HERE AND BEYOND
Ameria: It's time of efficient business management
Media Room

Interview with Mr. Tigran Jrbashyan, Development Director at Ameria Group of Companies

Mr. Jrbashyan, the Armenian market witnesses increase in demand for implementation of modern business management systems. Having 15 years of advisory experience, how does Ameria explain this upsurge in demand?


Unlike many other CIS countries, Armenia has few really big companies except infrastructure ones or those engaged in mining. The majority of small and mid-size enterprises was set up at the initiative of private entrepreneurs. While a startup, such companies are run by their owners (or families) meaning that the owners take personal participation in all business processes of the company, starting from the choice of premises to implementation of technological processes. This management model is very common among family businesses or small-sized private enterprises, and it is a usual practice in Armenian companies now. Along with growth of companies (which is what we have now), expansion of their geographic footprint, business diversification, either horizontally or vertically, business owners come to understand that manual management on large scale is no longer possible and there is a need for implementation of certain management systems. In our opinion, along with limited information and lack of knowledge on the right manner of business administration for many business owners comes the feeling of discomfort and awareness of the problems caused by too high expenses and production inefficiency. This is really one of the most interesting processes in Armenian business we witness today.

Is this the only reason why the demand for advisory services to implement modern management systems has increased?

Not only. Initially business owners appoint their trusted people, friends, relatives, etc., to various positions to fix the problem. While trusted people use their best management skills, the results are still upsetting which leads to the change of trusted people. This process is recurrent as long as business owners believe that the main problem is in HR. There is no understanding of the required management system dictating description of job positions and the roles in the system and hence – people matching the available positions. Many business owners now build their management model intuitively, often as a continuation of ‘manual’ management system. To be efficient, companies need a system of balances and counterbalance along with risk management system. Unfortunately, risk management is practiced only in banking sector while in companies it is not so much as a subject to discussion. Actually, it is a simple understanding of certain points in the production chain, purchase and sales chain, HR and financial chains where entrepreneurs may face risky situations. To minimize such risks companies need a certain model of relations and regulation of decision-making processes, which will help to control all the issues.

And what if such system is not built? What problems will the businesses face?

Business efficiency drops, quality of products gets worse, there may be pricing-related problems. This leads to waning competitiveness in the foreign markets which have more sophisticated level of production management. So despite the feeling that work could be more efficient business owners still fail to identify the roots of the slump, blaming absence of necessary human resources. Actually, first the role of each person in the system should be clearly defined along with the business processes he or she is involved in. Only then you should recruit people. By the way, scanning job announcements you may guess whether business is streamlined or not. Detailed requirements to the incumbent indicate to a well-oiled management system. If the only requirements for a vacancy are ‘degree in economics, knowledge of English and computer literacy’, the management system in the company is definitely not tuned and nobody is aware of what needs to be done.

If business owners don’t see the true reasons of business ‘malfunctioning’, why do they turn to you?

First, we have already implemented similar projects for a number of companies and word of mouth travels at a high speed in Armenia. Second, many people contact us for a reference, often informally. And then we start explaining the changes that the enterprises really need.

Does it help?

It depends. Some agree to the necessity to streamline the business but do not fully understand that it is a costly service. We are speaking about big projects which are implemented in a few stages during several months. Since all the companies are unique, the management system should be based on their unique philosophy incorporated by the business owners, so there is no single recipe to cure all businesses. It is very important that business owners take part in these processes personally.

Do you offer a functional approach or streamlining of business-processes by directions?

Well, you may do it direction by direction. But advisory on implementation of modern management systems assumes diagnostics, identification of business processes running in the company, their formalization, i. d. creation of flow-charts showing decision-makers and those who bring such decisions to life. After the process technology is described, the roles that should be in or out are defined.
This advisory is based on formalization of all business processes. Good regulation leads to understanding of the requirements to the human resources. This is a painful process for a business bringing end to informal relations in the company and forcing some people to leave and the others to shift to another position. It’s not simple but as a result you get a system where each person has a definite role and tasks prescribed by such role. By the way, the projects that we’ve already completed were implemented step by step. First, we identified two or three priority business processes and tried to streamline them. Even at this stage, efficiency went up by 20-30% due to making the decision-making process quick and definite.

Do you create business management algorithm?

We do, making management systems match modern reality. This is a dynamic process going abreast with the market changes. That is why one of the most important business processes is a change management process. The management system should be in line with the company’s market position and business strategy conducted by the executive. From this viewpoint, it’s high time to shift to new management model. In my opinion, businesses with staff over 100 people will not be able to operate without management solutions. Today this is the most important component for the company’s smooth development. The state needs institutions to carry out its economic policy and even the best policy may not be implemented without a relevant institution. A similar situation is on micro level of companies. An institution is of utmost importance for the process: no institution, no implemented policy. You have institution and you may implement any policy. I believe that institutional development on micro level is as important as on the state level. We should understand that we are part of a competitive world. Maybe I sound cynical but it was blockage that led to the greenhouse effect, when business could go along without competing by management issues, quality of technologies, etc. Along with the development of technologies, infrastructure and globalization which is a real salvation for small countries, competition will grow leaving out those who are not able to implement a strong management model. I think this is the main purpose of implementation of a modern management system.


By Anahit Julhakyan

Updated 26.02.2013, 10:29
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