You are on page 1of 7



West University Vasile Goldi Arad

The effects of the world economical financial
crisis have left their mark on the Romanian market
economy and the business environment, influencing
negatively the business plans mainly in the investments
orientated policies.
In order to be able to survive throughout the
present period of world economical financial crisis, to
adjust to it and to diminish the impact of the negative
effects that the ongoing crisis creates, the private
companies and the public institutions must change their
managerial style as well as the mentality of the employees,
the managers and the businesspersons.
In order to attenuate the effects of the economical
financial crisis, the managers see themselves compelled
to change the managerial style and to implement a real
participative managerial style.
At the end of the paper I present some actual
propositions, taken from my personal experience,
concerning the changes needed for the implementation of
the managerial style in the present period of world
economic financial crisis.


have been extremely profitable since then went bankrupt.

Not surprisingly, after a sustained economic growth
period there follows a stagnation and decrease period,
respectively a financial crisis which affects a significant
part of the private system and implicitly the world's
Considering the shifts occurred during the last 6
months in the Romanian market economy, in my opinion
there is high time for a structural change in the
companies managerial policy, in order to be able to
mitigate the adverse effects of the economic-financial

The first signs of this crisis, anticipated and
extensively propagated through the media by the tycoon
George Soros, have been felt by the Romanian market
economy only after 1 year since its beginning.
Economic crisis1 difficult condition of the
economic activities, crash, sudden change in the
economic activity, taking the shape of deceleration,
stagnation or decrease of the economic activities.
By extension, it is a depressing condition for the
overall economy, for certain branches, regions etc., a
disease of the economic body which indicates the serious
crash of the economic balance, especially between
production and consumption, between demand and supply,
having direct effects on the prices, occupancy degree and
production factors usage degree.
The economic crisis is literally the turning point of
the economic cycle, when the expansion phase
(ascending) is replaced by the depression phase
(descending). The beginning of the economic crisis
requires economic agents to act in order to determine
qualitative changes in the economic growth circumstances
and factors, in the economic structures, intended to lead to
the removal of certain unbalances, behaviours, institutions
and mechanisms which create prerequisites for passing to
a new ascending phase. Even if it is a difficult step in the
economic development, having adverse effects on a
significant portion of the economic agents, the economic
crisis is also the signal for the mass beginning of the
creative destruction type phenomena.


Within the current context of the world economy,
whether we refer to the Romanian market economy or to
the capitalist economy of the highly developed countries,
we have to admit that there is a worldwide financial crisis,
first occurred in the United States about 2 years ago,
which has extended and reached, respectively touched
also the Romanian market economy, adversely
influencing the companies managerial policy.
The current financial crisis may be compared with
the financial crisis from the years 1929 - 1923, when
many people remained unemployed and companies that


The world economic-financial crisis effects have

told on the Romanian market economy, on the
businessmen activities, adversely influencing their
business plans, particularly at the investment policy level.
Currently the economic-financial crisis impact is
felt both in the private sector, as a result of the decrease in
the turnover, respectively in the financial power of most
of the private enterprises, and in the Romanian budgetary
sector, by drastically reducing the budgets and by
stopping the investments proposed to be carried out.
Given the economic-financial crisis impact,
managers should review and necessarily change the
managerial policy practiced until the occurrence of this
crisis effects, respectively adapt their business to the new
market circumstances.
Of course, we should reflect on the following
how many of the current managers have
efficient managerial training during this crisis
what is the percentage of the managers who
attended a management course in the last 2
are the local managers able to adapt their
business to the new crisis created conditions?
are the business owners able to reduce their
mark-ups and implicitly their sale prices in
order to maintain their business during this
crisis period?
Considering that 93% of the local companies are
microenterprises, with little financial resources and
limited possibilities to access long term loans for business
development-extension, particularly under the current
circumstances when bank interests have increased,
respectively the loaning requirements have hardened - the
crisis impact is catastrophic.
The literature in the field presents three major
classes of information, with significant contribution to
the management definition.
One of them refers to the fact that the management
requires to acquire and combine the various categories of
resources necessary in order to fulfil the organizational
goals (Longenecker, Pringle, 1981) or to coordinate such
resources, in view of the same purpose (Pride, Hughes,
Kapoor, 1991). This approach highlights the nature of the
resources to be acquired, combined and coordinated. Four
categories of resources are represented and analyzed:
material, human, financial, informational. There is also
specified that the performance of the organizations
primary goals is taken into account.
The second approach on the management notions
scope and contents refers to the specification of the
entirety of processes, actions, functions which allow to
coordinate the resources and to fulfil the organizational
goals. Henry Fayol was the first to mention the
management functions in 1916.

According to Henry Fayol, the management

functions are as follows:
a. prevision and clarification examination of the
future and preparation of the action plans;
b. organization preparation of the organizational
c. leadership maintaining at a high level the
activity and performances of the subordinates;
d. coordination correlation, equilibration,
unification and harmonization of all the
activities and efforts;
e. control - surveillance, guidance in view of
complying with rules, regulations.
The management style is significantly determined
by the managers human type and does essentially depend
on the complexity of ideas, concepts and preconceptions
on people, behaviours, business etc. The style does
synthetically reflect the units external social-cultural
influences, the features of the respective groups
organization, as well as the features of the group itself.
The management style is the managers own
manner of being, comparing and acting within the
leadership process. The style is the actual, specific manner
of exercising the managers roles and of actually
behaviourally transposing the requirements resulting from
the managers status, leading to a system of acting
manners (for a well determined purpose) and methods of
intervention in the organizations employers activity, by
actively influencing them.
The leadership style concept integrates in a
dynamic entirety the leaders' psychical and psycho-social
features and particularities, skills, knowledge and
behaviours in exercising management according to the
actual circumstances under which the leadership activity
is carried out.
The leadership styles influence on the managerial
activitys results and on the groups entire activity is
currently fully accepted both theoretically and within the
actual leadership activity.
More concisely, the leadership style concept may
be understood as the leaders managerial abilitys
complete and personal expression manner, its active
A great variety in the nature of leadership positions
and in the typology of managerial styles practiced has
always existed and will always exist.
Factors such as the competence level required by
the job, the size of the managers formal authority and
autonomy and the change pace, vary depending on the job
and also in time, particularly during the current economicfinancial crisis period.
The managerial style varies according to the
circumstances and conditions under which the leadership
activity is performed.
The management style is determined by the action
of the following factors:
authoritarianism, expressed by the managers
power concentration degree, by the decision


microenterprises where the business owner is also
manager of the company and makes all by
him/herself the managerial decisions, without
consulting the employees or the experts from
consultancy companies;
directivity, consists in the nature of the
suggestions given by the managers to their
subordinates while performing their activity;
relationship between the manager and the
employees, based on which the groups socialaffective structure is specified, does directly
influence the companys economic-financial
managers orientation in relation to the
subordinates issue, in terms of the priority
given to the organizations issues in relation to
the subordinates' interests;
management techniques and methods used, which
vary depending on the companys size and
particularly on the managers training and
More often than not, the relationship between the
manager and the employees is a cold and distant one,
because the managers do underestimate their employees, do
not wish to consult with them, to ask for their opinion on
the activity carried out within the company and particularly
on the improvements that could be implement in order to
make it more efficient.
In most of the cases, the managers are firmly
convinced that only they may be right in respect of the
activity carried out within the company, being the most
professionally trained; respectively they do not need the
employees advices, opinions and suggestions.
The current crisis period undergone by the local
managers, particularly those of microenterprises, is a
truthfulness time that has awakened to the tragic reality on
their deficiencies and particularly to the need for changes in
the companys management, changes that they must
implement if they do not wish to go bankrupt.
It is important to know and assess the various
management styles and their determinant factors, given
the following reasons:
the effects of the leadership styles on the
psychological, psycho-social and relational
environment within the economic entities, as
well as on the production outcomes, on the
entire activitys productivity and profitability;
the leadership styles diffusion capacity does
influence the employees. The managers style
may influence the entire leadership teams
orientation and may also propagate to the lower
hierarchical levels. The top managers
leadership style may influence all their
subordinates' work style;
the managerial style has not only a personal
significance, but also an organizational one, i.e.
influences the entire organization;

given the need to select, to appoint in

management positions only persons with a
leadership style adapted to the current
economic-financial crisis context;
the managerial style adequacy to the actual
circumstances, i.e. the leaders style flexibility
in view of adapting the business carried out
during the current economic-financial crisis
period as to be able to last on the market.
According to Thomas Peters and Nancy Austin - A
Passion for Excellence and Thomas Peters and R.
Waterman Le prix de l'excellence the pursuit of
excellence in the managerial activity would be
characterized by:
revolutionizing quality and transforming the
production process in a marketing tool;
being fully committed to the service and
responsibilities fulfilment;
being fully committed to satisfying the
customers needs, listening to the customers,
end-users, suppliers and traders;
struggling to be unique and to develop an
innovative strategy, ignoring the answer it has
not been invented yet
overinvesting in people, valuating salaries,
services and distribution in the first place;
treating innovative spirit as an existence reason
for any employee;
measuring the progress achieved as a result of
each improvement;
making real heroes, champions of the company
out of the most inventive employees;
investing time in the human resources
recruitment and filling all the positions by
competent employees;
encouraging teamwork;
getting as soon as possible rid of the
incompetent or resistant to change ones;
re-conceiving the middle managers role in
order to turn them from guardians into
simplifying the bureaucratic procedures,
reducing the papers and destroying the
precisely orienting on what has to be changed
and on the urgency of such change;
leading through the personal example power,
using a visible management and using methods
as simple as possible, in order to encourage the
others understanding and participation;
making the control procedures as simple and
efficient as possible;
requiring the employees to be loyal to the
company and reliable in all the actions taken
for and on behalf of the company.
Nowadays more than ever a significant role in the
business success consists in the relationship between the
manager and the customers, as a customer satisfied with
the companys goods and/or services is the guarantee that


the business will survive during the crisis period. Satisfied

customers do usually contribute to the companys goods
and/or services promotion towards their acquaintances,
friends and work mates.
The most significant management systems2 and
methods applied are:
management by objectives dynamic system
achievement, by harmonizing them with those
of the personnel, using a complex motivational
participative management method to involve
the personnel in the leadership process;
management by projects improving the
leadership organization in view of a more
operative and efficient resolution, which
requires o lot of creative work and the
collaboration of some experts from various
management by product - improving the
leadership's organization in order to encourage
sales and increase in the return of the
companys main products;
management by budgets preparing expense
budgets for all the organizational links and
thoroughly supervising the budget exercises;
management by exceptions rationalizing the
management system by focusing the
information almost exclusively on the
deviations from plans, schedules, rules and
regulations and selectively circulating them on
hierarchic levels, which guarantees the more
efficient use of the time by the top leaders, the
superior use of the leaders potential;
organizational chart graphical representation
of the organizational structure, in order to know
and analyse it;
scorecard operative and post-operative
information of the leaders in view of the
decision making;
brainstorming - stimulating the personnels
creativity by way of group discussions;
synetics highlighting the creativity principles
and mechanisms and using them in order to
design and update products and technologies;
orders method cost calculation, particularly
in the companies with individual production, in
small and medium series;
value analysis reducing production costs and
improving quality by setting up an optimal
relation between the costs and functions of the
product, of the technological process.
In the opinion of the American businessman Donald
Trump, the managers businessmen should ask themselves
two business related questions in order to succeed:
1. Could anyone else do my work better than me?
In other words, know yourself and know your
competitors. If they are better than you, you should offer
something they have not.

2. What is that I pretend not to see?

Any of us could let him/her carried by the euphoria
of a creative moment, i.e. what one of the authors of the
speeches of the United States former president Nixon
called dream enthusiasm. But before letting yourself
carried to the seventh heaven, make sure that you have
thoroughly examined the facts from the field.
Five Romanian management patterns:
1.traditional management the managers behave
and act according to certain administrative
rules based on hierarchy, procedures and
bureaucracy. There is no interest in the changes
required by the new socio-economic
circumstances. Specific to state companies;
2.entrepreneurial management managers who
started business from scratch. Flexible, market
oriented attitude;
3.paternalist management managers who try to
change things, in order to increase the
companies efficiency, but who keep being
bound by social obligations and avoid
situations like dismissals, even if the large
number of employees impedes their
organizations development;
4.missionary management expat managers who
came in Romania as a result of the
multinational companies' operations extension.
They act as know-how transfer agents and
could be examples for the other leadership
categories. One issue could be the case where
the expat managers expect that the business
techniques from London are applicable also in
5.individualist management managers who
recognize opportunities in a not constantly
developing economy and exploit them in their
own interest, in order to achieve short term
gains (source - Management Culture in
Romania, Patterns of Change and Resistance,
Westminster University).
In the current economic-financial crisis period it is
not possible to apply a single management method
without taking combining certain positive aspects of the
other methods, but given the situation created the most
efficient method consists in the participative management.
Participative management the solution to
mitigate the economic-financial crisis effects
The contemporary economic development
dynamism leads to the occurrence of more and more
complex problems, whose efficient resolution requires the
decision bodies to use a variety of specialized knowledge,
a higher and higher responsibility level, which can be
fully supplied only by including several individuals.
Therefore it is necessary to fundamentally involve the
employees in the leadership and decision preparation and
adoption activity.


In3 order to mitigate the economic-financial crisis

effects, the managers seem to be bound to change their
managerial style, being forced to implement a
participative managerial style in the true sense of the word.
Given the financial crisis that has begun to affect
also the Romanian market economy since July 2008 and
implicitly the labour force market in the following period
(2009 2010), we may forecast as follows:
given the restructuring and reorganization of
companies, particularly of the small sized ones,
certain employees have been laid off, becoming
unemployed with no employment possibilities;
in the highly developed countries of the
European Union there started the drastic
reduction of the investment in new buildings,
performed so far by using foreign labour force,
well professionally trained, but poorly paid,
inclusively from Romania. The Romanian
citizens laid off, particularly those who were
working without legal forms, in percentage of
at least 20%, will return in the country;
in real terms, during the next 2 3 years
salaries will not significantly increase in real
the managers of private companies will apply
even more the employee performance criterion;
the interest of the private companies in the
access to European Union projects with nonreimbursable structural funds shall increase;
the interest of business owners and investors in
hiring for actual projects and in the temporary
employment will increase;
from October 2008 to March 2009, the
unemployed number at macroeconomic level
has increased by 113,677 individuals, and the
unemployment rate has increased from 4% to
5.3%, and until October 2009 another 235,000
unemployed are forecasted, which means un
unemployment rate of 6.9%;
gifted IT young people will try to emigrate in
order to find a job in the highly developed
countries, particularly from the European
The current worldwide economic crisis will last at
least 1.2 1.5 years, crisis which already starts being
fully felt also by the Romanian market economy.
It would be essential to be able to significantly
reduce its effects, in order for the private companies and
for the population not to feel it very intensely. More
specifically, the local consumers should dramatically
change their mentality, as to buy in the first place
indigenous goods and/or services, in order to reduce the
commercial deficit in the future period.

The participative management consists in the

exercise of the management processes by involving a
large number of managers and executants, using a variety
of methods and giving a major position to the
institutionalized participative bodies.
The participative management main features
include: actual participation of the employees to the
overall leadership process exercise, particularly in
strategic and tactical terms, involvement of a large
number of individuals in the control-assessment function
exercise, active participation of the employees to the most
important decision making.
The participative management simultaneously
represents a company management principle and system.
The approach of the participative management as a system
organizational, decisional, legal and personnel mentality
The organizational grounds which ensure the
structural and procedural support of a real participative
management include: the existence of the direct and
indirect participative management bodies' system, the
need to apply the components eligibility and revocability
principles, the existence of a circular authority structuring
system, according to which each employee should be both
in the position of leader and in the position of subordinate
within the company.
The changes in the personnels mentality, required
by the participative management existence, are a complex
process and represent the increase in the employees
efforts in view of participating to the development and
increase in the efficiency of their company, enhancing
their creativity and initiative in setting up and carrying out
their goals.
The application of the participative management
involves: using certain modern leadership methods and
techniques, based on the cooperation of the management
and execution personnel, within thoroughly organized
teams that should determine the stimulation of the
personnels creativity, the frequent use in decision
grounding of the economic methods based on cost
analysis and of the return, the extension and improvement
of the use of meeting and delegation methods and of the
influence on the work style.
In Romania the participative management goes
through an intermediate phase, from the communist
proletarian auto-leadership, characterized by a powerful
formal nature, to a new type of participative management
to be developed together with the new configuration of
the Romanian economy, focused on market and
The adaptation of the activity of the private
companies and even of the public institutions in the
current worldwide economic-financial crisis period
involves and even requires to change the managerial style,
in view of being able to survive during this period, in
order to mitigate the impact of the current crisis adverse
effects, inclusively by changing the mentality both of the
employees and of the managers and businessmen.


to immediately implement the participative

managerial style to all the companies,
regardless of their size and business profile,
that will lead to the reduction of the managerial
errors and shall create stability in business and
confidence of the employees in the companys
Most of the companies in difficulty have laid off
employees, have drastically reduced goods and services
promotion expenses, respectively are not preoccupied by
the continuous training of the remaining personnel.
The implementation of these measures has already
started to have negative effect on the economic-financial
performance, as not only the employees, but also the
managers have to continuously professionally train in
order to be informed about the worldwide situation
existing in their business field.
In order to sell their goods and/or services, the
companies would also need a promotion policy, especially
in order to remind the consumers about them.
If the suggestions hereinabove presented were
implemented, I am absolutely convinced that the current
economic-financial crisis effects would be much less felt
both by the local companies and by the population, but
this requires political will and the current Governments

Conclusions and suggestions

During this crisis period there are no management
pattern absolutely valid for all the local private companies,
instead it is necessary to change the managerial style
applied so far by the managers, by implementing a
participative managerial style.
The managers should not expect miracles from the
current legislative body, which is more preoccupied by
the euro-parliament and presidential elections to follow
and not by mitigating the crisis effects by implementing
certain measures to make the Romanian economy more
Our suggestions in view of mitigating the
economic-financial crisis effects by changing the
managerial style, potentially applicable to the Romanian
companies, would be:
to guarantee the loans through the small and
medium sized companies guarantee fund and
through the agriculture credit guarantee fund,
particularly in case of the European Union nonreimbursable projects;
to give young people the opportunity to access
bank loans based on business plans, without
being forced to have collaterals, in view of the
inception and start of new businesses;
to reduce the reference interest of the National
Bank of Romania from the current 10.07% to
to reduce the tax system for private enterprises;
to harden penalties increased fines for the tax
dodgers up to their companys cancellation and
interdiction to start a new business on their own,
as business owners, for the next 5 years;
to reduce bureaucracy in setting up new
companies, particularly in case of the small and
medium sized companies;
to grant low interest house building loans, of
maximum 3%, to young people;
to develop the public-private partnership;
to support the legal persons interested in
accessing projects from the European Unions
non-reimbursable funds, by bearing the project
drafting expenses and by granting 3% interest
investment loans;
to grant preferential loans for the cutting edge
technology importation;
to reduce the commercial deficit;
to make the local consumers aware of the fact
that they should buy indigenous goods and/or
service instead of the exported ones;
to reduce prices and services and implicitly the
mark-up and the rate of return down to the limit
of recovering the expenses incurred, in order to
be able to maintain the companys current
activity and personnel;
to use only for investment purposes the foreign
loan accessed by the current Government;

[1] Angelescu, C. (2001) Dictionary of Economics,
Economic Publishing House, Bucharest, 140-141;
[2] Nicolescu, O., Verboncu, I. (2007) Organizationss
Management, Economic Publishing House, Bucharest,
[3] Scholtz B. (2009) Companys Economics, Risoprint
Publishing House, Cluj Napoca, 248.


Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.