Zygmunt making the headlines

35 years past Poland's transition into free-market economy, the time ensues for several entrepreneurs to retire. Their businesses are usually either handed over to descendants or sold to third-party investors. Succession in Poland has not been an issue brought up frequently. Until recently...

Family issues of Zygmunt Solorz-Żak are now like episodes of a gripping TV series. The very character is a media and telecommunications tycoon, controlling the largest private TV station, a satellite TV platform, two telephony and internet providers and also a power plant on top.

Divorced twice, until recently fostered relationships with three of his adult offspring, born to him by his two ex-wives. All three children were more or less successfully involved in running his numerous businesses. Half a year ago he married Justyna Kulka, aged 50, i.e. nearly two decades younger than him. The third marriage is cited by many as the source of problems and sparked a battle between the tycoon's children and his new wife.

I will not summarise the intricacies of the dispute, especially since we still know less than more. Everyone who saw the streaming of the extraordinary shareholders' meeting held last Monday might have serious doubts about Mr Solorz's capacity to make informed decisions and exercise control over his businesses.

In Poland, where everyone is an expert in any area, tribulations in the media empire are widely commented. Mr Solorz and his relatives are avidly judged. Only few commentators point out Mr Solorz might do whatever he wants with his private wealth. This assertion could be true, yet it is not, for the sake of a single important detail. Several of his businesses are listed on the Warsaw Stock Exchange. Their prices have declined by 10% to 20% since the turmoil commenced. Several small investors, institutions and pension funds have seen a chunk of their wealth evaporating. For such reason, the decisions of succession may impact virtually anybody, so are not just his private stuff.

From a banker's perspective, the stock market's reaction is absolutely justified. Mismanagement may send a sound business under quite quickly. I have seen smaller companies going bankrupt in the wake of conflicts between shareholders. For Mr Solorz’s businesses the path is longer. Mr Solorz himself does not take decisions, but can instantly appoint and oust senior executives, which means already gives sizeable potential for disruptions.

Hybrid Toyota - get it out of your head

The New Factory has recently adopted a new company car policy. Procurement experts and financial planners have been bending over backwards to improve the way car are used by an organisation I work at and have worked it out. This week I had a chance to try out a demo car, in an identical configuration as the vehicles due to replace our current fleet. I took a trip to a provincial town in Poland, some 150 kilometres from Warsaw with three passengers (and me) on board…

The New Factory wants to boast of the lowest carbon footprint on the market, therefore it has chosen to use hybrid cars only (they opted for Toyota only). Also for some reason employees of The New Factory tend to heavily press accelerator pedals in company cars and their employer has apparently resolved to crack down on it.

The revised policy has in my opinion two major flaws which disqualify it from being hailed as eco-friendly.

Firstly, the replacement periods – the cars will be leased for a period of 2 years or 60,000 kilometres, whatever comes first (and then replaced by brand-new ones). Durability and reliability of a properly-looked-after car should let it be used over 5 years or 150,000 kilometres. Someone who has negotiated the contract has presumably not learnt how much CO2 is produced during vehicle manufacturing – I have looked for several data, they are not fully consistent, but on average, CO2 emitted before a car leaves factory gates is the equivalent of driving 80,000 kilometres under current stringent norms for petrol-fuelled cars…

Secondly, engines. A 1.8-litre engine for a Corolla and a 2.5-litre engine for Camry in the era of far smaller engines (compact cars do well with engines below 1.5 litres, mid-class cars with engines below 2.0 litres) is a big misunderstanding since whatever is saved when an electric engine is in use will be wasted while a petrol-fuelled engine kicks in.

If you shape a fleet policy, you should ask yourself a question, what purpose the company cars should serve. I do believe employees ought to be encouraged not to use them for commuting to work nor to drive around town. They should travel longer distances where it is not practicable or cost-effective to use trains, planes or other forms of transports. My two trips last week (first behind the wheel of a hybrid Corolla, second in my private car), both to district towns in Poland where it would takes around two or even three times longer (door to door) to get otherwise than by car are the ideal examples when the fleet is necessary.

Coming to the point, i.e. to driving impressions – with silence at low speed and decent parameters of the electric engine, the hybrid car is ideal for around-town driving, an ideal car for a… taxi driver. While if I move about city, I use public transport or take a taxi, not a company car. As mentioned in the previous paragraph, a city car does not rank among desirable means of transport. Beyond town, on a dual carriageway, then on an expressway, driving was a misery… The CVT automatic gearbox does not let a driver feel control over how a car accelerates. Maybe I am overly accustomed to manual transmission, but I felt uncomfortable despite considering myself a rather seasoned driver. The very reaction of the car to pressing the accelerator pedal when one needs to change a lane quickly or to overtake has little to do with what I consider safe manoeuvre standards. I am used to pressing the accelerator pedal and making a car picking up speed rapidly (in 1.4 turbocharged engines of my private Megane, or company Passat). A hybrid Corolla at first does not react at all, then it chokes and just then accelerates reluctantly. I would fear overtaking a truck on a single carriageway… On top, the car is humming at higher speeds (above 130 kmph) and wobbles as if it signalled an imminent disintegration… I believe it was not the fault of the specific demo car (just above 4,000 kilometres on the clock) since many of my workmates have taken test drives with other vehicles and their impressions are similar. For the first time in my life I am happy not to be eligible for a company car.

A quick look at technical specs (especially the torque) of the hybrid engine is self-explaining. I wonder how they have measured the average fuel consumption, since on an expressway at around 140 kmph computer of the hybrid Corolla with 4 adults inside showed current consumption of 12 – 13 litres per 100 kilometres.

If I were a decision-maker of a car fleet policy, I would proscribe to:

- abandon a company car as a perk – the top-rank staff should just get paid enough to afford to buy a decent car,

- broaden the extent to which pool cars are used – an analysis of historical long-distance car journeys would be conducted and a sufficient number of cars per team or department would be allocated, individual cars would be granted to staff covering historically at least 20,000 kilometres in business (this would also reduce number of parking spaces rented),

- lengthen the replacement periods to at least 5 years or 150,000 kilometres, whatever comes first,

- impose penalties on employees who do not look after cars they use properly.

I actually considered switching to a hybrid car in some time, but having driven one, mindful of how little I drive around town and knowing how much carbon footprint the manufacturing process gives off, I am intent on keeping my current car going for as long as possible.

Turin

Ventured to North Italy in business earlier this week. The very decision of the senior management to fork out money and command me to take this (truth be told) useless business trip has taken aback many in my department, as our budget for travels to clients is rather tight. But then out of the blue it transpired splurging nearly five thousand zloty for a three-day foray was absolutely doable and coming by all sign-off despite strict cost savings turned out achievable.

The total cost was quite absurdly high (for five thousand PLN you could arrange two-week holidays in Italy for one person, provided they travel with a companion and share accommodation) because flights and the hotel had been booked less than a week in advance. Hence… Failing to plan is planning to… pay over the odds. But who cares if no one’s money is spent (if the travel budget is not fully spent, someone will cut it next year, so it is better to expend money foolishly than to pursue savings). If you can get a foray for free (or actually earn on it as you receive foreign travel allowance) who would not seize an opportunity to some nooks and crannies of a distant country?

Since there are no direct flights to Turin from Poland, one option to get there is to take a flight from Warsaw to Milan and then take a fast train which runs between the cities, or, arguably more conveniently, buy tickets from Lufthansa and catch a connecting flight in Frankfurt or Munich – we opted for the latter. “Catch” is the apposite word, since on the itinerary my imprudent workmates from sales department booked, the transfer time between connecting flights in Munich was 40 minutes.

Needless to say, after a delay in take-off from Okęcie airport on our way to Munich, we were late for a flight to Turin. Lufthansa kindly rebooked us for a flight three and a half hours later and equipped us with a snack voucher for 7 EUR (try to buy something reasonable to eat on the airport for such amount of money!!!). We ended up then flying with a cheap airline one hour later than planned (in total four and half hours later), missed a dinner with a client and checked in to hotel at 10 p.m. On our way back the first flight from Turin to Munich was delayed, but to our luck, the flight from Munich to Warsaw was even more delayed, therefore we landed in Warsaw mere 45 minutes later than scheduled.

The agenda of the visit was stuffed with meetings morning-till-evening and I only managed to take one brisk, long (15-kilometre) walk around the city in the evening the day before flight home. I need to confess for the first time since many years I ventured somewhere abroad without getting familiar with stuff such as local transport, local sights to be seen and other knowledge coming in useful while travelling (logistics was taken care of by the workmates).

Forgive me the quality of photos. I did not take the camera with me, all pictures snapped with a smartphone. To the right, Piazza Statuto, one of more famous squares in Turin, but I have no idea why (pardon my glaring ignorance).

I stroll (no, I rush) towards Pad river (with hindsight I have learnt it is Pad, not “some river”) and pass by a building which resembles a town hall. In fact, this is Madama Palace, now playing host to senate of Italy. So inconspicuous…

Less than half a mile closer to Pad, I stop by at Veneto Victory square. Should look like a life-bustling place on Tuesday around 6:30 p.m., but few tourists roam around, some local teenagers hang out, besides the place is quiet.

The day I turned up to Turin, a friend advised me to climb up the hill on the other side of the river to take delight in panorama of the city. Here, having ascended the viewing terrace outside Santa Maria del Monte church. It’s before 7 p.m., nearly one hour before sun goes down. Splendid.

Then I scrambled even further up the hill, to Villa del Regina (my sneakers from Lidl, bargain purchase for 27 PLN did not withstand the two-kilometre steep ascent) to stare at the sunset. The smartphone definitely proved inferior to even a compact camera which would have rendered far better how marvellous sight it was. I grabbed the moment, made it perfect, immortalised it, but with an imperfect device.

On my way back to the hotel (one night per 115 EUR, cheapie, but who cares if your employer pays) I cross the river again. Boulevards are anything but full of people. Conversely, nightlife does not seem to exist in Turin during the working week. On the other hand, I have not spotted any potentially dangerous immigrants, yet saw many homeless sleeping on the street, a disturbingly frequent sight, just as in Madrid.

While moving between meeting across the city and beyond we took taxis (too little time to use public transport). Driving in Italian cities proves to be governed by the law of the jungle, but Italian drivers have got accustomed to chaos well and excel in avoiding accidents (if inexperienced in driving in such traffic conditions Poles were behind wheels, prangs would happen all the way).

Price-wise, I was surprised basic goods in local discount stores were more expensive than in Madrid and Berlin which I visited this year, although I can boast about running across a restaurant where we ate medium-sized pizza and washed it down with mineral water for mere 7 EUR.

Finally, a foregone conclusion that Italy has seen its better days. Every time I travel abroad I appreciate how Poland has moved on and how in many aspects it has not just caught up with Western Europe, but often outshines the “old EU” countries.

Flying to Malta for eight days on Tuesday, next post in a fortnight.

By the way, any gee-up from readers after a few months without a single comment and seepage of inspiration since getting busy with more interesting stuff than blogging?

Conferencing

Just returned from a three-day industry conference held in one of the most known hotels located less than 100 kilometres from Warsaw. I go to such events two to four times a year and each such stay and observations made there prompt some thoughts on what conferences are actually for.

So having been present to more than ten conferences over the recent three years, I have reached a conclusion conferencing is a huge business and a marvellous machine for transferring money from some organisations to others, under the guise of noble ends.

The ones who benefit most in this business are:

- companies which specialise in staging such events,

- companies which deal with hosting and running such events (hotels, catering companies, marketing co-ordinators, etc.).

Nevertheless, the business keeps going since it is fuelled by expending “no-one’s money” which are the easiest to be spent – attendance in such conferences is hardly ever paid from private purses; participation fees are paid from corporate training budgets which, if not spent, will go to waste and would likely be taken away next year.

Based on what I have witnessed, there are main five reasons to attend conferences.

1. To show off / blow one’s own trumpet / make an appearance – this pertains to speakers who, by delivering workshops or speeches or participating in discussion panels can easily keep a high profile, underscore their position in a specific milieu, or boast of their recent achievements. If people see you, you do exist. If someone invites you, your existence is more noticeable.

2. To spend budgets – corporations send employees to conferences to prove they care for their development, staff take part in conferences to show they want to broaden their knowledge.

3. To facilitate exchange of knowledge – I do not want to detract from the main reasons why theoretically people attend conferences, yet if you are familiar with topics broached, you often witness industry experts reinventing the wheel, while what you learn are some uncanny titbits you can use later on to impress your interlocutors.

4. Sponsoring – companies which decide to co-fund conferences seize an excellent opportunity to boost their visibility among potential business partners and given they are clustered in one place, this can be accomplished effectively and quite on the cheap.

5. Networking – is unquestionably the biggest value added brought by conferences. Once you gather several, also notable, people ,in one place you give them opportunity to exchange business cards, engage in small talks and serious conversations and share knowledge, experiences, ideas and views in rather informal atmosphere. Looks like the whole setting is worth it.

All things considered, I am asking myself whether it is worth to attend such events to fish out a few titbits and talk to one or two noteworthy professionals. Mindful or all drawbacks and benefits, I would still say yes. I look at agendas of such events to check out whether lectures and panels touch upon the topics I need to be versed in to perform my job better and because of budget constraints I take heed of expenses related to such events (participation fees + accommodation + travel expenses) to pick out most worthwhile events. Looking forward to more of them.

Business trip in the sticks

Whenever I travelled in business, my destinations were always larger or smaller cities, but until last week I had never had to take a trip to the back of beyond. The destination will not be precisely divulged for obvious reasons, I can only reveal it was somewhere in Wielkopolska province.

The very idea that the New Factory has its own training centre (purchased back in early 1990s when the whole site was a dilapidated remnant of state-owned farm) makes a good alternative to paying for hotel / conference centre to hold in-house trainings, however if most attendants have to get to the remote facility from Warsaw, logistics becomes a nuisance, since you can get there directly virtually only by car which means if you don’t have a car, you need to rely on someone else’s lift or change means of transport several times.

The upside of the trip was the weather – although quite chilly and frosty at dawn, it still could be classified as clement – clear blue skies from dawn to dusk lift spirits at this time of year even in the absence of warmth. To the right – the only photo I will share which should not let anyone recognise the place (is the back of beyond easy to recognise?) – Wednesday, 7:42 a.m., a short stroll through the countryside just before a quick breakfast. Temperature of some –2C, frosty mists are lingering over undulating land (the anything, but plain landscape was a kind of astounding for me in that part of Poland), first rays of sun turn the hoar frost into dew, autumnal riot of colours pleases the eye of few beholders. Sight hard to be caught in Warsaw.

Now some little grumbling – I cannot say I thoroughly enjoyed the trip. The workshops were fairly intensive. On the first day we set off at 10 a.m. and, with two breaks for lunch and dinner, finished at 9:30 p.m. Having woken up at 4:30 a.m. to drive to Warsaw and pick up three other participants I was prostrating in the evening. On the second day workshops kicked off at 8:30 a.m. and finished at 3:30 p.m. (with a half-an-hour lunch break). And the journey to Warsaw, three and a half hours spent behind the wheel, was ahead…

The trip has made me realise why it is wise to travel in business around the country by train. I used to think people choose to go by train because they can work in the meantime, instead of focusing on driving. The other reason I had in mind was that whenever your destination is in a centre of a town, you just quickly reach a train station, jump into a train and are on your way home. The recent trip added the argument when you are tired-out, it is no fun to drive 350 kilometres and take responsibility not only for yourself, but also for your passengers and other road users, all innocent human beings. Back in Warsaw, where traffic despite late rush hour was still dense I had to be damn careful making manoeuvres, mindful of my impaired judgement of situations of the road. I drove safely back home, but the very end of the journey has made be break sweat out of stress – something which has not happened to me behind the wheel since some three years.

The trips to the back of beyond will likely repeat so I will have to either get used to it, or desperately try to cadge a lift (too many folks do this). Getting there for a training / workshop kicking off in late morning would require me to get to Warsaw Central Railway Station, then take the service to Poznan (which is fast and reliable so up that point I do not mind it), then change for a service to a district now nearest to the back of beyond (they run every 30 – 40 minutes and the journey lasts around an hour), from there can I take either a taxi or a PKS bus. I would need to collect receipts or invoices for all services and then submit them to get the reimbursement. With a personal car the journey is door-to-door, does not involve waiting for trains and getting reimbursement takes a single slip of paper entitling to a payout covering cost of petrol and motorway tolls with a decent surplus.

Alcohol and speed are most often cited reasons of traffic accidents. But has anyone taken the trouble to count how many people lose their lives or are severely injured as a result of collisions caused by tired drivers? On this weekend when we bring back memories of our departed ones, it is also a good moment to rethink our habits behind the wheel, unless we want to join them too quickly.

Oversized

Imagine an office (urząd) without petitioners (petenci). Imagine a school without pupils. Imagine a hospital without inpatients, or a health centre without the ill. A mind-boggling absurdity? From the times I was a student, I recall a conversation between two student office (dziekanat) workers both claiming their job would have been much nicer, if only they had not need to deal with students (ta nasza praca byłaby całkiem fajna, gdyby nie ci studenci). So much nicer would be a job of a clerk if only those obtrusive people did not come around. A work in a hospital would be much more rewarding, if personnel did not have to take care of those horrible patients. A work in school would be marvellous, if only teachers did not have to deliver classes to rowdy brats.

Smacks of absurdity? Not really. Each organisation, as it grows, goes through certain stages of development. With each consecutive one its structures are bigger, so they require more control, reporting, paperwork, etc. With time a profit-oriented organisation, i.e. a business no longer allocates all its resources towards attaining its core goal which should be making money. With time each company builds ancillary structures, which at first enhance specialisation and support front-line units, so that everyone can focus on doing their bit. As more time goes by, in order to keep the business together, companies set up more reporting / oversight / control functions. As the process carries on, fewer employees are focused on serving customers (i.e. looking after sources of revenues) and more employees are focused on dealing with internal affairs of an organisation. When the company is bigger, internal oversight structure are vital for keeping it going in line with a certain strategy, yet the question of proportions between so called front-office, middle-office and back-office is justified. The more of a company’s resources are directed towards back-office functions and the less towards front-office, the more mature the company is. But is it more efficient?

The term diseconomies of scale has not been coined without a reason. In an organisation’s development there is a point at which the organisation grows to unmanageable proportions, i.e. is too big to be run efficiently. This happens both in the government sector (which is more prone to such distortions) as well as in private sector, yet there probability of diseconomies of scale is strongly positively correlated with size. Overgrown bureaucratic structures no longer need customers to be have something to deal with. At the highest stage of this “internal focus” middle- and back-office staff can not see the forest through the trees. They no longer realise serving the customer who feeds them should be a top priority. The become so pre-occupied with processes, procedures, reporting and other self-oriented stuff that they forget those are the customers thanks to who they can earn a livelihood.

Oddly enough, such self-oriented organisations survive, albeit rarely thrive on the market. When an organisation reaches the highest stage of development (when it does not need customers to move on) it already has established a leading market position (often might be a monopolist) and superior reputation and switching costs for customers are high. These factors allow such company not to strive for many new clients and put little effort in retaining the existing ones. Moreover, front-office functions are never neglected. Employees who bring the company the bacon are property remunerated for securing revenues essential to cover costs of the bureaucratic structures. The inertia in such huge organisations can last years and such wicked corporations do not fall apart. Senior executives often realise what is wrong and launch initiatives aimed at reinstating customer focus in organisations they run. The frequent upshot is that an organisation focuses on pursuing the programme rather than on customers…

Some time ago I took part in a series of workshops aimed at streamlining and leaning process in my company. As the workshops developed and participants came up with new ideas, the picture which emerged showed clearly the customer is actually necessary to feed us with documents we could hand over from one to another, fill in to several systems, create reports, etc. The role of a customer is boiled down to a creature which sets the bureaucratic machine in motion. Once it gains momentum, it busy with document circulations, internal analyses and reports so that the customer drops to the bottom of its list of priorities. One day when the group of workshop participants was in top form and devised plenty of ideas how to improve workings of our company, I held back for a moment, examined what had been put forward and without second thought asked an inconvenient question “but where’s the room for customers in what we design?”. I poured cold water on my fellows, the silence came into the room. They all stared at me. I realised I could have overstepped boundaries, as dissenters are not flattered in corporate capitalism. To my surprise, no one denounced me, my remark turned out to be quite productive and changed the course of works during the next workshops.

After over three years of working in the same place, I am growing weary of my current job. Or to be precise, I have had enough of my employer and how my company is run. I do take pleasure in what I do and perform my duties zealously, so the symptoms do not signify burn-out, but I am frustrated with prospects my employer and I have, or rather do not have. My employer is a part of a huge corporation with operations in most countries in the world. My diagnosis of the problem they have with their Polish recalcitrant subsidiary is that the operating environment here differs from those in other CEE countries. The corporation refuses to compromise and adjust its doing-business guidelines to specifics of the Polish market. They fail to recognise the simple rule “shape up or ship out”. They neither shape up, as consistently they fail to discern the Polish market is not malleable and will not alter to meet their expectations, nor have the courage to divest of the defiant business which totally does not fit the rest of the corporation. Customers are lost, profits are shrinking and prospects of turnaround are miniscule, because the organisation is so big that the decisions as effect of which the company could get up from its knees would have to be taken by decision makers who could not point Poland at the map, not to mention basic understanding of peculiarities of the Polish market. Thus my job is dead-end, but owing to inertia of overgrown corporations I will hold it down for a while. In the meantime I keep looking for a better one, mindful of the risk of falling out of a frying pan into the fire. As long as I am not redundant, the pressure is limited. And if they decide to fire me, there is golden parachute waiting for me by the end of this year. If it accompanies the lay-off, putting me out of misery looks like an appealing option.

The banker’s role, from a bank employee’s standpoint and in Poland

My brother Marek e-mailed me with his observations about my last post, pointing out the importance of the banking sector to the entrepreneur. Indeed - such a valid point that it will make a separate post.

Instead of posting a drawn-out comment in response to Michael’s insightful post, I decided to dedicate a separate note to his text, making references to each paragraph and put his reasoning into the context of Polish banking sector, far younger than those established in Western economies. Beware though, the picture presented is biased, inevitably, when written from a bank employee’s perspective. A for starters, a valid point – I don’t feel I’m a banker, I’m only a bank employee – just an in a 5-year-old Polish joke, there difference between bankier and bankowiec is roughly the same as difference between rentier and rencista… There are no bankers in Poland, there are banks and their representatives who do exert influence on how businesses are run.

Looking in stereotypes, the British believe the Germans have got it right. Their Landesbanks provide a capital lifeline to small and medium-sized family-owned businesses for generations. They know their clients personally (often having a banker sitting on the firm's supervisory board). When the firm needs money to buy another production line because it's just won a new order in South America, the bank looks at the firm's track record and says "by all means".

Is this really true the British envy the Germans how their banking system functions? In Poland such relationships simply cannot exist, because civilised banking sector emerged only after 1989 and had to be developed from scratch. It has grown out of the teething phase quite quickly, as Polish banks have been sold to foreign investors, who have contributed with their know-how of doing banking business.

Deals in which there is a too profound relationship and a client smell a rat to me. Whenever I see a transaction in which someone from a bank knows too well a company, it heralds troubles, if it goes through… The proper distance between a bank and a company increases… bank’s safety…

In the UK, the banks have done away with personal relationship managers and have outsourced the loan decisions to a call-centre in Bangalore, which mechanically ticks the boxes and says 'no', just in case. Online banking has many positive facets for the consumer, but for the small business it has killed off the personal nature of the banking relationship. "Lend to the man, not to the asset" was the golden rule for Mr Mainwaring and his generation of bank managers, who knew their customers, but this is no longer the case. Today, UK banks talk of 'relationship banking' as if it were a new discovery; the truth is they lost it long ago and are now trying to rebuild it on the basis of call-centres, internet banking and algorithms that replace loan decisions.

As a rule – the bigger the Customer is, the more personalised the relationship must be. And whenever you speak of a relationship manager, you should have in mind somebody who knows its customer inside out and fosters its interests, not just foists upon them services they don’t need only to get a bonus. But personalised relationships do cost money, so probably the cost-to-benefit analysis has led many banks to give upon the relationship model. Let’s face it – does an average individual or small company need a dedicated employee who knows them and their needs well? Such approach costs and this cost will be passed on to a client, often reluctant to incur additional expenses. The question one needs to answer is whether a customer prefers and individual approach or low cost of banking services. Cost savings are also the driver of automated loan decisions – in assessing creditworthiness of a small business, one of many millions in the country, a well-designed system will beat a not infallible human. Another advantage of a score-based loan decision system is its quickness – within a few minutes you know whether you are eligible for a loan or not. Of course, again, the bigger the business, the more complex the credit analysis and the less reliable simple algorithms based on questions are cut-off points are. Plus an important note – in Poland credit risk management cannot be outsourced, so whenever you apply for a loan in a Polish bank, be sure it is not farmed out to Bangalore.

Now that the economy is on the rebound, British banks have only got worse in this respect. Want to borrow money to buy a house on a rising market? Why certainly! Mortgage lending is back to 2008 levels. Want to borrow money to expand your small business...? Ooh... That's a bit difficult... We'll need to send someone over to check your business in person, but that costs us money, so we won't bother, so to save time, our answer is no. Bank lending to business is 30%-40% down on 2008 levels (depending on sectors and regions).

The rationale behind such stance is as follows: for housing loans, a bank has a tangible collateral and very strong incentive for the debtor not to lose the roof over their head. For small business the risk profile is far worse. I don’t know how law in terms of creditor protection in the United Kingdom exactly works, in particular I’m not familiar with issues of owners’ liability for their business’ debts. A small company might easily wind down in a few days, owners may go away or tell their venture didn’t work out, having pumped out cash beforehand and the bank is left out in the cold… Oddly enough, in Poland mortgage lending has been curbed, while SME lending also, but not to such extent…

What's it like in Poland? Banks have generally tended to say 'no' from the outset (that lack-of-trust issue again), so Polish entrepreneurs have just got used to financing growth out of saved earnings. Over the economic slow-down (no recession here, remember!), Polish entrepreneurs drew in their horns and sat on their cash, tempting politicians to tax it or somehow put it to better use.

Rightly discerned, it all boils down to mistrust. Banks are too wary to lend to small firms, which are risky businesses, less transparent and more shaky and corporate clients. The other story is when you criticise banking sector’s mistrust, you should keep in mind a bank collects money from depositors and has to return the money to them, no matter of its borrowers settle their debts or not. Banks’ restraint in lending is also a form of prudent management of someone else’s money. As a depositor I also must trust my bank that it doesn’t engage in risky lending.

Poles, like Brits, look across to Germany's Landesbanks as the ideal model for small- and medium-size businesses, yet another reason (along with apprenticeships, a high social regard for engineers and manufacturing industry) why the German economy weathers the storms well (and can still afford to bail out the lazy southern Europeans).

I would also add focus on competitiveness. This praise of the German economy is quite surprising when made by someone who support liberal economic agenda of the Conservative Party.

Ethics in banking? Polish bankers are nowhere nearly as well paid as their British counterparts. The result is that here in Poland, people have no problem inviting bankers to dinner parties, saying 'hello' to them in the street, or generally treating them as fellow human beings.

What earnings have to do with ethics? Ethics is about conduct, not about salaries – one could even point out someone who earns less is more encouraged to behave unethically in pursuit of quick wealth.

Still, banking sector employees in Poland earn well above national average. It just the gap between average salary in the national economy and in the banking sector that is much smaller than in the UK. A relationship manager for corporate clients in Poland earns on average between 10 and 15 thousand PLN per month before tax (some three times more than average salary in the national economy), plus it gets numerous perks (company car, phone, etc.) and discretionary bonuses for meeting sales targets – unlike in Anglo-Saxon banks, bonuses are not contractually guaranteed. Still, although quite wealthy, Polish banking employees are ordinary people, unlike their spoilt counterparts from the City or Wall Street.

The Polish banking sector is generally in sound shape, but still has much to learn about working closely with the entrepreneur for the benefit of the economy at large.

And the essential thing on both sides is empathy – the bank needs to understand the entrepreneur and the other way round – banks have status of ‘public trust institution’ and no matter how ludicrously it sounds, their primary goal is to ensure the safety of funds entrusted with them, this can be achieved by cautious risk management…

'Business school' versus 'School of economics'

In practice, I have actually parted company with my school, although in theory I'll do it when I pass my Master's exam. Formally I'm still a student, and both as a student and as a would-be graduate (a diploma from the Warsaw School of Economics is a recognised 'brand') I should be interested in the strategy of WSE (PL: SGH), thus the direction in which it is drifting.

Recent years have brought significant changes in the workings of my university. Most of them have been brought about by an obligation to implement the so-called Bologna system. The biggest revolution to take place under the new system was the shift towards two-tier studies. Each student now has to no choice, but to take a three-year BA course and then, if they wish to continue their education, a two-year MA course. This has replaced the previous cycle of five-year MA studies, which left the decision to take a Bachelor's exam at students' discretion. The shift necessitated changes in the curricula. In the old system studies lasted five years, now they last three plus two years. This indeed equates to five, but the new system lacks continuity, as studies have to be split into two separate cycles and new curricula for each cycle have had to be drawn up.

Proponents of the shift (not those from Poland, but EU officials and scholars) pointed out the Bologna system would bring benefits to students. As it now transpires, its introduction was to the benefit of the overwhelming, problem-piling-up bureaucractic machinery and students are not key beneficiaries of the Bologna system. Since the introduction of the new system in 2006, when I began my studies, SGH has pressed on with two curriculum reforms. Both have come in for harsh criticism for cutting down on number of course hours allocated for "core" courses (intermediate macro- and microeconomics, advanced economics, statistics, econometrics, mathematics) and "not strictly economic" courses (sociology, economic history). The most ardent opponents of the reshaped curricula even cried out against SGH turning into a "vocational school" and retaining the word "economics" in its English name only.

In the West we have two different types of universities:
1) business schools,
2) schools of economics.
And they must not be mistaken for each other!

Let's look at the top bar at "The Economist's" main page.

This is not a coincidence that 'economics' and 'business' have separate sections.

The difference between the two is quite simple. Economics is about understanding people's and companies' behaviours on the marketplace and functioning of economies and it is a social science. Business in turn is simply about making money. The two are strongly tied-up with each other, yet the latter is just a part of the former.

This assertion leads us to another conclusion. It takes much more to educate a good economist than a good businessman. In fact a 'vocational school' would suffice to churn out graduates who would pursue their careers in 'business'. They should have all competencies and skills that would allow them to generate money for their corporations and, consequently, for themselves. A graduate of a business school can work in a consultancy firm, as accountant, auditor, product manager, at a bank, they can successfully run a company. In many of the jobs listed above they would outperform graduates of economics, but think about a business school graduate analysing financial markets, working in a central bank (remember the former president of Polish central bank, ridiculed for his diploma from an 'inferior US business school'?), as an economist at a bank or drafting a pension system reform. All those tasks require a graduate of economics, equipped not only with essential knowledge, but also taught to understand all complex phenomena that take place in the economy, taught to analyse and track causations and, above all, able to shape their own opinions independently. In the context of independence the word 'business' has to be stressed. Being in business involves money-related tie-ups and conflicts of interests that jeopardise an economist's independence. But bear in mind that only business, but also politics might pose a threat to an economist's independence.

Nevertheless, the education of an economist needs to be much broader that the one of a business school student. Courses such as sociology, economics of development, economic history, economic policy have to be run and taken by students. Being an economist requires broader horizons and open mind. The style of teaching should differ. Students of economics should be encouraged to discuss; during such discussions various opinions should clash, substantive arguments backed by examples and calculations should be traded. Analytical skills should be developed, students should be taught to discern possible impacts of some factors on other ones. A few useful rules should be instilled, such as recently quoted one that in economics you can prove a theory if you can't disprove it. And a grasp of psychology is essential when analysing the mechanics of economies and financial markets! Business students, in turn, can crack case studies, learn how to manage people, run companies, foist stuff upon customers and develop other skills requisite for making money.

I don't wish to denigrate students and graduates of business schools. They're just a different breed and are not cut out for some jobs. As a rich man I would not hesitate to take on a business graduate to run my company (but remember the currency-option botch-up from early 2009), but they would not be allowed to manage my personal finances.

And having said that I can't stress strongly enough there is no clear dividing line between business and economics. At my job I am somewhere in between; I try to make the most of my knowledge in economics, but the job has a tilt at the 'business', which means my career path might have to be reassessed...

Coming back to the issue of SGH, I'd like them to settle on 'school of economics' model. Maybe this is not what the market, ruled by money, needs most, but this what next generations will surely need. Moreover, 'business school' means taking a path of least resistance, while SGH with at least some of its excellent staff, is capable of aiming much higher. May it stay the Warsaw School of Economics, not in name only!