CEO survey 2012

CEO Survey 2012 Searching for Solutions

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General Overview

We are proud to announce that our CEO Survey has this year its fifth anniversary, so that we can now talk about a nice tradition. We also use this opportunity to thank everybody who participated in it over the years and contributed to its success. We are especially happy to see that the number of participants has constantly been growing and that this year all the records have been broken: over 70% addresses filled in the questionnaire. It is possible that due to the complexity of the situation a larger number of General Managers and CEOs felt the need to comment on current circumstances, and maybe somewhat different questions played a role in it: this year we have tried to direct the questions more to searching for concrete solutions and ideas, and our participants reacted eagerly. Besides suggested responses, we asked for further clarifications and got very interesting comments.

Like every year, we had both Serbian and foreign CEOs participating in the Survey, thus showing the real picture in our market.

The most of the CEOs have been in the leading position for over 5 years and the majority of them come from Professional Services, Consumer Products and Financial Services.

Almost one half of the participants believe that Sector of Food Production and Processing has the best prospects for growth, while one fourth claims the same for the Agriculture. Only 10 percent of the CEOs in Serbia think that Industry has a growth perspective, and each of the remaining sectors got a negligible number of votes.

Finding a strategic partner is absolutely the most efficient method of financing which could induce the development of companies in Serbia. Since more than one answer was possible, all other answers got between 20 and 30 percent, except financing from foreign exchange reserves, which is obviously regarded as the worst solution. In connection with this is the result that EU countries, with over 80 percent, are far the most desirable partner, while Russia and the ex-Yugoslav countries share the second position with slightly over 20 percent. It is interesting that BRIC countries got only 8 percent, and some of the participants named ex-Soviet republics, such as Kazakhstan and Azerbaijan.

As regards the business in Serbia in the previous year, the impression is that nothing important happened. Firstly, there were no significant investments, except a few exceptions such as Fiat in Kragujevac or NIS in Pancevo Refinery. Also, CEOs find that running a business in Serbia did not at all become easier in the previous year.

The situation is somewhat better when it comes to running the business in their own companies, because over 60 percent of the participants claimed they managed to have rationalization of business. It is very encouraging that one third of CEOs declared business volume increase, and one fourth invested into employee development.

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The solution for getting out of the crisis within their own companies our participants see in internal restructuring of the management team, giving chance to younger managers and in change of the strategy. There were a lot of concrete suggestions:

Focus on core business More flexible business by rationalization of work process and introducing inovations (products,

services) Vocational and functional training of employees Complete reorganization of business Defining clear long-term strategy of development in Serbia

Although a vast majority of CEOs find that the professionalization of management in state-owned companies is a must, almost half of them would not accept the offer to lead such a company. Those who would accept insist on the flexibility in choosing their team, on variable remuneration depending on results and on flexible strategy.

Some of the typical comments:

The risk of accepting the job and responsibilities for professional managers is extremely big, while on the other hand there is no guarantee that the business environment will be fair. Although state-owned companies do present a great challenge and possibility for highly qualified professionals.

Provided that I launch my strategy, choose the team, run independent policy, and have full freedom in running business, I would be prepared to guarantee with personal bill on my entire property.

Last year almost 80% of the participants said that the perspective of Serbia is in agriculture. However, it seems that the census of agriculture households was the only significant activity realized in the previous year, along with state subventions for certain agriculture sectors (e.g. wine production, cattle breeding…).

Most of the CEOs agree that the banking sector could help Serbian economy to a large extent by reducing interest rates and by debt restructuring. As regards companies’ solvency, it could be improved first of all by more efficient debt repayment by state companies/institutions to private sector, but also by introducing the regulation on paying the VAT after the realization, and by restructuring debts with banks.

It is interesting that the coaching for top management, along with executive search, is the service which CEOs recognize as the most needed in their companies.

Another turbulent year is ahead of us. We would like to see it as an opportunity for new creativity, brave actions and moves, about which we are hopefully going to read in our CEO Survey next year. Until then we wish you a lot of success in finding innovative solutions.


Consumer Products (18,6%)

Technology (11,9%)

Logistics and Transport (6,8%)

Industry (17%)

Financial Services (18,6%)

Life Science and Healthcare (3,4%)

Professional Services (22%)

Government Institutions and Non-Profit Organizations (1,7%)


1. How long have you been a CEO?

2. What industry do you work in?

1–3 years (13,8%)

3–5 years (19%)

Over 5 years (67,2%)

13,8% 19% 67,2%

IndustriesMost of the participants in the Survey come from the Professional Services, Consumer Products and Financial Services.

Experience as a CEOMost of the participants in the Survey have been CEOs for over five years.

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3. Where do you see the perspective for Serbian economy?

4. Which financing methods would be most efficient to stimulate the development?

Industrial production (10,2%)

Agriculture (25,4%)

Food production and processing (44%)

Tourism and hospitality industry (1,7%)

New technologies (5,1%)

Renewable energy sources (6,8%)

Other (6,8%)

Comments:- Service industry. - Food production, energetics and infrastructure. - Efficient work rather than surviving of state-owned companies on public funds (financing the

losers). Serbian government should start dealing with economic problems rather than their own ambitions and petty crimes with public (borrowed) money.

10,2%

25,4%

44%

6,8%

1,7% 5,1%

6,8%

Comments:- State-owned development banks, Development fund and borrowing from banks with state

guaranties (model that should be further developed).- Privatization with real payments, establishing material responsibility for top managers in public

and state-owned companies, based on submitting personal bill when appointed to the managing positions.

Consortium of domestic investors (20,7%)

Strategic partnership (56,9%)

Financing from foreign exchange reserves (3,4%)Foreign funds (24,1%)

Borrowing from banks under more favorable conditions (29,3%)Further privatization (27,6%)

Concessions to foreign investors (25,9%)

Other (3,4%)

3,4% 20,7%

56,9%

3,4%

24,1%

29,3%

27,6%

25,9%

Perspectives for growth and developmentAccording to the opinion of CEOs in Serbia, Food Production and Processing, as well as Agriculture have the best perspective for growth.

Most efficient financing methods The majority of the participants in the Survey believe that finding a strategic partner would be the most efficient financing method which could stimulate the development of companies in Serbia.


Business development in SerbiaEU countries are most desirable strategic partners of Serbia.

5. Who is a strategic partner of Serbia?

EU (81,4%)

Russia (25,4%)

BRIC (Brazil, Russia, India, China) (8,5%)

Middle East countries (8,5%)

USA (3,4%)

Ex YU countries (22%)

Other (5,1%)

Most of the CEOs think that there were no significant investments in Serbia in the previous year.

6. Do you think that significant investments in Serbian economy were made in the past year?

81,4%

25,4%

22%

5,1%

8,5%

8,5%

3,4%

Comments:- Russia and ex-Soviet republics (Kazakhstan, Azerbaijan, etc).- Market, i.e. wholesalers choose products which they want to sell. It means that a high-quality

product adapted to client needs will find a strategic partner anywhere, whereas those of poor quality won’t find any strategic partner at all.

- Serbia and its economy are not a desirable partner and should try to present themselves as a reliable partner with all potential partners.

Yes (6,9%)

No (93,1%)

Comments:- NIS, Pancevo Refinery, Zastava-FIAT Kragujevac.- Fiat, Philip Morris.- No, and that is one of the main reasons for the difficult situation of Serbian economy. - Unfortunately, with the excuse of political situation (elections) and global economic crisis a little

or almost nothing has been done. There is no clear plan in which direction Serbia should go. Industry has been totally neglected. Potentials in the region and Europe should be seriously investigated, an estimate of the investment necessary for initiating industry again, employ able management and give a chance to younger people.

- Inadequate business environment for foreign investment.

6,9%

93,1%


The majority of the participants in the Survey agree that running business did not become easier in Serbia in the past 12 months.

7. In which way did running a business become easier in Serbia during the previous year?

Legal procedures are less complicated (5,2%)

Political situation is more stable (3,4%)

Corruption is reduced (1,7%)

Tax policies are simpler (0%)

It did not become easier (91,4%)

Other (1,7%)

91,4%

1,7%

1,7%

Comment:- Bureaucracy and extremely unproductive solutions in key economic regulations have made things

even more complicated.

Business results in the previous yearMost of the CEOs named the rationalization of business as the most significant achievement in the previous year. On the other hand, neither reduction in business volume nor salary and benefit cuts could have been avoided.

8. Which of the following did you achieve in the previous year?

Business volume increase (33,9%)

Investment in employees development (25,4%)

Rationalization of business (62,7%)

Expansion into new markets (17%)

Introduction of new technologies (13,6%)

Finding a strategic partner (10,2%)

None of the above (5,1%)

Comment:- Conditions for running business did not make it possible to realize any of the mentioned activities.

62,7%

5,1%

33,9%

25,4%

10,2%

17%

13,6%

5,2%3,4%


9. Which of the following did you fail to avoid in the past year?

Dismissal of employees (29,3%)

Salary and benefit cuts (34,5%)

Reduction of business volume (44,8%)

Further borrowing (15,5%)

Closing a part of the company (8,6%)

Something else(13,8%)

Comments:- All the above mentioned elements, were more or less present in running the business. - Debt collection. Long payment deadlines and impossibility of collection. - Lack of real growth.

29,3%

34,5%

44,8%

15,5%

13,8%

8,6%

Comments:- Focus on core business.- New services and cost reduction under current circumstances. - Additional programs in type of services. - Creating new offer to the market in line with needs. - More flexible business by rationalization of working process and introducing innovations

(products, services).

Searching for solutionsThe best solutions for companies to overcome the crisis, according to our participants , are internal restructuring of the management team and giving a chance to younger managers.

10. What do you see as a solution for your company to overcome the crisis?

Internal restructuring of the management team (37,5%)

Giving a chance to younger managers (37,5%)

External recruitment of managerial staff (16,1%)

New loans (7,1%)

Change in strategy (33,9%)

37,5

%

37,5

%

16,1

% 7,1%

33,9

%


- Business environment is a problem (macro factor), but the largest number of organizations operate without clear strategies (in all dimensions) and defined leadership programs.

- Focusing on market potentials. - Vocational and functional training of employees.- Complete reorganization of business.- By adapting to new trends in constructing industry it is necessary to restructure the current

organizational structure and redefine the existing strategy.- Defining clear long-term strategy of development in Serbia. - Focus on financing industries important for the future of Serbia and the region. - To focus more on productivity gains/profitability rather than on market share growth.- Seek new business model.- New markets.

The CEOs agree that professionalization of top management in state-owned companies is inevitable.

11. Do you find that the professionalization of top management in state-owned companies is inevitable?

Yes (91,5%)

No (3,4%)

I do not have opinion on this (5,1%)

91,5% 3,4% 5,1%


The CEOs named the following conditions under which they would accept to take over managing a state-owned company: flexibility in creating their own team and variable remuneration depending on results. A significant part of our participants would not accept such an offer.

12. Under what conditions would you take over managing a state-owned company?

Variable remuneration depending on results (33,9%)

Long term contract (13,6%)

Flexibility in creating your own team (44,1%)

Flexibility concerning the strategy (32,2%)

Creation of neutral professional committee for the control of the working process/results (18,7%)Possibility of using state subventions (3,4%)

I would not take over a state-owned company (45,8%)

Other (5,1%)

Comments:- The Answer: “I would not accept” – is the result of the following: before introducing professional

management in state-owned companies it is necessary to perform several preparatory actions and define clearly business philosophy and values of such companies. There is no “know-how” in this part and most probably no political will. The risk of accepting the job and responsibilities for professional managers is extremely big, while on the other hand there is no guarantee that the business environment will be fair. Although state-owned companies do present a great challenge and possibility for highly qualified professionals.

- Provided that I launch my strategy, choose the team, run independent policy, and have full freedom in running business, I would be prepared to guarantee with personal bill on my entire property.

- “Golden parachute” – Option that in case the employer (the state) decide to terminate the working contract with us, I should be remunerated with one to three year gross salary.

33,9

%

13,6

%

44,1

%

32,2

%

18,7

%

3,4%

45,8

%

5,1%

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Census of agriculture households (48,2%)

Merging of land properties (9,3%)

State subventions for certain agriculture sectors (e.g. wine production, cattle breeding…) (37%)Development of organic food production (16,7%)

Other (16,7%)

Census of agriculture households was the most important activity related to the investments into agriculture in the last year.

13. Last year almost 80% of you claimed that the perspective of Serbia is investing in agriculture. What do you think was done in the course of the past year?

48,2

% 9,3%

37%

16,7

%

16,7

%

Comments:- Not enough. - Insufficient.- Very little with the aim to improve production and placement of products. Not a kilometer of overgrown

irrigation channels was cleaned, and the irrigation system was not increased for even 2 km. - Nothing.

Majority of the participants agree that banking sector could help Serbian economy by reducing interest rates and by restructuring existing loans.

14. How can the banking sector help Serbian economy?

Comments:- A combination of larger number of parameters is definitely necessary. Also, defining financial

market is a precondition. - Unrestricted opening of financial market to foreign banks (like UAE) or nationalization of banks

(like Iceland). - Granting long-term loans (over 10 years) with lower interest rates. - Better understanding of clients with open and good-willed two way relationship; realistic

estimation of capacities and cooperation volume. - To continue to finance the Serbian economy by supporting good projects/clients.- Becoming a more professional and reliable partner.

Reducing interest rates (30,5%)

Increasing grace period (11,9%)

Interest rates write-off (0%)

Start-up loans (10,2%)

Restructuring debts (27%)

Offering finance consultancy services (10,2%)

Something else (10,2%)30,5

%

11,9

% 10,2

%

27%

10,2

%

10,2

%

External recruitment of top management (executive search) and coaching for top management are recognized as the most needed services for companies in Serbia, CEOs claim.

16. Which of the following consultancy activities do you find most important for your company?

Solvency of companies could be improved by more efficient debt repayment by state companies/institutions to private sector, as well as passing the Regulation on paying the VAT after the realization.

15. How can the insolvency of companies improve?

Debt restructuring by banks (47,5%)

Regulation on paying the VAT after the realization (54,2%)

Payment of capital gain tax at the end of the fiscal year (15,2%)More efficient debt repayment by state companies/institutions to private sector (64,4%)Regulation on cutting the payment due period (35,6%)

Development of factoring services (30,5%)

Development of securities market (18,6%)

Other (6,8%)

47,5

%

54,2

%

15,2

%

64,4

%

35,6

%

30,5

%

18,6

% 6,8%

Comments:- Cash Flow Management.- Elimination of state debts and companies debts (with

payments, of course) and more discipline in financial markets and more efficient sanction systems for responsible persons (ban on business activities, confiscation of personal property, personal bankruptcy…) through efficient work of courts.

- Complete reform of tax system and easier procedures, as well as unique implementation of regulations by all tax offices in the territory in Serbia.

- Reduction up to 30 days, both companies and the state.

Comments:- Management consulting.- Financial consulting.- The answer “something else” was given because a compilation of all the above mentioned

activities is necessary. A single answer is impossible to give. Serbia needs a new value system and new business approach.

- Company should outsource the following activities: legal, integrity/risk check.

External recruitment of top management (executive search) (26,3%)Assessment of the existing management team (14%)

Coaching for top management (24,6%)

Board advisory (8,8%)

Proposing the strategy for human capital development (19,3%)Something else (7%)

26,3

%

14%

8,8%

19,3

% 7%

24,6

%


Debt restructuring by banks (47,5%)

Regulation on paying the VAT after the realization (54,2%)

Payment of capital gain tax at the end of the fiscal year (15,2%)More efficient debt repayment by state companies/institutions to private sector (64,4%)Regulation on cutting the payment due period (35,6%)

Development of factoring services (30,5%)

Development of securities market (18,6%)

Other (6,8%)

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About Stanton ChaseStanton Chase International is an internationally specialized Executive Search company, which by using the expertise of its consultants, provides its clients with the best services of finding and assessing the top managerial staff. What makes us different is our knowledge of international, regional and local movements on the workforce market, as well as the accessibility to candidates from all over the world. Stanton Chase International is a company which consists of 73 offices in 46 countries around the world. According to the most recent research in this industry, the company is ranked one of the top 10 leading international Executive Search consulting firms in terms of size, speed of development and reputation. Among its clients the company is especially valued for its exceptional quality of business, above all for its successful work assessment in the complicated process of finding and choosing top management staff.

Stanton Chase Belgrade office was founded in 2002 and provides a full spectre of services in the area of Human Resources (HR) based on the multifaceted approach to the human resource needs of our clients. Such a multifaceted approach includes not only different services, but above all our ability to adapt to the needs of the client. Our complete activity during the selection of candidates or consulting is adapted to the specific needs of every client and is based on the type of industry that the client belongs to as well as their characteristic needs.

Today Stanton Chase Belgrade is placed among the leading Executive Search companies in Serbia.Our team constitutes of consultants and researchers specialized for certain branches of industry. We particularly want to emphasise that our consultants have acquired their knowledge, skills and experience in leadership positions in the industries that they are specialized in.

Our specialized fieldsWe offer industry specializations in nine dynamic fields:

Industrial Technology (IT & Telecom) Consumer Products & Services Life Sciences & Healthcare Financial Services Professional Services Natural Resources & Energy Logistics & Transportation Government, Education & Non Profit

Using the latest methodology for the assessment of competences and personality profiles (on-line psychometric testing and strategic exercises in the form of business simulations) we provide a successful and fast assessment of the best staff relevant for project work.

Additional services Internal assessment Coaching Company restructuring


Documents

CEO survey 2012