Leader on the Czech market? Your job is just about to get much harder

As a foreigner in the Czech Republic who speaks Czech and who, till a few years ago when the migration crisis started had the feeling of being fully integrated here, I am living both a blessing and a curse.

A blessing because I can experience the society from within while retaining sufficient critical distance to see things in perspective (my education in systemic dynamics also comes handy in this regard). A curse because there are a few things happening in the Czech society right now that, seen in perspective, cannot be un-seen. More, when you look at the root of the issues and the possible scenarios ahead, you can’t prevent a cold shiver down the spine. These things that I cannot un-see are the topic of the following lines.

Milked away

It all started in 2008 when the global economic crisis hit the Czech Republic. Till then foreign investors, who have been the main driver of economic growth in the Czech Republic after the fall of communism, were splitting the profits made on the Czech market roughly 50-50 – half of the profit was going back to the headquarters and half remained in the Czech Republic for re-investment and local development.

I’m sure many of you can remember the good old times when companies were “throwing money through the window” on items such as sponsoring, advisory, training, team building or prolonged company retreats. Well, the crisis put a halt to that. What the crisis didn’t actually stop was profit-making – the companies were still making good money, otherwise they would have closed down shop. But the split of profit changed – according to a 2016 report by the Czech Statistical Office since 2008 roughly 70 to 75% of profit was pulled out of the Czech Republic by foreign investors – some companies took it to a mind-blowing 97% – with local subsidiaries left to wipe tears and chew on the profit leftovers.

Another side effect of the crisis was the outburst of restructuring, some of it natural – many companies expanded beyond healthy boundaries in 2000-2007 – and some of it irrational, driven more by attempts to spot new sources of savings to secure the habitual high profit (at least on paper) than by dreams of growth and long term prosperity and sustainability on an increasingly competitive Czech market.

Mounting frustration

All these moves left the Czechs incredibly frustrated. Some lost their jobs, mainly in managerial positions vulnerable to restructuring, some stayed and had to work way more than before for fewer benefits. The level of frustration grew in intensity and blew out straight in companies’ faces starting with 2015 when the Czech labor market started to unfreeze and people started to change jobs at an accelerated path. All of a sudden reputable foreign companies with a previous 5 to 7% fluctuation rate were confronted with fluctuation beyond 30% (surprise surprise – those companies who pulled away most profit between 2009-2014 were the first to see their fluctuation figures going through the roof).

What’s worse, companies started to lose key talent and put a cap on new business projects because of lack of labor force, because during previous years they had no money or energy to invest into strategic labor planning, HR staff education or quality, meaningful retention policies.

Historical trauma

Beyond the obvious economics, what happened in the Czech society between 2008 and 2015 is something that I would dare to call historical re-traumatization. Because of its exquisite geographical position, the Czech Republic found itself abused numerous times along the history by foreigners – the Habsburgs, the Germans, the Russians. A country’s historical memory is very much alive, same like a personal history of trauma that lives in a body years after the traumatic situation occurred.

By pushing the profit-taking pedal way too deep foreign companies unwantedly stepped on a sensitive item that triggered a response powerful beyond expectations. After the fall of communism and driven by hopes and the glamour of the West, Czechs developed towards foreigners something called “tolerance.” By no means read inclusion – in the Czech emotional vocabulary tolerance means: “Whatever. Do whatever you want as long as you don’t come in contact with me, don’t limit or put pressure on me, and you don’t tell me what to do.” Oh well.. that’s not exactly what happened since 2008 in this country.

Therefore, we can’t be so surprised that the Czech discourse and societal mood changed from “tolerance” to “I knew it. It’s just a matter of time till you show your real face, you bloody foreigner!” And, as if the economic aspects hadn’t been enough, the migration crisis of 2015 put the crown on an already tensed societal and economic context. The Czech reaction to this perfect storm was the emergence and growth in influence of an anti-democratic political discourse, mainly carried by a populists such as Tomio Okamura (a more-than interesting character from a systemic perspective, he is half Czech, half Japanese and he happily gives voice to all Czech hatred towards everything foreign – which, by definition, includes half of himself). Anyway, his political party Freedom and Direct Democracy (SPD) got the third place in the Czech Parliament, becoming a quite significant political player right now.

Taking charge of one’s destiny

Right, quite a gloomy outlook, you might say. What can we do about it?

When I started my business in May 2010 – I launched a media training business at the start of the economic crisis AND in English, silly me – I started to observe a specific mental and emotional feature of the Czech culture. Czechs wouldn’t by no means speak up – in fact they wouldn’t even feel the need to show up, to take care of their image, personal brand or the way of being perceived by the outside world until they couldn’t do otherwise (which was usually too late). By the way, why do you think that so many companies started to fix their employer brands only since 2015? And why so many companies are still failing miserably in new recruitment despite the huge amount of money poured into communications for the last two years?

What I observed therefore was that, on the Czech market there was no understanding whatsoever of the strategic importance of well thought-through communications – of showing up, of speaking up timely, clearly and with dignity, of taking action and responsibility for one’s own communications, image and, ultimately, life before it was too late. It is usually a crisis that pushes local people and companies into doing something about their communications. Of course, for a trendsetter like me that societal tendency was and still is incredibly frustrating – but it’s the way things are on this market and, as long as I want to operate here, I can only accept the reality and work with it. Which takes me back to the question: what to do about what’s going on in the Czech Republic?

Challenges ahead: automation and robotization, globalization and other black swans

It is a fact: the Czech Republic is dependent on industry and on foreign trade. Faced with growing labor costs, local companies can do nothing but to increase the speed of investments into automatization and robotization. This trend will only increase the bottom-line fear of the blue-collar workers that “the foreigners are out to get them.” If companies do nothing to spot this fear, address it in time and communicate their intentions well, they will only further contribute to the already existing frustration, which will add to the political unrest, which will lead to the country falling more and more into undemocratic political hands, which will turn against market policies, which will ultimately push the “bad, bad foreigners” out of the country. Sounds like science-fiction? Take a trip to Hungary and ask them about their latest political and economic experiences.

So in my view the challenge for leadership in the Czech Republic is multi-fold:

  • See the systemic reality beyond the narrow reality of your company and the pressure of your next quarter’s results; dare to articulate a vision that embraces the whole, not only your narrow company interests.
  • Listen more to the Czechs. Encourage them and support them to express themselves early on. Show respect for what you hear, show people that they are heard and respected at all levels of the company.
  • Be courageous. Communicate the reality of the Czech market abroad to your headquarters timely and clearly. Gain buy-in, space, resources and support at your headquarters to do more for the Czech market – and to do more things the Czech way.
  • Improve your internal communications; reassure your people that the company is working with and for them, that you are still parts of a bigger, meaningful whole there to serve everybody, not just a few distant, remote and abroad.
  • Find resources to contribute more to the Czech society beyond your company – to schools, the media, various citizen initiatives and other connections with the bigger whole. If you want to be a stand-alone unit with a predatorial attitude, the larger system, which is the country in which you operate, will sooner or later get rid of you.

The biggest challenge lying ahead of us is humility: to look at what it is, to accept the mistakes we’ve done in the past and to try honestly to fix them. One way to do that is to show recognition: to say an honest thanks to all those who contributed to our well-being including the blue-collar industry workers, the state administration staff, the exhausted corporate people who kept companies going and making good bucks for the last 10 years of unrest. These people go to vote today. My hope is their vote will be a source of hope, not one of deepening social rifts on the Czech market.

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The best way to gain, retain, and restore your critical distance as a woman CEO is to have a faithful guide, thought partner, and inspiring challenger by your side. This is what I am for women CEOs. If you are facing major developments in your business or in your career this year, we should talk. Please book or have your assistant book a no-strings-attached free 30-minute CEO exploration call with me; we will get to know each other and I will be thrilled to spot how I could be of your service in 2024 and beyond.
Cristina Muntean
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Let's Talk

The best way to gain, retain, and restore your critical distance as a woman CEO is to have a faithful guide, thought partner, and inspiring challenger by your side. This is what I am for women CEOs. If you are facing major developments in your business or in your career this year, we should talk. Please book or have your assistant book a no-strings-attached free 30-minute CEO exploration call with me; we will get to know each other and I will be thrilled to spot how I could be of your service in 2024 and beyond.