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to be allowed to come into their ministry so that they could talk with
him, they need to have a signature - now I cannot remember whether by
the director or by the Secretary General of the ministry - a special
permission to do that. Mindless! Can you imagine for a
second if I said to my employees: "You will not meet with people from
outside unless I sign an authorization"... Well, the state
provides an example of total inefficiency... I am filled
with admiration for colleagues who work despite this framework
set by the state. Simply, I do not understand with what
self-esteem someone could go to bed in the evening, when he knows he has
signed such an order ... And it probably is the same in other
ministries, I can not imagine it is just that one.
Joanna Nikolova: This is about the state
administration. If, however, we speak more globally about the
pillars that are holding up the country and are a guarantee that there
is a market economy, that we entered into a structure like the European
Union, the fact that our financial system is stable at the moment, what
is our handicap? Bogdan Nikolov: In my deep conviction, a stable
state is built on two pillars - a stable financial system and stable
legal system. The stable financial system was introduced with the
currency board on July 1st, 1997 and now our country - figuratively
speaking - looks like a table top that is supported by one pillar
[only], and is accordingly quite shaky. At some point
someone will have to put the second column in place [too].
Namely, a stable legal system. I will not go into a detailed
analysis of the causes and how it should be overcome, for the simple
reason that time is limited, but in general it should be noted that
these laws which work flawlessly in Bulgaria, in large parts are
copied from elsewhere. For example, our Law on Obligations
and Contracts was copied in the 50s [of the last century] in most from
the French Code Civile. Our Commerce Act with the exception of the
chapter "Insolvency and Liquidation" was copied from the German
Handelsgesetzbuch in 1990. Have you heard of any problems…?
Joanna Nikolova: You say "copied" in a
positive sense? Bogdan Nikolov: Sure. Naturally!
For you see, every gardener knows that when a plant is not given
enough phosphorus which it needs, no quantities of potassium can
compensate this lack of phosphorus. Now, let us have a look at the
VAT Act. Since there are problems with uncovering and
punishing crimes, in the VAT legislation the legislator tried to put a
maximum number of protective barriers so there would be no abuse.
This is exactly an attempt with inadequate measures to try to
fight a very different core problem. Really, I don’t know how this
would sound, but I am sceptical towards new "inventions" in areas, where
in Western societies there has been a well working framework for decades
- or centuries. Simply no one can convince me that a working group
within 2 - 3 months or 1 - 2 years could create a higher quality product
than the one that was created (and has worked!) in a Western society for
centuries. I would just copy such a law, if I had the power to do
Joanna Nikolova: We are talking about the
judiciary, the reform and the laws that have to be finalised. But
what is the responsibility of business, employers, in respect of the
fact that the grey economy in Bulgaria is a large proportion of the
total economy? What should the representatives of the business do - is
there anything that depends on them? You are part of this
entrepreneurial profession, this area ... Bogdan Nikolov: Look, this
in particular, depends on the country. It really depends on the
State. The employer can make it happen that his/her enterprise
works in a perfect way. The fact is that few employers do this,
but they do exist – which means few are capable of doing this .
The rest depends on the state. Simply, the state should establish
the strict framework in which there would not be grey economy.
Think about it, if you are a restaurant owner and the manager of the
restaurant steals from you, who is really to blame? Naturally you.
Because you have not put him/her in a framework that
prevents them from stealing. Now, the state simply must
accept responsibility, but this happens when the state is strong and
when it is not engaged in stupidity.
Nikolova: You say that the state should assume responsibility, but you
are one of the people who do not just wait for someone to do something
but are working in your own field. Furthermore, you made a kind of
selection of some of the rules in a book. That is the formal
reason for today's meeting. Here, I will show on that camera -
Corporate Management. This book was published very recently.
What provoked you to write it? Bogdan Nikolov: Actually, the
widespread ignorance of basic principles triggered the idea. I
think that everything that is written in this book is so obvious that
the owners and managers of an enterprise should know it.
The fact is, however, that most of these things are not respected.
I think it would be difficult to find anything in this book, to
simply open any page and say "Here, this is not true." Everyone would
agree formally: "Yes, indeed, it is true." The success in leading a
company is not as complicated as a nuclear power reactor or a repair of
the Hubble [Space] Telescope or something of that sort. I am just
sure that if entrepreneurs follow these rules, things will move forward.
With a faster or slower rate, depending on global conditions, but
will move forward. You see, this is the difference between most
Western societies and us. Western societies are moving forward
with a lesser or greater speed. We, unfortunately, from time to
time, every 10 - 20 years drop back, then move forward again, and so on.
Connected to this, I would like to say something about the crisis
because sometimes statements are made of the crisis in Bulgaria and
America as if we’re talking about the same thing. The crisis in
America, you can imagine as a [disease of a] very healthy
organism, which at the moment simply has a 39 degree temperature.
In Bulgaria, the situation may be pictured as a pale weakling who for
the time being has no fever... The United States have not once in
their more than 200 year history gone bankrupt. Our country does
this every 20 - 30 years, sometimes even 10. So the crisis in
Bulgaria and America has a different genesis and different structure.
Joanna Nikolova: Does that mean we are more
flexible and that we can draw advantages from this situation? Or, the
global economy reflects on ours? Bogdan Nikolov: Of course, if we
may use a little exaggerated comparison, so to say, the typewriter
industry cannot be hit by a computer virus. But if we really look
at things in a more serious manner, we have to take extreme care
not to reach [a condition with] a temperature of 39 degrees, if we
continue using this analogy made a minute ago. Because, if the
strong body recovers quickly, including (including!) from a
budget deficit, I am not sure how long our country will be able to
sustain a budget deficit. In any event, in any case, much
less time than America.
Joanna Nikolova: We
shall see this [in the future]. We have heard today what the facts
are. The facts are presented in a very easy to understand way
based on the knowledge you have from your own experience. Bogdan
Joanna Nikolova: So,
eventually I will ask who is this book targeted at? Bogdan
Nikolov: The book is aimed at everyone who would like to make their
corporation a well-oiled machine. Whether this is a student who
has just graduated, whether it is an entrepreneur with a 5 - 6 years
experience, I think that each could draw some conclusions from the book.
In the case of an entrepreneur with 20-years experience, there
should not be any unknown element. And if he/she has 20 years of
experience and by chance still finds unfamiliar things, this should
lead to some conclusions...
Thank you very much for participating in the show, for the comments that
you made and I wish you success in your work and with your book!
Bogdan Nikolov: The pleasure was all mine!
Joanna Nikolova: Bulgarian wages are among the
lowest in the European Union – up to ten times lower than the average,
but our working week is one of the longest. What causes this
anomaly and how long will the indexes remain unchanged? Institutions do
not give a clear answer to this question, so the best solution is to
seek the advice of experts in the field. Without anymore opening
remarks I present to you my guest for today – this is the entrepreneur
Bogdan Nikolov. He is an economist by profession and deals with
corporate management. Good evening, welcome! Bogdan Nikolov:
Good evening, Ms. Nikolova! It’s nice to be here.
Joanna Nikolova: You have heard the worrying
indicators for the Bulgarian economy in the press review. There
has been a lot of information on this topic. They are hardly a
surprise for anyone. What is the reason that Bulgarians work hard,
on paper, but in reality labour productivity is so low? Bogdan
Nikolov: First let’s comment briefly on the figures. Today I heard
something like 280 leva is the average wage in the country.
Without going into too much detail, it should be noted that 280 leva as
the average salary for cities like Sofia, Varna, Plovdiv, Stara Zagora,
Bourgas, Veliko Turnovo, and so on is an illusion. Naturally,
wages in those cities are higher, that is, the ratio is not 10 times,
but the difference is large and it is not in our favour. We have
to elaborate on the reasons therefore. No matter how clichéd it
might sound, most of these reasons are of a national-psychological
nature. First, it can be observed that when in a Bulgarian company
workers, employees, management, outside consultants and so on start to
discuss an issue, they often "hover" around it. Of course, this is
most clearly observed in public institutions where there is a faltering,
in that everyone would like to show the working group how much he/she
knows on so on, but this is also the case in private business. You
know, we Bulgarians have a quality that at first glance seems minor, but
which substantially harms the business. This is not to
insult the person, not to say unpleasant truths in his or her eyes,
based on the fact that this person has put some effort into the work.
Let us take as an example our corporate website. While it
was oriented solely towards the Bulgarian audience, we never received
any call, no criticism. In the rare cases, when I asked someone
how the site was, that person would say: "Oh, it's great!" However, the
moment we began working with Germans and translated it into German, [the
situation changed]. If a German does not reach his/her intended
destination by the third click, if this does not happen with the speed
of light, he would immediately ring and ask: "Mr. Nikolov, what’s going
on? In the contract you offered me this and that, but it is not
happening on your site! So ever since I started working with Germans
precisely because they had no reluctance to insult me, affect my tender
feelings, things have improved.
Nikolova: Did the effectiveness of your site increase? Bogdan
Nikolov: Sure! I would say that the site is currently very good and also
other things [have improved]. The first and most important thing
that the Bulgarian companies need to do is to clearly put the issues on
the table at internal operative meetings. Actually, nothing could
be more important than that. Closely related to the first, but no
less important is the second thing, namely the discussion of each
question only once. For all the years I have lived in
German-speaking countries, I know that when an issue is placed on the
table, there may be many very different opinions on it - one says "yes",
another says "no", the third - "perhaps", the fourth observes "yes, but
not today", etc. However, when they get up from the table after
the meeting a decision is taken and the whole unit complies with it.
What happens in a typical Bulgarian company? One says,
"hm-hm-m-m", another says to "y-y-yes, but I do not know," the third
says he would need to ask somebody. Finally, a decision is taken,
often - though not always - in an authoritarian manner. Then, the
following Monday, they all sit at the table and the discussion starts
from the beginning as though this issue has never been
discussed. An enormous quantity of man-hours is lost. Energy
that could have gone into a more productive direction is wasted.
Sounds prosaic, but it is true. The third reason for the low
productivity is the under-investment in high technology. Look,
every company has different periods in its development. There are
times when customers are lining up outside the door and the revenue that
we collect pours in, even we might miss sending an invoice for a service
done. Let us wish everyone has such a period in their company.
However, after this, there comes a period when the customers are
gone, when we have nothing and nobody to invoice.
Joanna Nikolova: What should be done in such a
period? Bogdan Nikolov: This is the moment when the team has to
consolidate the processes in the company, to invest in new technologies
and to move forward. We don’t need to invent hot water. The
same was done by the Roman Empire - conquer and expand; at a time when
things get worse consolidate, strengthen democracy from in the centre,
in Rome, and so on. Every company should act in a similar way.
Joanna Nikolova: Well, in terms of personnel,
employees, what should the policy of the company be and what are the
main errors of employers here in Bulgaria? Bogdan Nikolov: The main
mistake of the employers in Bulgaria in terms of personnel is that they
say, "Why should I invest money in him, since he can leave any time".
Formally speaking, and acting on a first-signal system, this may
be true; however, it is much better to invest money in someone even if
he/she leaves after that, than to not invest a penny in the development
of the individual and he stays. This is the most dangerous
thing that can happen to our company - to keep someone in our company
who lacks the necessary skills. Of course, I prefer to invest in
someone, even if he goes. Well, after he is gone, it would mean
that I didn’t manage to keep him, rather than not to invest in him and
for him to stay. Then you know what happens... So, another
thing still in connection with productivity; is Western companies’ there
is the so-called succession planning, that is, it is clear when someone
moves to a higher position, who will take his/her place. Two or
three hours ago, at the Hilton, there was an event with the former
president of France Valéry Giscard d’Estaing who said something very
interesting: "The world is moving and changing." I was listening with
interest - this person was talking about, how the world is moving and
changing. What I see in a lot of Bulgarian companies is many
things move, but nothing changes. In short, somehow we
have to do this, in order to catch up with - for successful companies
to overtake - the development of the world and things because the
world won’t stop and wait for us.
Nikolova: You say "to catch up with". I will quote some of the
data that I mentioned in the press review at the beginning of the
conversation. If the productivity of labour in the European Union
is 100 units, in our country it is 36. This was reported recently
by Minister Emilia Maslarova. This is a huge discrepancy - our
work is three times less effective. The problem has many layers.
What is the fault of the State, of the institutions, for the
framework they ensure for business? Bogdan Nikolov: The answer to
this question is very easy. Colleagues from a ministry where I
used to work many years ago, quite some time ago, told me - not
months but two or three years ago - that if someone were