The previous post dealt with contracting with Romanian private companies, and now I want to look at the position in relation to State companies. Despite over 20 years of „capitalism” much of Romanian industry and resources are still in the hands of companies that are either Government owned or Government controlled. Unless your business can be isolated from the State, any person doing business will at some time or other come into contact with the State. What is just as important is that many of the employees of these companies worked for them before 1990, or became employed in them in the years immediately after 1990 and therefore have pre 1989 attitudes.
The importance of this is that the companies and the employees have not in some cases moved on and adopted the ways of doing business introduced into Romania after December 1989: rather they still see their position as one of protecting State assets against those who will only exploit those assets and also themselves for the investors own benefit and not for the benefit of the business.
It is also very important to remember that until 1990 and in the succeeding years Romania was a command economy. Both of these factors now affect the way that matters are dealt with inside these State institutions and by the employees.
It is necessary at this time to point out that the many years of communism have also fostered close relationships inside organisations and industries which mean that it can be difficult to break into this type of relationship; also deals are done and matters are concluded in a less than transparent fashion. The current wave of anti-corruption trials and trials concerning influence peddling are now also reflected in how business is done with and by the State companies nad how decisions are taken.
Our early experience with negotiating with a State company and organisation meant that not only was time wasted but it took a long time for us to understand the technique. As Romania was a command economy this meant that everything had to be approved to fit in with the plans of the State. When dealing with a State company negotiation it is very clear in the meeting that despite the number of person’s present only one person from the State side will get involved in the initial discussions and will be decision maker. Although there will be many representatives in the meeting, often accounting, legal, technical, HR department they will always defer to the chairman of the meeting who is often the managing director. He will do the talking and they will only become involved if asked and he agrees. To try and engage them in the discussion will be difficult and they will avoid it if they can.
You will have a number of discussions and meetings as you move towards an agreement. Sometime you will be asked to go over the ground of an earlier meeting and you will then find that what you thought had been settled suddenly becomes an issue which has to be discussed and agreed again. You may agree a price in the morning meeting and then in the afternoon find the price has been increased or has to be renegotiated. Very frustrating but all part of the negotiation. The reason for this is that after your meeting with the negotiating team, they will then analyze everything and if they think that they can come to a better arrangement they will open up the discussion again.
When they were having their meeting after the negotiation it is only then that all the members of the team will have their say. They may object to any point but it is necessary for the State Company to ensure that their position is no less favorable than it was originally. The smaller the negotiating team the harder it is some time to come to a conclusion. When negotiating with the State one must always be prepared for matters you thought were settled to be brought up again.
Another technique is what we call the rolling negotiation. Here the negotiating team will change from meeting to meeting. This means old ground has to be gone over and new points made. The Romanians also do not respond very well to the good cop bad cop routine. So far as they are concerned the negotiation is not with an individual. This means that it can be difficult to establish a relationship with the negotiators on the other side of the table.
To understand the negating technique one has to look at the past. For over 70 years Romanian business was centrally controlled, both in the war years and afterwards until 1990. During this period any individuality was taken out of business and business was to serve the common good. If anyone was seen to be getting an advantage then they were brought down to the lowest common denominator in the group. Any negotiation is therefore seen as a group endeavour and if the Romanians thinks that you are obtaining an advantage they will try and bring you back. Often they fail to see that a concession given in one part of the contract will be more than off-set by an advantage elsewhere.
The former system also relied on a pyramid structure of decision making. This meant that no-one would make a decision. It would be passed up the line until the person at the top who had authority to make a decision made it. If he queried any point then the comment was passed back down the line and the whole matter re-opened. This in many State companies and ministries is still the same type of structure. Despite many attempts to improve the structure this is taking longer than was anticipated although changes are happening as younger persons move up the corporate State structure. As knowledge is been passed down in the system the process is slowly freeing up but still be ready for delays because a key decision maker may not be available.
Despite Romania’s rigid employment laws many people in State industries and companies are still protective of their employment. Working for the State whilst on the face of it is not very well paid but bonus and incentive payments mean that many officials receive twice or three times their basic salary a supplementary payments. Thus even if a young person is better suited the negotiation and would move the matter forward the older members of the negotiating team may hold them back. It is only as they leave their positions that these companies will become more adaptable and allow decisions to be made.
Once the final terms are arrived at then it is a matter of reducing the contract into writing. On lawyers and drafting next blog.
