Mentors and mentees –
Almost Family Circle.
Almost ten years ago, Tamás Kovács undertook quasi a difficult task when he applied as an outsider for a manager position, advertised by a well-run family business for more than a decade and a half. First, he became director of finance, later general manager, taking over the latter position from one of the family members, the older boy. It was only seemingly difficult because the handover / takeover of work took place under clear and unequivocal conditions, instead of frequent debates on such occasions, such were the circumstances thereafter as well.
What did you do before you decided to join Szabadics Zrt.?
I had been working at E.ON for nine years in a multinational environment, later for seven years at the Hungarian Development Bank in a state environment, at both companies in economic field. So, I had experiences concerning two very different cultures. In 2007, the Szabadics family contacted me with an offer and I said yes.
So, you entered into contact with another culture, the culture of a Hungarian family-owned small and medium-sized company. What did you say when you were offered to go to work with them?
For a deeper understanding of the story we have to know that Szabadics Zrt. was no longer a small family business, but a large-scale medium-sized company operating for 18 years, with a significant market share and a good market reputation.
What does the company do?
At that time, it was only engaged in civil engineering, and today it is engaged in structural engineering and structure construction.
What was it like to fall into a family forcefield where a generation change had already taken place, since one of the founders' sons was running the company?
The driving force behind this demand for change was that the family recognized the company's growth limits. They faced with increasing competition, they knew that if failing to advance in corporate governance, to expand their management capacity, then the company will be at a competitive disadvantage and may become a second-line, mostly subcontracting company. The goal, however, was to build up a company playing on the front line.
Were you immediately employed as CEO?
That was the plan originally. However, since I was not familiar with the market or the personal circumstances of the industry at that time, we decided to start as director of finance. After two and a half years, I became CEO in 2010.
However, it was clear that you were the candidate for the CEO title. Has this caused troubles in the family, or between you and some members of the family?
I dare say no. If there had been a strong tension in the family, this model would not have been able to really work. In such cases, the family had to exercise considerable restraint: in decision-making as well as in everyday activities. It is not an easy situation if an outsider arrives into a company formerly run by family members. But the goal was common, and everyone in the family knew and accepted it.
Not everyone would be able to do that.
Not really, because it's not easy at all. Here, however, the goal existed from the first moment, and the realization of this goal was given the highest priority. Everybody was aware that if this goal was not achieved by the company, it would not be favourable for the company in the long run. The fact that I received ownership in the business, shows already in itself how seriously they took their decision.
What kind of difficulties did you face during your first years as CEO deriving from managing a family business instead of a multinational company where leaders are coming and going?
With the owner we cleared game rules of a joint work relatively quickly, which are and were followed by both of us. We have agreed, for example, on decision-making powers both at operational and strategical level. While the founder, his two sons and myself were working together at the company, the rule was only to make consensual decisions. Later, I had a 100% authorization in personnel and operational affairs. For example, they did not insist on anyone just because somebody had been working at the company for a long time.
When a company is in a growth phase, many things are changing. Most of people are looking back with nostalgy to earlier times when everything was more family-friendly, slower and more predictable. Managing this problem was initially a challenge for me, but thank God the owner quickly solved this situation. You may be nostalgic, but then the company will not be able to achieve its growth goals.
It seems to me that the family members were very rational in their thinking and did not leave a wide space for emotions.
They were completely rational in affairs making me very easy the seamless takeover of matters as well as my activity later on. What does the founder think about these processes is obviously a key issue. Our founder was enough strong to make difficult decisions as well as to fully hand over direction of the company first to his sons and after to me. It was a lucky thing to be able to convince the staff very quickly that I was professionally good in the job I got here enabling us to achieve our strategic goals. Moreover, a significant number of staff members realized that this was also their interest as well.
How big is today the company group?
We are employing around 330 people and our annual turnover is between HUF 25-28 billion.
Managing a company like this is not a small task. How can you even deal with mentoring?
My position changed from January: I resigned from the post of CEO and became chairman of the board of directors. This means that I got out of daily operative work and I am focusing on strategy and on managing key clients. Therefore, I am able to spend a little more time with other tasks, such as mentoring activity.
We have lived through and have managed the succession as well, the leadership change even twice, so I know how important are these questions in the life of a family business. I also know how important is to realize successfully a succession process if we decide to start it. I think I have enough experience in this field, which I would be happy to share with other businesses as well.