SANTIAGO, Cuba --
Rooms go for just $19 a night at the two-star Hotel Rex, but you would never
guess it from the service.
Fresh bath towels arrive daily, artfully twisted into a pair of courting
swans and left on the bed. Hot water flows in the bathroom, a rarity at
low-end Cuban hotels, and the room air conditioners hold off the muggy
Santiago heat.
Not satisfied with the view? Management will be happy to find you a new
room.
"We want you to feel like our house is yours," says Roland
Betancourt, the Rex's amiable desk clerk.
Cuba's state-run industries, never particularly known for efficiency and
service, are undergoing a revolution.
Soviet-style centralized management of the island's economy is being
dismantled, and state industries are being turned loose to compete on
their own merits.
State subsidies have all but disappeared. Managers are being given the
right to hire and fire workers. Quotas have vanished. Pay is linked to
productivity. Rather than fulfilling state production goals, companies now
must find their own national and international markets and make products
at competitive prices.
The reform process is called perfeccionamiento--the "perfecting"
of Cuban state business--and while it is not quite privatization and not
quite total quality management, it is Cuba's unique response to the need
to compete successfully in an increasingly globalized economy.
"The idea that only private enterprise can be efficient and state
businesses cannot is wrong," said Julio Vazquez, Cuba's vice minister
for economy. "People ask, `How can you use market forces in a
socialist economy?' But they're economic mechanisms that work in any
economy. The only difference is the profits go to the state."
Melding of business models
Perfeccionamiento, a reform process cobbled together from Japanese,
European and U.S. ideas as well as Cuba's own experience, began in 1998 as
Cuba's government set out to improve business efficiency while trying to
preserve its socialist ideals.
Today nearly half of Cuba's 3,600 state-owned companies have applied to
enter the lengthy reform program, though only a handful have finished it.
Roadside signs touting "quality and efficiency" have sprouted
alongside more typical state slogans such as "Socialism or
death," and at architectural firms, hotels, farms, mines and
factories, change obviously is under way.
The once-shabby Hotel Rex now sports a "Quality Wall" bulletin
board listing employees of the month, outlining procedures for solving
guest problems--"Every worker is authorized to solve problems,"
it notes--and entreating workers to put service first.
Managers plan to update the lobby, with its faded display on the
achievements of Castro's revolution, replace the sagging velvet armchairs
and build a new bar upstairs.
"Quality can't just be a slogan," a sign says. "Quality has
to be a permanent objective in every situation. Our clients expect to be
treated with the highest enthusiasm and devotion."
Transforming Cuba's top-heavy state command economy into a set of lithe,
efficient and competitive state industries is no easy task.
Most state companies have not kept accurate accounting records in years,
auditors say. Under the old Soviet-style system, profits and payments
meant little, pilfering was widespread and books were falsified regularly
to show that industries were meeting production goals.
Now, however, businesses must be audited to prove their finances are in
order before entering the perfeccionamiento process. Overnight accountancy
has become one of the hottest career fields in Cuba.
Once accepted into the reform program, companies launch an intensive
self-diagnosis, looking into their problems and strengths in 16 key areas,
from quality control to labor management.
Employees' ideas sought
Employees, often for the first time in their lives, are asked what they
think of how the business is run. Managers are sent to school--in Cuba or
overseas--to learn everything from how to write a mission statement to how
to hold an effective meeting.
In the end, each company comes up with a program for change that must be
approved by a government panel before it goes into effect.
"The manager's responsibility is to get results every year and every
month in terms of efficiency, costs, productivity and quality, in order to
reach the levels demanded by the world market," Carlos Lage, Cuba's
economic czar, said earlier this year. His new motto is, "What is not
efficient is not socialist."
While the reform program has started slowly, the potential for change is
enormous.
For the first time, factory managers have the right to choose the cheapest
supplier of raw materials, even if that supplier is overseas and a Cuban
supplier is bypassed in the process.
No longer obligated or even able in some cases to sell to the state,
businesses must find their own markets at home and abroad. If a product
doesn't sell, it is eliminated; if a company doesn't sell, it eventually
will fold.
"You have whole companies where nobody knows how to make a
sale," said Philip Peters, an economic analyst who has studied
perfeccionamiento for the Lexington Institute in Arlington, Va.
"Now that's changing," he said. "Companies have to sink or
swim. They have to make money."
Authority to hire, fire
Perhaps the most controversial of the new powers given to managers is the
right to hire and fire. Factory chiefs who once were required by the state
to employ six truck drivers or a dozen janitors now can dismiss those they
do not need.
According to Cuba's state newspaper Granma, the first 64 companies to
enter the reform program laid off just 2.5 percent of their employees.
Under Cuba's socialist vision, the firms are required to find the workers
other jobs or send them to school to learn new skills.
"The policy is that they don't go to the street," Vazquez said.
"A person without a job and salary feels useless. Society benefits
when they are employed."
For most workers, the new competitiveness push has been good financial
news. Productivity has risen an average of 20percent during the first year
of the process in most companies, and wages have risen by an equal margin.
Changes much in evidence
Just how dramatically Cuba has changed its management focus from only a
few years ago is evident everywhere.
The island for the past three years has given a national quality prize
"to promote business efficiency and competition." The University
of Havana now offers courses in total quality management, and a recent
study by the university's economics department used "The Seven Habits
of Highly Effective People" as a reference. More than 350 Cuban
companies are adopting international quality standards.
Even more telling is the change in the Ministry of Economy and Planning.
The agency used to write the state economic plans but has been downsized
by two-thirds. Since 1993, subsidies for state enterprises have fallen by
89 percent.
"This is the end of the Soviet state planning process,"
Lexington Institute analyst Peters said. "That model is dead. And in
a way, that may be the biggest thing happening around here."
Copyright © 2001, Chicago Tribune
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