crucial that they should work together,” says Calin Tatomir, general manager of Microsoft Romania, a company that recently came out fourth in the Best Employers ranking compiled by human resources consultancy firm Hewitt Associates and Monday Insight Romania.

    After a long time during which human resources managers had been complaining that they were not regarded as strategic partners in companies, but rather as mere performers of administrative tasks, the top management is now giving them their rightful place back. The main reason is that the recent restructuring cannot be done without the help of the human resources department. Similarly important is stimulating those that stay and have to work harder than before, but are paid the same or even lower salaries. At any rate, the role of the human resources manager at this time is more important and more novel than ever. ”The crisis has made us creative and stimulated us to move faster than the workforce market. A context was created for us to carry out activities we would have done at a different scale if circumstances had been different: interdepartmental trainings, internships for students, outsourcing of certain operations,” says Anca Iancu, human resources manager of ING Asigurari de Viata.

    This is not a first, though. Human resources departments have always seen hectic activity. Until last year, that meant hiring people en-masse, fierce negotiations, the rush for the best contracts with various suppliers of products or providers of services that could be included in the perks package of the employees, training programmes as sophisticated as possible. Now it is all about the exact opposite. Amid constant cost cutting steps, the priorities and goals of the human resources managers have radically changed.

  • Around the World

    The number of those embarking on a trip to discover the world has risen lately, with travelling around the world now also being perceived as an escape from the bleak everyday. When Suzanne Schaefer was made redundant from her position as HR manager at Lehman Brothers, she went through the same routine as any other unemployed person. She updated her CV, registered with the database of recruitment agencies, but did not manage to find a solution. Then she decided to go on a two-week trip to Vietnam. But her trip left her longing for more and she decided this was the perfect time to see the world.

    The former Lehman Brothers HR manager is only one among many who decided to take advantage of the current state of things and see the whole world. One of the best-kept secrets of airline operators is the around-the-world ticket – it is valid for a year, can include up to 15 stops around the world, of at least one day, and can be acquired at prices that range from 2,500 to 10,000 euros (for business class and first class). Although it is not promoted at all by airline operators, the ticket is available with any of the big alliances, and entails major savings on transport expenses (which, in the case of long haul flights, are what the bulk of the budget is spent on).

    One of the ground rules is that you have to stick either to an eastbound or a westbound trajectory, on condition of paying an extra fee, while destinations can be changed even during the trip. Although the crisis has changed consumer habits, the appetite for luxury is still there. This means there are also agencies that sell the exclusive variant of the trip around the world. Two companies, TCS Expeditions and Starquest Expeditions, offer voyages on board of a private Boeing 757 private jet, equipped with doctors, guides and art experts. For instance, the ”Seven Seas Odyssey” package from TCS, a three-week trip around the world, with stops in lesser known places, such as the ruins of the Leptis Magna city in Lybia, costs around 35,000 euros.

  • Who Is Hiring

    ”To us the high number of unemployed in the economy is an opportunity because now we have plenty to hire from,” Theodor Alexandrescu, chief executive of insurance company AIG Life, told BUSINESS Magazin. To insurers, personnel recruitment had been a very complicated matter until recently, because of the tight competition in the financial sector and the small numbers of specialists available. This year AIG wants to hire new sales agents and now Alexandrescu has plenty to pick from, because there are enough people who have or will lose their jobs. To companies that are not forced by the crisis to operate personnel cutbacks, the high number of unemployed is an opportunity, because it is easier to find the right people at lower costs than before. To others, the fact they have plenty to choose from is a good opportunity to cut their salary budgets, replacing high-salary employees with lower-paid ones.

    Besides professional reorientation or development of a small business – the solutions proposed by the authorities, or the possibility to seek a job on a foreign market, the private sector offers a natural way to address the unemployment issue, or at least part of it. Despite the wave of redundancies over the last few months, there are also companies that are hiring especially on the retail market, in the consumer goods industry, outsourcing or financial services. Some are hiring because they are expanding, some are both firing and hiring, and some are consolidating their business and hiring only for certain key positions. The Real hypermarket network set out to hire about 2,000 people, both for the 20 strong- store chain that it operates in the country and for the stores to be opened.

    The company is mainly looking for bakers, pastry chefs, confectioners, meat, fish and fresh product specialists and will mostly recruit from among the ranks of the unemployed, says Ramona Toma, manager for recruitment, training and development. She, too, notes the high interest in the job ads, which was not so common back when the economy was doing fine and companies were fighting over employees. ”There is an avalanche of job seekers on the market and we expect it to maintain until the end of the year.” In addition, she says, ”we are seeing a shift from very high paid offers to those that provide security.” In the same business, hypermarket chain Carrefour is hiring 1,200 people this year and the Germans at Rewe approximately 1,800, according to the officials of the two companies quoted by Ziarul Financiar.

    Bricostore, one of the biggest players on the DIY market has 250 jobs available in three counties this year where it will open stores (Calarasi, Deva and Drobeta- Turnu-Severin). The service outsourcing market has high hopes for the crisis period: to cut costs, more and more companies are choosing to outsource an entire series of related activities. To outsourcing companies, this is new business and as a result, a need to hire. Easy Call, Accenture, Linea Directa Communication, Wipro and Genpact are but some of them. ”We are interested to integrate candidates that were affected by mass layoff policies, from fields such as banking or financial services. We have already hired a few people in this situation,” Genpact Romania officials told BUSINESS Magazin. As far as Easy Call, a call-centre operator is concerned, the number of employees should go up by 1,000 this year, while Linea Directa Communication will hire, chief executive Dejan Grbic says, about 250 new people.

  • The Empty Half of the Glass

    A year ago, when the crisis seemed far away from the Romanian real estate market, some of the more pessimistic residential brokers talked about the large number of apartments which would be completed, and whose windows would not be lit in the evening, pointing to the fact that a significant percentage of the new homes had been acquired by investors, and not by people who would be living in them. According to estimates, such apartments are expected to account for 30 to 50% of the overall number of homes sold, most of which are due for completion this year.

    2009 should, indeed, bring Bucharest the largest number of newly-completed homes included in residential complexes with at least 100 apartments, according to data collected by BUSINESS Magazin for its supplement ”The Real Estate Market – Exit from Crisis?”. A series of large projects, whose construction started in previous year – in full boom of the residential market, such as Asmita Gardens, Confort City, Cosmopolis, Rasarit de Soare and InCity will be fully or partially completed this year, with the ten largest to total over 7,000 units. However, the number of those that will remain in the dark will be much bigger than previously estimated, if we look at the fact that over 40% of the apartments and homes to be completed this year have yet to be sold.

    ”We have around 35% homes available for sale. We will not cut prices, not even by 0.1%, this has in fact been our policy in the last few months. We have yet to make a decision on the apartments to be completed, and which will remain unsold by then,” says Atena Tiplic, sales manager of the 765-apartment Asmita Gardens project, which will be completed in two stages, the last of which this autumn. The same sales policy is pursued by Conarg Real Estate, developer of Rasarit de Soare, one of the projects which performed well at its launch and which sold around 500 units in the first few months. ”We have 450 apartments left to sell, but we won’t cut prices, this is not a solution,” says the developer’s manager, Romeo Cazanescu. He grounds this policy on the fact that the developer had launched the project at the beginning of last year with prices below the market average.

  • Watchmakers Sail their Way into the Past

    This trend appears to have become common among watchmakers, too, which are getting involved in events meant to consolidate the link between the history of the brand and the technologydriven present. Officine Panerai has been sponsoring the Panerai Classic Yacht Challenge for 5 years, a regatta which includes vintage and classic boats, and has been involved in one of the most extensive restoration projects aimed at a vintage boat, Eilean. The Breguet manufacturer has not forgotten that its founder was also Marie Antoinette’s watchmaker, and has sponsored the restoration of the Petit Trianon, the queen’s favourite place.

    For its part, Parmigiani Fleurier has not allowed the success of its new collections to become too overwhelming, and instead became involved in restoration of historic clocks, declared ”dead” by the rest of the specialists. The Vauban harbour, close to the Saint Jaume bastion in Antibes, on the Côte d’Azur, became for 4 days in June the scene of one stage of the Panerai Classic Yacht Challenge. It was in fact a genuine historical parade, because each of the boats (some more than one hundred years old) has over time collected stories that would not be out of place in a Hollywood movie script.

    Moonbeam IV from 1914, a 33 metre-long aurica cutter, where Prince Rainier of Monaco and Grace Kelly spent their honeymoon was one of last year’s winners. Each of this year’s winners, among which Rowdy, from 1916, which won in the over 15-metre Vintage, category and Chaplin, declared a winner of the under 15- metre Classic category, received a Panerai Luminor 1950 Regatta Rattrapante. Available in a limited edition of 500, the watch is a split-seconds chronograph, accompanied by a chronometer certificate, and indicates the final 5 minutes preceding the starting signal of a regatta. The new model preserves the Luminor 1950’s 44- mm case, but its look is different due to its special, DLC (Diamond-Like-Carbon) coating, which gives the watch a black colour and more resistance to corrosion.

  • The Coldmaker

    ”The company needed the cleanup,” says Nicolae Bara, minority shareholder of Frigotehnica, explaining the reasons for the sale. In December 2008, the company, which was a market leader on the refrigeration market in Romania, was involved in one of the highestprofile transactions, when it was taken over by Balkan Accession Fund (BAF) investment fund. Nicolae Bara (55) has been working for Frigotehnica since 1979, when he graduated. He has left the company only once ever since, and that was for one year, when he decided to start his own business.

    ”In 1992, (when he was production manager i.e.), I started a business in the refrigeration industry, which I used to get back with Frigotehnica. I actually have never left the company, because my company was based 50 metres across the street from Frigotehnica. I didn’t even leave the area, just the yard for a bit.” Shortly after returning to Frigotehnica, its privatisation process started and was completed in 1995, when Bara became the shareholder and general manager of the group. ”In November 1994 I won the management contest at Frigotehnica (through the company I had set up in ‘92) and in June ‘95 I completed the privatisation process, with the entire red tape required by the legislation.”

    Bara’s stake increased to 38% in the meantime, after buying shares from the colleagues who wanted out of the business, he explains. In 1995, the year of privatisation, the company posted a 200,000 USD turnover, and 2008, the year of the sale to BAF, ended with revenues worth approximately 52 million euros (of which Frigotehnica contributed about 47 million euros). ”There have been stages and stages in the company’s history: it’s been a few years now since, as a result of the significant development of the major retail chains, commercial refrigeration started to prevail over industrial refrigeration (according to BAT, Frigotehnica accounts for 75% of the commercial refrigeration systems market and for 20% of the industrial segment i.e.),” Bara recalls, explaining how he moved the company that worked mainly with industrial to commercial clients; demand for commercial refrigeration started in 1996, when Metro opened its first store in Romania.

  • At the Travel Exchange

    When Ziarul Financiar announced in March that TAROM (Romania’s flag carrier airline) had launched a shock offer – 50 euros for a return ticket (no taxes included) and 24 euros for domestic flights, the article became one of the most read stories, with the online version alone recording 24,000 hits. TAROM changed its marketing policy, which, in business terms, was interpreted as an attempt to attract more clients and increase the occupancy degree, while for passengers it meant lower-priced tickets than the airline had ever had in its offer.

    For instance, a Bucharest-Rome return ticket costs 145 euros (all fees included) at TAROM (50 euros – airport charges excluded), while for a flight of low-cost operator Wizz Air departing on April 26th and returning on April 28th, the ticket cost 116 euros – all taxes included.In fact, lately, price offers for aeroplane tickets and travel packages have become very common, with most of the airlines and travel agencies joining in with low-price offers. Representatives of the Eurolines group say most aeroplane ticket offers are for England, France, Spain and Italy. For instance, in May, Air France launched a special promotion for Paris -167 euros – all taxes included (for online booking). For Amsterdam, KLM had a 199-euro offer under the same conditions.

    German operator Lufthansa sells aeroplane tickets to Milan, Frankfurt, München and Düsseldorf, with prices starting from 99 euro – all taxes included. London, considered to be one of the most expensive destinations in Europe, became more affordable in the April 7th – 28th period, due to the British Airways offer – 118 euros for a one-way ticket. ”In the current European financial context, competition among airlines has made this a good time for travelling, with many providers choosing to cut prices in order to attract as many passengers as possible,” says Emil Delibashev, commercial manager of British Airways for the Balkans.

  • The fortune of Dorobanti cafés

    A little after lunch, all is quiet on Radu Beller. The businesspeople that had a cup of coffee in the morning or had lunch are already back at the office. Waiters are getting ready for the second wave of customers for the day: the afternoon bunch, who gave a relatively deprecatory meaning to the ”go out for a cup of coffee in Dorobanti” phrase. More concerned about showing off than about business or about the simple pleasure of sitting in an outdoor restaurant, this type of customer, as well as the overall increase in revenues over the last few years have been the most important causes for the development of coffee shop poles in Bucharest.

    Radu Beller was the first such pole because it is precisely on this street in the Dorobanti quarter that the after-1990 history of coffee shops and restaurants in Bucharest began – once the Deutschland confectionery shop and the White Horse restaurant opened some time around 1997. ”I bought this house in 1995, when I came back from a trip to London and decided to get my own pub,” recalls Cristian Paun, the owner of White Horse and La Belle Époque restaurants, about the house in Dorobanti where he opened the first pub-restaurant in the capital. Coffee shops and restaurants started to develop on Dorobanti and Radu Beller since 1999, with the opening of Nova Brasilia and, some time later, of the High Heels or The Belle Époque.

    In June 2009, ten years from the start of the development of the area, more than ten restaurants and coffee shops are lining the street. Quite a crowded street section, which however, attracts more than one million customers a year, who drink more than two million cups of coffee and generate more than ten million euros. It is very important that anyone opening a coffee shop and wanting to have it blend in with the area, should place it right there, in those several tens of metres. Around 2006, the area that had started to develop as a business meeting place began turning into a fashionable location.

    ”2006 was the year when a sort of small bourgeoisie started to develop in Romania, people who had made money from real estate speculations, from selling some property given back to them by the state, from various other small businesses, who immediately saw Dorobanti as an area that had shut them out until then, which they suddenly could afford. This is how they started to come,” says Cristian Paun explaining how the customers of the area changed. To real estate agents specialising in that location, the flood of customers was a significant leap of the market. Alexandru Preda, retail broker of Colliers, says that spaces in Radu Beller are rented as soon as they are put on the market. Too bad there are not too many of them: most of the existing spaces have been occupied by the same coffee shops for years. ”Almost no one has closed up shop on Dorobanti until now,” says Preda, who is carefully watching the area and says he has customers for each space that comes up.

    Radu Beller, however, has become too small a place for all the people in Bucharest who wanted to go out for a cup of coffee. Especially since as soon as a street is known as a business pole, it starts to become fashionable, and the business pole tends to move, though somewhere close by. Which is why in 2003-2004, when Dorobanti became a crowded street, other areas started to develop. One by one, Dorobanti (from Piata Lahovari towards Perla), Episcopiei and Dinicu Golescu streets, the University area and then Decebal developed. All these streets together with Radu Beller generated almost 100 million euros in business in 2008, as calculated by BUSINESS Magazin.

  • Mall-mania is a thing of the past

    After a hectic week in Grenoble – a small town in the French Alps, of about 150,000 people, which also attracts several tens of thousands of students every year, two young people from Bucharest, who were attending college in France, realised they had almost no food left in the fridge. They decided to go to the Carrefour hypermarket on the outskirts of the Grenoble, one of the two big shopping centres of that town the next day, on Sunday.

    When they got there they saw the car park was empty and the hypermarket was closed. ”I was shocked maybe. I thought I was in a movie, I couldn’t understand what was happening,” one of the two remembers today, almost a year after that incident. As they would later find out, the hypermarket was rarely open on Sundays, like other big stores in France. The legislation in force in several countries in Western Europe until the end of the nineties prohibited large stores to open for business on Sundays, partly for religious reasons and partly because of the negotiating power of the unions, which wanted Sunday to be a day off for employees.

    Fiercer and fiercer competition among store chains and developers of shopping centres led to the dropping of such laws in many places, while in others a special permit is still needed to open a large store on Sundays – something that can seem at least surprising to a Romanian used to see the supermarket or the hypermarket allow them to do their shopping on Saturdays and Sundays, when the rest of the stores are closed. What happened to the two young people is relevant precisely because of this: after almost half a century of communist regime, when those who could not get out of the county, namely most of the people, actually, had only general stores to deal with instead of malls and hypermarkets, the opening of the first Western-type shopping centres stimulated a consumer spending appetite that almost defied economic conditions.

    The desire to adopt the Western cultural model and the pleasure to set foot into a ”temple of consumer spending” as abroad, turned the first malls in the country into an instant attraction. The willingness of a consumer sometimes fresh out of the grey retail (in the true sense of the word) to shop and spend their free time in modern shopping centres has encouraged developers to announce project after project, and retailers to expand at the same pace, driven by the good results in Bucharest and in the first such centres opened outside the capital city. The mall-mania, if we can call it that, both in terms of consumers and in terms of frantically announced plans by developers and retailers, has also led to poorly thought out projects, as they are considered today or to unrealistic rents paid for a retail space.

    Such times, when the newly opened shopping centres would become genuine pilgrimage places for consumers are gone, both because of the economic crisis, and as a result of the novelty of the mall concept wearing off, after such centres mushroomed, even excessively in some places. ”A great deal of money has been made in Romania without actually producing something – from real estate, from foreign investments. An atmosphere where everyone made profit was created but now everyone must suffer,” comments Ali Ergun Ergen, the man who coordinated the building of Bucuresti Mall and then of Plaza Romania and later supervised the development of the shopping area in the Baneasa project. He admits the market has developed like crazy over the last few years because all retailers had the same constant increase expectations for consumer spending. ”It’s like a balloon that you keep inflating; it will eventually burst.”

    Traducere de Loredana Fratila-Cristescu si Daniela Stoican

  • Cash is King

    The trouble is that all companies are trying to put off their own payments as much as possible and collect money from clients even in advance, if possible, although this is now very seldom achievable, due to the financial blockage. But can companies avoid this blockage although their sector is affected or will one player defaulting on its payments cause a chain reaction?

    Marius Ghenea, an entrepreneur who prefers to invest in start-ups, and has eight companies in his portfolio, says a company with losses and a positive cash flow is more solid than one which makes a profit, but which has its cash blocked, and is unable to pay its employees and its debts (most Romanian companies finance their operations via loans). In order to maximise cash inflows and minimise outflows, Ghenea believes the firm needs to increase sales and cut costs.

    Although it sounds simple, it isn’t. Sales should not be boosted at all cost: if the markup is cut too much, companies and entire sectors can be hurt. Cost cuts are also problematic, because such measures can generate significant subsequent costs; for instance, layoffs can give rise to immediate compensatory costs – i.e. unwanted expenses. Ioana Constantinescu, general manager of Chimtotal, in turn believes there are strategies to avoid a liquidity shortage. It is essential to keep a firm eye on the cash flow, especially the forecast one.

    ”We should be able to keep a strict record both of payments made to us and by us.” The company, a distributor of raw material for the cosmetics and the furniture industries, ended last year with 700,000 euros in turnover. Now, payments tend to be about two weeks late, and Constantinescu is getting increasingly more requests for a rescheduling of payment, especially when large sums are involved, but, at least for some products, the company is not willing to accept late payment. The explanation for this is that, although for the time being the balance between sums coming in and those going out is reasonable, both in terms of value and in terms of deadlines, there is always the risk, including for a profitable company, to default on its payments. One thing is certain right now: not all companies have a strategy that can shield them from problems, so the advantage of those that have a ”map” to avoid a liquidity shortage is all the more important.

    Traducere de Loredana Fratila-Cristescu si Daniela Stoican