1. Controlling born out of necessity –
The story of Croatian controlling
Croatia
In Croatia the tasks of controlling departments are for the most part reduced
to reporting, i.e. to filling out parent company business report forms. The role
of controlling is still that of a passive observer and an analyst of past business
events, or simply that of the bearer of (bad) news. This is why we who pro-
mote awareness of controlling in Croatia regard these times of crisis as our
window of opportunity.
Controlling is a philosophy of management, a know- Difficulties due to a lack of quality
how, a network of multidisciplinary pieces of information
knowledge which are required in order to collect
– from countless pieces of information within and But what problems are encountered in practice? In
outside a company – a sufficient amount of just the national private companies, managing and making
right information, which will then create a quality all the business decisions is to a great degree firmly
platform for making the right business decisions. It in the hands of their owners, who have been build-
is based on the economic logic of rationality, and ing their companies for the last 20 years or so. But
for it to function well a certain set of preconditions developing a company from 15 to 150 employees
must be satisfied. One of the most crucial ones is is not the same as developing it from 150 to 500,
an interested management. which is all too frequently disregarded in Croatia.
Most company owners believe that they know what
The Croatian economy has been preparing to is best for their company, and that generally no one
enter the European Union for the last few years. can either advise or replace them in this matter.
Today it is in part based on small- and medium- Consequently, it is not uncommon that after 20 years
sized enterprises founded within the last 20 years, or so of continued development very successful
in part on older state-owned companies which companies start facing difficulties due to a lack of
went through the process of privatization (or which quality information that cannot be obtained by in-
is still ongoing), and in part on foreign companies tuition, regardless of the extent to which their own-
“After 20 years or so of con- which started opening sister companies in Croatia ers ‘live and breathe’ their companies. They usually
tinued development very suc- since the 1990s. react all too late – when the bank account dries up.
cessful companies start facing
difficulties due to a lack of
quality information that can- This general framework could indeed be a solid On the other hand, however, incomplete privatiza-
not be obtained by intuition, groundwork for the future development of the tion – or more specifically the remains of state-
regardless of the extent to Croatian economy, provided that it is run by edu- owned shares in some companies – is why politics
which their owners ‘live and
cated and professional management, and that in continues to exert tremendous influence on man-
breathe’ their companies.”
addition to modern computer support the function agement decisions, which often rise from the con-
of controlling becomes self-understood. text of political interests, which have not much in
common with controlling.
22 CONTROLLER Spezial | Controlling International

2. Foreign companies which opened sister compa- cerned, most attention is directed to salary reduc-
nies in Croatia are the part of Croatian economy tions and to the laying off of employees. Unfortu-
that actually stands a chance of being the leader nately, professional training and development has
of the development of controlling. However, objec- been minimized as well. It is most certain that to-
tively only a very few sister companies succeeded day more than ever companies should be focusing
in developing actual controlling departments as on improving the quality of their products and
laboratories for actually assisting management, for services, and on nurturing their relationship with
the creation of scenarios and simulations, for what- their clients to be able to withstand the crisis. Ex-
if analyses, for novel models of management, etc. pecting that a reduced number of employees earn-
The tasks of controlling departments are for the ing smaller salaries and not attending any profes-
most part reduced to reporting, i.e. to filling out sional training and development courses would
parent company business report forms. This is one want – and know how to – work more and better
of the reasons why understanding the actual func- is unrealistic. In other words, the way out of the
tion of controlling is insufficient. In reality, many crisis is the exact opposite. Quality, educated and
‘controllers’ in these companies have no control- motivated employees are the greatest mainstay of
ling hard skills whatsoever. As a result, what their companies in crisis, and only dedication, quality
practice wrongly communicates is that the role of work and loyalty can help company owners to
controlling is that of a passive observer and an keep their capital.
analyst of past business events, or simply that of
the bearer of (bad) news.
Crisis helped controlling to make an
inroad
A tremendous need for the right
information This crisis has most certainly helped controlling to Jasmina Ocko,
make an inroad into Croatian companies. Com- Controlling Consultant,
This is why we who promote awareness of control- pany owners are coming to realize daily that busi- Kognosko, Croatia
ling in Croatia regard these times of crisis as our ness sense and intuition are no longer sufficient.
window of opportunity. Namely, the very begin- The once chief measures of success – market share
ning of the current crisis was marked by a tremen- and asset growth – have been proven not to be
dous need for the right information that would en- reliable in terms of safely leading companies in
able management to react actively and without the right direction in the long run. The statement
delay. After a long time of steady development and that “a reduction in the volume of business, a de-
almost overnight, companies found themselves face crease in revenues with a drop of inventories and
to face with a drop in revenues, which then be- receivables, and a general decrease in the value
came the main trigger for all the other difficulties of assets does not necessarily have to be a bad
created by a domino effect. thing” was up to only yesterday inconceivable,
which only the bravest controllers dared to utter.
Suddenly, management demanded detailed infor- However, it seems that this statement is closest to
mation overnight on each and every business seg- the generally accepted model for the healing of
ment – which segments of the company function struggling companies.
well, which are unprofitable, which markets are
actually profitable, which markets only increase It is becoming increasingly evident that without a
revenues, which products are unessential, which change in management strategies, without timely
customers are dispensable, etc. The questions kept information on all the business segments within
multiplying, but answers were provided only to and outside the company, without quality analy-
those who had raised their awareness of and had ses, diagnoses, prognoses and therapy – in other
“Expecting that a reduced
built controlling during good times to live through words, without controlling – there is no way out of number of employees earning
the bad as painlessly as possible. the crisis for the Croatian economy. Furthermore, smaller salaries and not at-
without it, the Croatian economy is unlikely to be tending any professional train-
ing and development courses
As for the rest, cutting costs became their primary able to join the economy of the European Union
would want – and know-how
way of trying to mend the situation. The problem in actively and in a quality way. to – work more and better is
this is that, as far as the segment of costs is con- unrealistic.”
23