Transitional period

Civil servants may be required to continuously educate ourselves

According to the agency RIA Novosti this initiative was proposed by the Ministry of Labor. Dmitry Akopov, CEO of Jacobson Partners discussed this with Kommersant FM anchor Oksana Barykina. |  June 10, 2015

Investment Profit

Forestry enterprises face a difficult situation. On the one hand, the Soviet-era model of forest management requires extensive investments in the development of new territories. On the other hand, it is necessary to change the obsolete equipment and introduce foreign technologies. In addition, electricity tariffs are going up and services of competent professionals are expensive. We need to change the system, but not to cut costs, experts say. |  March 25, 2014

The Bonus Component

In early 2014, the amendment to the law on the Central Bank has come into effect giving it the right to assess remunerations of bank employees in terms of their compliance with the scope and nature of the bank's activities and risks it takes.

Dmitry Akopov |  March 13, 2014 |  October 02, 2014

Transitional period

One of the most important indicators of the economy is the demand for automotive products. According to experts, by September car sales in Russia fell by 12.7% in the first eight months of the year. Hard times came both for the automakers and related sectors related to the automobile industry. Under these conditions, the larger the company the harder it is to change for it in a short time. Experts point out that many companies are focused on improving the efficiency of the management. Active changes are taking place at AvtoVAZ, the largest automaker not only in Russia but also in Europe. Its production is the best-selling in Russia: about 250,000 cars were sold within eight months of this year, accounting for about 17% market share in Russia. Sales of Renault over the same period were half less.

Significant changes in AvtoVAZ happened at the same time as the appointment of Bo Inge Andersson, former Director of GAZ Group as AvtoVAZ President, who succeeded in achieving positive performance of GAS within four years. There are not so many examples of successful performance of foreigners in the Russian industrial sector who understand the Russian specifics and who are capable of carrying out rapid and qualitative changes. The Board of Directors of AvtoVAZ entrusted Mr Andersson as a manager with proven track-record in the automotive industry in Russia with the most complex project in the Russian automobile industry – to make efficient a bureaucratized business.

Despite the current economic and political situation AvtoVAZ has complex strategic objectives – to increase the Russian market share to 20% in three years, operating profit up to 6%, create a positive cash flow, increase the share of exports to 50%, and release six new models before the end of 2017. "One year from now, on September 25, 2015, we will start production of a new car Lada Vesta which has already surprised everyone at the recent motor show in Moscow. Nobody believes it. But we'll do it!" said Bo Andersson.

AvtoVAZ is rather a B2C than B2B business, as it was for Mr Andersson in GAZ. Besides the fact that AvtoVAZ business is focused on the end user with its own specifics in comparison to B2B, Bo Andersson’s challenge is also to change the customer’s attitude towards AvtoVAZ products, which has been formed over the years and generations. According to experts, the attitude can only be changed through improvement of the product quality, affordability, and decent attitude of AvtoVAZ dealers towards 14 million end users.

"The main objective of AvtoVAZ is to be a customer-oriented company. We have opened a customer service center which has 50 employees now. We have a lot of work to do in this area, but we will do our best to improve the image of Lada. We take into account opinions of each of our consumers. On September 1, we started custom production. Our dealers and partners help us face the customers both in terms of reducing the time of delivery of vehicles to our customers, and in terms of timely delivery of spare parts and quality and affordable service. Despite the hard times at the market, the Lada team will do its best to improve its image," says the President of AvtoVAZ.

Mr Andersson notes several key aspects on which his work is based: "Give people hope, give people the freedom and authority to allocate human and financial resources, clearly assign tasks and monitor their execution." According to Dmitry Akopov, CEO of consulting company Jacobson Partners, Bo Andersson is a real workaholic and his only hobby is work. "Every day at 6:45, instead of holding meetings at the conference-room he meets people in shops which he visits with his team of managers every morning holding short meetings with production managers. Three main issues faced by all heads of shops every day are: quality, capacity and production volumes," adds Dmitry Akopov.

In February, Mr Andersson said he had three problems: management, management, and management once again. According to Dmitry Akopov, 30% of managers were made redundant, nearly 60% of foreigners who worked at VAZ were sent home. All production managers are Russians now. The bureaucratic management system which consisted of up to 18 levels has been reduced to 5. The quality of management itself, as well as the cross-functional interaction between structural units which poses a huge synergy potential, changes.

Result-oriented top managers with proven successful experience, including foreigners with a worldwide reputation started joining the plant. "One of them is Steve Mattin, who was in charge of development and release of the Mercedes A-Class. Steve was involved in the development of such models of Mercedes, as S-Class, SL-Class, ML-Class and GL-Class. In 2005-2009, Steve was Vice President for design in Volvo, where he was in charge of projects of first concepts of XC60 and S60, and then series vehicles. In 2011, he came to VAZ. The old management in AvtoVAZ is also ready for changes. There is a lot of work, the introduction of changes and transformation of such a colossus as AvtoVAZ is complicated, but we already can see the result," adds Dmitry Akopov.

"The key to positive change is a system of management and work with people. The system of motivation and remuneration which is a basic problem of all large bureaucratic enterprises is also in the process of change. AvtoVAZ takes into consideration work experience, qualifications and performance. Opportunities to learn and get training will be provided. The system of key performance indicators being introduced within the company and designed to enhance the interest of each employee in the final result, increases the interest of both individual and team performance", said the president of AvtoVAZ.

According to one of the vice-presidents of the auto giant, constant change and improvement of production processes which are initiated and implemented directly in shops, is gaining momentum. Without this it would be impossible to achieve the strategic goals of AvtoVAZ.

"AvtoVAZ needs people who are ready to take responsibility for their work. Be demanding to yourself in the first place and not to others," says Mr. Andersson. "AvtoVAZ should become an attractive place to work for young professionals. Today, it is one of the key challenges facing the management of the plant," adds Dmitry Akopov. Today, the plant pays attention to housekeeping, quality of food, accessible recreation areas. The most important aspect of improving the productivity of workers is financial incentives tied to transparent performance indicators. "Fifty best workers in AvtoVAZ 4x4 assembly shops have been paid an extra monthly salary, and in the event the approved parameters for quality, productivity, and cost reduction are achieved all 4x4 shop workers will be paid an extra monthly salary. This practice is being introduced in other AvtoVAZ shops", says Dmitry Akopov.

Each of approximately 15,000 assembly plant workers produces 40 cars a year. Not so long ago they used to produce 20 cars. The plan for the next year is 60 cars. At the same time production costs for the first nine months of the year have been reduced by 25%. The quality of cars has improved by 25%, which has increased the warranty period on some models up to 3 years.