Businesses Can’t Be Managed by Nepotistic Models
One cannot develop his/her own business with the help of relatives or friends only. A management system is required so “Any owner wants to see his trusted people in important business positions. And when these people do not have appropriate professional skills and knowledge, it can cause serious harm to the business, “says Tigran Grigoryan who is the co-founder of ‘’Avenue Consulting Group’ ’LLC and the Head of Operational Management Advisory Services. According to the consultant, the time has passed when the business owner trusts relatives or friends, or, in other words, manages his business himself. For example, the owner of a shoe small workshop, which also sewed shoes in his workshop, was in daily business planning with business management, solving problems in accordance with urgency. Although the economy has evolved and business approaches have changed, business management has remained in the same level in many cases today. So, as T. Grigoryan says, owners continue to manage business by giving “manual” instructions. “Problems are solved when they emerge, and problems arise every day, but people do not even think about developing a management system that will prevent unpleasant problems.”
According to his observation, even the most profitable businesses in Armenia are often “manually handled” in this century. Meanwhile, according to Grigoryan, the key to business success is the existence of an effective management system. In other words, it is necessary to set rules of the inner game, what to do, when to do and who is responsible for all that. In the absence of such system, according to Mr. Grigoryan, the management of large businesses is definitely complicated. “International practice shows that besides a clear management system, it is necessary to set clear business processes. These are the rules of the game, in the form of an algorithm, as a result of which people have a clear idea of how each function in the given business is implemented. Business processes are described in internal regulations and guidelines. As a result, the introduction of a new employee to the functions and business processes of the given post goes smoothly and efficiently. Often the newcomer is told about his duties, and as a result of this, the information is often misinterpreted, that is, the spoiled phone’s effect. ”
The consultant assures that with the introduction of the management system, the business owner will first of all raise the efficiency of the work: employees will spend less time doing their daily tasks than before, duplicate functions will be excluded, and so on. “Getting acquainted with the day-to-day activities of the enterprise, you realize that the same function is carried out by several employees, which is already ineffective and can be the focus of the internal conflict. This leads to serious problems. And finally, the business suffers from that. ” It is also important to clarify the mechanism of staff encouragement when implementing the management system.
“There are several incentive approaches. For many, incentives only consist of the financial side, while encouragement has financial and non-financial instruments, “explains Grigoryan. According to him, depending on the positions, the methods of encouragement should be different. “You cannot motivate the worker as you would motivate the head of any department. It is important that the head of the company understand how to motivate his employees, when to motivate, and what motivation tools he uses. Thus, praise can have a great impact on the employee. Financial incentives are also important because everyone feels satisfied with financial incentives. There are two approaches to financial incentives: one is rewarding according to the manager’s wish and the other is a bonus system encourage employee’s work or additional effort. For this reason, clear accounting systems are developed, individual standards are defined. ”
According to T. Grigoryan, when developing a management system for this or that business, the company’s strategy, development directions, expansion possibilities, etc. should be taken into account at least 5 years’ time “And all this, on the way to implementation, should be one of the so-called, impartial representatives of the owner who will oversee external monitoring and control the processes. It is here that Armenian businesses are underestimated and, in most cases, they do not understand the role of a professional counselor. When you work in the organization and are busy with everyday work, you cannot even notice the problems as an external independent consultant will notice. Being independent in many cases helps you to advise your client painfully, but at the same time very useful.
In response to “Aravot’s” question whether the organization that invests in the management system guarantees the success of the business T. Grigoryan answered “Imagine you have invested a management system, have created business processes, you have collected an appropriate team for the client , who must fulfill the business objectives, but the customer continues to work in the former style. In the result, the invested system does not work.
Taking this into account, in some cases we do not advise to introduce a modern management system because we have to realize that the the business is not ready for that system. One of our goals is to explain the importance of business planning, and the benefits it may have, why the management systems are needed, and why professionals should have a very important position. ”
According to Mr. Grigoryan, one of the most important business issues is that the business owner often does not have a strategic vision, business plan, etc. “It’s the same thing you go, but you do not know where you want to be and this is a very serious problem for local businesses today. Let’s take into account that the economic situation is unstable and there is no confidence in tomorrow’s day, and working with such style increases business risks, the best way to reduce and manage them is business planning and effective management system. ” LUSINE BUDAKHYAN”