Guests at the Business Breakfast were:
Boris Koprivnikar, Minister of Public Administration of the Republic of Slovenia, has lived with the challenges of public administration for over 20 years, now he has the power to change it.
mag. Tomaž Lanišek, MBA, General Manager OEM Europe & CIS, Knauf Insulation Slovenija, experiences and obstacles of a company that wishes to expand its business in Slovenia.
mag. Branko Žibret, MBA, Managing Partner for Eastern Europe, A.T. Kearney, an analytical and practical view on how to create a more efficient public administration.
The discussion was moderated by Jaka Repanšek, MBA, co-chair of the AmCham Intellectual Property Committee.
Let’s bridge the divide between “us” and “you”
Jaka Repanšek, chair of the AmCham Intellectual Property Committee, highlighted the achievements of our athletes. By wearing a ski-jumping hat on Shrove Tuesday (people traditionally dress up and join a carnival on that day in Slovenia) he paid tribute to Peter Prevc, who flew over a quarter of a kilometer on Saturday. As an interesting fact, Repanšek added that Peter Prevc is a member of the Slovenian police force and as such, a public servant. He further added: “A public administration official, Tina Maze, won two gold and one silver medal at the World Ski Championship. A nation with only two million inhabitants has super-powers in several sporting disciplines. This allows us to think about what we can achieve in other areas. These sportsmen can teach us that success, individual or societal, in a competitive environment, is dependent on our responsiveness and flexibility.”
Repanšek further pointed out the importance of bridging the divides between US and YOU. “By that, I am talking about the divisions between us – the business sector, and them – the public sector, and vice versa. Such splits are extremely counter-productive for the nation with a number of inhabitants, which equals that of a major European city.
Boris Koprivnikar, Minister of Public Administration of the Republic of Slovenia, began his keynote speech by stating: “I look at politics as strategic management. This means that it is not important which country you come from, but how you are leading your organization. A true politician thinks strategically and plans in advance, in order to spend the funds for reaching common goals. When we talk about the economy and the public sector, I strongly reject any divisions between the two. We have an expression ‘the real sector’. Does this mean that the public sector is unreal? The overall success of a country depends on the success of its private sector.”
Koprivnikar continued, talking about the interdependence between the two sectors: “Paying taxes is a burden, while on the other hand all workers go to the doctor, their children go to school, there is a public road leading to every factory…therefore, there must be a codependency. Just as we expect businesses to pay their taxes, we expect the country to be rational in its functioning. The goals of the interdependence are therefore crucial.”
“Working together is one of the biggest problems. We are not cooperative enough and we can learn about that from the business sector. Even ministries have trouble communicating among and within themselves. In the IT sector, as an example, our goal is to bring together as many different companies with new products, which would be of interest to major customers in Slovenia and internationally. But we must understand that running a country and managing public property is not as simple as running a business. Businesses are closed environments, whereas by leading a country, you are facing different opinions by politicians, trade unions, the civil society… There are many additional burdens, which make you inflexible. Everyone who says that governments should be managed as companies must bear this in mind. This is why we need additional knowledge and especially further cooperation. We need innovation, not only in technology but also in the fields of proceedings, organization, financial modeling, public-private partnerships, and above all in the field of legislation. There are several large projects that we are starting. At the same time, we understand that in addition to interdependence and cooperation, we also need further consolidation into a single working system with a common goal, with that goal being common welfare of all citizens. Interdependence in cooperation will lead us to this goal and in the end, we will have something to show and sell,” added Koprivnikar.
Which knowledge from the business sector can be transferred to the Public Administration?
Koprivnikar emphasized the knowledge of large international companies on how to create and run effective, large systems and on how to change values: “In such systems, the question is not how to change the thinking of each individual employee, but how to create a new value system, which leads to everyone’s improvements. Our error from the past is never having had a good system for measuring the effectiveness and performance of individual departments and civil servants.”
Answering a question on measuring the quality of public sector services, Koprivnikar answered: “The problem is in setting a standard, I must admit that I am not a fan of setting standards. Why? Let’s take healthcare as an example; if you limit the number of doctors and nurses needed, such standards will be unrealistic. We can, however, compare the number of operations performed by different doctors. Such measurements offer us a good basis for comparing which doctor is better. This is an opportunity to set standards. If individual doctors perform above average, they should be rewarded, and if they underperform, other measures are needed. This makes a system dynamic and enables continuous improvements.”
Regarding the impact of measurements on wages in the public sector, Koprivnikar emphasized: “The biggest problem in the past was the fact that the grading system was dependent on the personal choices of the boss. The grades were always 4 or 5 (out of 5), and therefore there was no motivation. If you want to change the system of wages in the public sector, you have to establish the elements of measurement, which are not entirely subjective and which are based on objective criteria. These instruments must be created with the help of professionals and trade unions. This is the only way of making wages more flexible and the employees more motivated, because it will be very clear that if you perform better – you will be paid better.”
Branko Žibret, talking about a recent study on agile governments, explained: “We have to understand that we are in a phase of changes. In the past, the country was protecting the interests of the leading class, but nowadays, countries protect all citizens. In the business sector, companies exist for customers and try to serve the customers in the best way possible. The same should apply for the country. Its citizens are the consumers of the public sector and the public administration should act in ways that are good for the citizens. It is not true that there is no competition – where there’s mobility of people, countries will compete with each other. The aim of each state is to serve its citizens. The government does not create jobs, but only the preconditions for job creation. We absolutely need to stop the brain drain. As a minister, your options are limited, however, a change in the tax structure is needed in order to keep the best and the brightest in Slovenia. Slovenia has the skills and education, which are important. On the other hand, it also has an expensive taxation system for foreigners who wish to work here, therefore they opt for Italy or Croatia instead.” He further added that competition is always healthy, as long as the rules of the game are clear, especially when it comes to social services. Public-private partnerships are, in his opinion, one of many initiatives, but an important and an excellent one.
Experiences of foreign investments in Slovenia and competitiveness of Slovenia
Tomaž Lanišek presented the investment case of Knauf Insulation in Slovenia: “This international company actually wants to build a branch in škofja Loka, because they have a lot of knowledge and educated individuals with PhDs. Slovenia also has a competitive advantage over other countries because of its tax holidays for highly qualified personnel, which is essential for further investment. The public administration in škofja Loka, as well as the mayor showed a very positive response. The spill-over effect is important too, as some of our suppliers may want to build their factories in the vicinity, if our investment succeeds. Quick decisions are crucial here, as investments can quickly move to a competing country.”
Koprivnikar emphasized: “Touching upon the problem of environmental legislation, the biggest problem are applications for licenses from different sources, until somebody says no, which can be entirely justified. The problem lies in the sequential approach, which we wish to change and make it based on the consensus of all, with public interest being the main question. Regardless of the decision outcome, quick answers are crucial.”
When asked about what competitive countries are offering compared to Slovenia, Lanišek replied: “These countries have a strategy in place, you can receive a business license in a very short time. This is because they are facing high unemployment and are therefore interested in obtaining international businesses.”
We need clear objectives and management
Žibret pointed out: “Fiscal balance certainly needs to happen, but on the other hand, we have public sector efficiency and effectiveness of the state as such. We need to identify the country’s main objectives. Citizens are worried about their future in terms of pensions, the future of their offspring. Our unemployment rate is too high, we have to create new jobs, which will also make our citizens less worried. To achieve this, we need a basis for economic progress and development. Nobody is against the creation of new jobs.”
Žibret further added: “In my opinion, the tax structure is not the biggest problem, the biggest problem is leadership. We did a survey, which showed that civil servants believe they can be more productive, but they need a strategy, more cohesion and clear leadership.”
“We need a clear vision and goals, because we currently do not have either. We started the process of collecting strategic goals for Slovenia, where we gathered more than 140 strategies at the national level. We are very good at setting up strategies, but bad at their implementation. The implementation is a major challenge. Our legislation faces a similar problem; it is very process-oriented, the processes are well defined, but there is no definition of substantive law. There is no definition on what is/is not in public interest and what our goals are. Those in the position to decide should know what the basis for their decision is”, emphasized Koprivnikar and concluded: “Above all, the problem is that we have a panic fear of changes. We are ready to remain in the same position, even if it is bad, because we are afraid of what changes would bring.”
“Operate with a clear consensus what is our country strategy, act smart and constant innovations are the three areas I believe Slovenia should base it`s steps further on. At AmCham meeting we all agreed that setting long term values and establish measurements are essential towards agile public administration, which will serve the citizens with high quality of service. I would like to encourage the government to open up for strategic partnership, where we would all share best practices and knowledge from many projects we did with other governments around the world. We are here to help building a successful Slovenia for our generations in the future”, concluded Julij Božič, Country Sales Manager IBM Slovenia.
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