COORDINATION OF OPERATING DOMAIN, Victor Stepov

19/02/2014

 

Pult Upravleniya. Magazine for managers of Russian Railways (Moscow), No. 1 2014

COORDINATION OF OPERATING DOMAIN, Victor Stepov

For the purpose of increasing of competence of managers we implemented special advanced educational programs including programs with participation of Stockholm School of Economics having created an environment for permanent self-development of the employees.

Pult Upravleniya. Magazine for managers of Russian Railways (Moscow), No. 1 2014

 

COORDINATION OF OPERATING DOMAIN, Victor Stepov

Director of the Oktyabrskaya Railway shares experience of work of the regional corporate management center.
The railway worked in 2013 in a fundamentally new management system. De jure the regional corporate management centers (RCMC) had been working since October 1 of 2012 but because at the Oktyabrskaya Railway the system was launched in a pilot mode the RCMC there started functioning even earlier.
It is possible to judge about the size of the work done partially according to the quantity of business units of the holding at the operating domain of the railway. These are 22 territorial units of functional divisions and seven structural units of RZD, as well as 36 subsidiaries and dependent companies.
Of course, the reform passed with difficulties but because specific of the holding did not allow stopping of transportation process. It was necessary to carry out structural transformations, so to speak, "on the wheels" and we did not have a right for mistake. The main difficulty was in absence of necessary competences in the field of reforming. Development of the management system requires not only engineering knowledge from managers but also mastering of a whole complex of disciplines in the field of corporate management, economics and marketing.
A modern manager should not only develop himself but should also develop his employees, should know how to be a leader, should have systemic thinking. Before carrying out of structural transformations we subject the history of reforming of the biggest railways of the whole world to meticulous analysis. We had to acquire the necessary experience in the accelerated mode because domestic and global market of transport services does not give time to you to get ready. Competitors will not wait until we gain forces and improve our efficiency and competitiveness.
For the purpose of increasing of competence of managers we implemented special advanced educational programs including programs with participation of Stockholm School of Economics having created an environment for permanent self-development of the employees. During roundtable meetings and business games we worked out different situations and created a model of efficient management in new conditions. Results appeared quickly. A team of trained managers who have the necessary set of knowledge is working at the railway now.
Management of human capital and human resources management is one of strategic tasks of reforming of RZD. At the meeting dedicated to results of the first year of work of RCMC (it took place at the end of the last year) this was especially emphasized by President of our company Vladimir Yakunin.
Competence approach in development of employees on the key posts is the basis of achievement of the tasks set. At present, a unified system of corporate requirements to the staff is created in RZD. A working group for implementation of this system is functioning at the operating domain of the railway. The goal of its creation is determination of requirements to professional knowledge and skills of RZD employees that influence efficiency of fulfillment of functional duties by them, contribute to implementation of strategy of the company and ensure its competitiveness on the market of transport logistic services.
In the framework of the regional council for human resources the model "Management of development of human resources in the region of the Oktyabrskaya Railway" was worked out in 2013 for the purpose of determination of the procedure of interaction of RCMC with directorates, centers of functional divisions of RZD and subsidiaries and dependent companies located at the operating domain of the railway. It determines unified approaches to coordination of training, retraining and improvement of qualification of managers, specialists and workers, as well as conduction of technical education. We started implementation of educational projects aimed at development of competences including the projects for the youths. These programs include teaching of lean production, risk management, project management, basics of business modeling, skills of work in corporate ERP systems Enterprise Resource Planning System) in remote mode and many other disciplines mastering of which is vitally necessary for a manager of a big international company. Such approach to implementation of educational programs acquires the decisive importance in achievement of goals and tasks set for the RCMC.
Along with this, interaction with providers of educational services according to one window principle allows saving of costs on account of choice of optimal forms of education and consolidation of corporate order.
Simultaneous involvement of employees of various segments into the process of improvement of qualification provides for better interaction among them and, as a consequence, achievement of positive synergy during organization of transportation process in the region. Using this approach, RCMC plan to educate more than 5,500 managers and specialists this year at the operating domain of the railway under corporate programs at expense of the budget and the major part of them will improve their qualification remotely.
Opening of a division of the corporate university took place in St. Petersburg in June of 2012, which allowed training of 283 people under "Corporate leader" program for improvement of qualification of managers of RZD holding in addition to the existing educational programs at the operating domain of the railway.
By now, we created a vertical of management: director of the railway – deputy director of the railway for the region – node working groups (NWG). This management structure ensures technological and corporate coordination of structural units of the divisions, as well as subsidiaries of RZD that carry out their activity in the borders of the railway. We also created a vertical of technological service that provides for coordinated activity of regional directorates on the level of a region, territorial units of structural divisions, implementation of a system of balanced indicators of production budgets, organization of work of NWG and making of day-to-day managerial decisions.
We implement new management tools, one of them being controlling. Despite that it sounds similar to the notion of "control" it means "to manage," "to regulate" and "to observe" first of all and to "control" only in the last case. The main goal of controlling is building of an efficient system of analysis, making, implementation and control of managerial decisions in the company.
The controlling model developed at the operating domain of the railway is oriented not at internal processes of certain directorates but at their interaction with each other with connection to strategic initiatives. As a result, we do not look for a scapegoat but work out a joint action plan for achievement of the key indicators of the railway that are determined by resolution of RZD No. 56r of January 17 of 2011.
One of the most important tasks now is provision of stability of the key processes. Now, in conditions of optimization of expenses when it is necessary to cut expenses by 81.1 billion rubles in the company as a whole, this is especially important. In the last few years, one of the main lines of development of the Oktyabrskaya Railway has been improvement of the production system through implementation of lean production in the transportation process.
Importance of this goal is determined by the fact that 75% of expenses of the operating domain of the railway as a whole depends on efficiency of transportation activity and almost all regional directorates participate in its implementation. The work on involvement of employees of all categories into the process of permanent improvements through lean production started at the operating domain of the railway yields its results on account of improvement of technologies and reduction of nonproductive expenses. Speaking about an example of incentives for participants I will mention the working group of multifunctional project "Organization of work of railway parts St. Petersburg-Sortirovochny-Moskovsky-Kirishi-Budogoshch in accordance with a unified mutually connected technology." From 48,000 to 159,000 rubles of bonuses were paid to all members of this working group. Thus, employees involved into the process of permanent improvements bring benefit to the company and improve their material well-being.
Participation of staff in such projects not only allows achievement of effect in the part of production proper but also forms commonness of values and goals for employees of the company from manager to subordinate and vice versa. Production system is also a motivation environment both for manager and for ordinary employee. At present, it is possible to retain a person only on account of his involvement into fulfillment of difficult and responsible tasks. That is why it is also important that a manager create atmosphere when all lower employees are permanently demanded from the standpoint of initiative, understanding of what they do and increasing of their own potential.
Naturally, mastering of new technologies starts from obtaining of knowledge and so we have started from learning and continue the permanent process of comprehensive teaching of employees of the operating domain of the railway lean production tools. For the purpose of deployment of the program at the operating domain of the railway and involvement of divisions and units in 2012 a goal was set for the Oktyabrskaya Railway: to teach not less than 20,000 employees of the operating domain of the railway to use methods of the production system. According to results of the year, we managed to train 20,257 employees. At present, there is a team of trained specialists – experts in the field of lean production at the operating domain of the railway. They are occupied with teaching and spreading of successful practices in the field of implementation of the production system.
Effect from implementation of these methods is a synergy result of work of the interested managers and specialists of the railway motivated for the result. Research of involvement of the staff into the process of improvements is carried out at the operating domain of the railway annually. The quantity of employees who are supporters of use of the program "Implementation of lean production" is growing gradually. Thus, in the last three years the quantity of employees (from among those polled) who supported lean production grew from 65% in 2011 to 76% in 2013.
Training of another group of experts in lean production, as well as training of 880 employees in "Innovator" area, specialists improving technological processes in the limits of their structural divisions, was done in 2013 for achievement of the necessary level of involvement of staff of the railway into the process of permanent improvements. Overall, 265 managers of units passed through training in four years, as well as 95 experts who received status of internal coaches and, in turn, trained more than 27,000 employees of the operating domain of the railway.
In 2013, emphasis in the program was put on mapping of the transportation process as the basis of inter-functional interaction of all units of RZD according to the levels of management: on the level of operating domain of the railway – mapping of completed route, on the level of territory – mapping of work of a part, on the level of node – mapping of technological process of a station. Correspondingly, management of the program is organized in a similar way: N-NZ for a territory – node working group. As a result, we completed more than 250 projects in 2013 and achieved economic effect bigger than 1,452 million rubles including the effect on account of spreading of the formerly completed projects. Given growth of the working fleet of railway cars by 14.6% in the railway and growth of cargo turnover by 2.6%, this enabled us to fulfill the production cost plan.
From the standpoint of implementation of the company's strategy it is also absolutely necessary now that the values and the principles that are followed in the company on the supreme level from the standpoint of working out of the target indicators of our reform be unified both for the director of the railway and for the worker. There cannot be efficient work in the company in absence of value grounds for what we are doing. That is why the matter of upbringing of the staff is the key task of managers of any level because these value grounds can only be handed over and this is not taught in the institute. Along with this, manager should create an atmosphere in which lower employers feel permanently demanded from the standpoint of initiative, understanding of what they do and increasing of their own potential. Today, it is important to understand that no technologies and novelties can bring the desired effect if the relevant corporate culture that corresponds to new challenges and tasks, a culture of efficiency is not formed.
For fulfillment of the tasks set by the President of RZD in the field of development of corporate culture the Oktyabrskaya Railway is developing a pilot project for development of a system for diagnosis and conduction of research of the organizational culture for its compliance with values of the brand, mission and strategic goals of RZD holding. A big work is being done now on formalization, implementation and broad informing of the staff about the main elements of the new corporate culture – mission, values of the brand, principles of the business ethics code, competence approach to management of the human resources. However, the demonstrated models of behavior often do not comply with the announced values. The matter is about domination of the command administrative methods of management, use of the demotivating measures of influence by managers towards the subordinates and discrepancy of the declared and real behavior with clients. In December, we conducted express diagnosis of condition of organizational culture using one of the most widespread models for this purpose ("Competing values framework" of Cameron and Quinn. More than 100 managers from deputy director of the railway and heads of the regional directorates, centers and services to chairs of the node working groups from all territorial divisions participated in the polls.
Results have shown that there is obvious domination of the hierarchic culture. The same trends can be traced in research of the culture of security done by various methods of sociological research in various target audiences: among young employees, heads of linear enterprises, on the middle level. Results of these measurements say that these elements of corporate culture are restraining for the company now. to the problems related to strengthening of hierarchic and bureaucratic system belongs distortion of information between the levels of the organizational structure; inefficient setting of targets and planning according to formal sign not supported by resources; increase of the quantity of reports; contradiction of regulations and instructions and their lagging behind the changing of reality. Relying on results of express diagnosis and also understanding that formation of a new organizational culture is a long and often painful process, we are going to form a program for implementation of changes in the organizational culture making provisions for periodical diagnosis of its compliance with the target condition. For this purpose it is necessary to create motivation environment for conduction of changes, to develop competences of the staff according to criteria of efficiency, to create new methods of implementation of corporate culture: transition from bureaucratic methods to the innovative ones.

We are going to organize this activity in the framework of the project office. It will be formed from employees of various levels of management who have the necessary competences in various kinds of activity. This work will result in a detailed plan that is to determine the necessary resources for its successful implementation. 

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