EMCC European Monitoring Centre on Change

P.U.H. Hant

16 Jul, 2015
    • Poland
  • Organisation size

    10-49

  • Establishment size

    10-49

  • Type of restructuring
    • Internal restructuring
  • Ownership
    • Private
  • Involved actors

    • Public employment service
    • Development agencies
    • European Commission
    • Private consultants
    • Others
    • National government
    • Banks
  • Anticipation of change activities
    • Strategic long-term monitoring of individual organisations economic and financial situation
    • Training/skill development
    • Strategic long-term monitoring of market and technological developments
    • Establishment of networks/partnerships with regular exchange facilities
    • Development and maintenance of capacities and competencies for anticipation of change
  • Management of change activities
    • Supporting the access to finance of the affected organisation
    • Support of networks/partnerships among organisations
    • Flexible/early retirement schemes
    • Diagnosis of the situation and designing change procedures
    • Information and consultation of workers or their representatives
    • Monitoring of the impact of the restructuring
    • Reorientation of previous productive resources (site/equipment/etc) and diversification measures
    • Redeployment of affected employees within the organisation

Organisational profile

PUH HANT was founded in 1994 by Maria and Andrzej Kurowski, who are still the owners and executive managers. Andrzej Kurowski graduated from the University of Technology in Poznan and completed postgraduate studies at the city’s University of Economics. The company was founded to take advantage of the market opportunity created by the introduction of the VAT law in Poland in 1993. PUH HANT was among the first companies in the market to sell and service cash registers and fiscal printers and it quickly managed to achieve a strong position, in Poznan itself, plus the wider Wielkopolska region, and nationally.

PUH HANT 's mission is to assist in the optimal selection, delivery and installation and servicing of technical equipment used to support the sales processes in every type of retail outlet. In the first period of activity, from 1994 to 2001, the company achieved average annual sales growth of around 20%. The growth rate then stabilised at a slightly lower level, but the company continued to grow. In 2006, employment peaked at 36 people, on different types of contracts, then decreased slightly. Employees are mostly male with a secondary technical education. Many of them continue their studies at the Poznan University of Technology in the evenings and at weekends, with financial support from the employer. Due to the nature of the fiscal devices industry, workers involved in installation and servicing must have appropriate state certification and a good reputation.

The company is very well established and active in the local community. Maria Kurowska is a board member of the non-profit association Komitet Partnerski Ziemi Goślińskiej, founded in 2003 to develop partnerships between local businesses, the city authorities and between partner cities. Andrzej Kurowski has been a founding member of the Wielkopolska ICT Cluster, an initiative begun in 2006 and supported by the city authorities, which brings together numerous companies and institutions including Poznań University of Technology, Poznań University of Economics, Adam Mickiewicz University, Poznań Supercomputing and Networking Centre. Both company owners and most of their employees live near the company premises. The company also has a very large share of local market sales and service of fiscal devices and other areas of its business activity. can be characterised as having a strong family culture and has neither a works council nor trade union representation. PUH HANT does not have a written human resources management policy nor a policy on corporate social responsibility.

Background to restructuring event

The fiscal devices industry is particularly dependent on the tax requirements imposed by the authorities in the various sectors of the economy. The level of sales has also, to a much lesser extent, been related to the overall economic situation. Thus, the change in tax laws in 2002/2003 reduced the demand for cash registers from about 200,000 to 100,000, and after several years, to the current level (in 2011) of around 40,000 to 50,000 nationally. This represents a fall in demand to around 25% compared with the peak period.

There are also high technical requirements for such equipment, with fiscal regulations set out to ensure constant reliability. By law, if a cash register breaks down, then the shop has to be closed. Regulations also cover the safety of the records of transactions recorded on the till. They apply not only to software, but also the technical specification of the hardware, such as what media should be used to store transaction data, or what kind of batteries should be used as back up if mains electricity fails.

Another requirement for the fiscal equipment manufacturers is to ensure a constantly available service by certified personnel throughout the country. Many till manufacturers cannot independently organise and maintain such a national service network and, therefore, establish partnerships with specialised companies which provide service networks for several manufacturers.

The close relationship of the sector with the tax legislation means that there are statutory inspections of fiscal devices. These inspections in the first years after 1994 were required every six months, then once a year, and current regulations (2011) now require such inspections once every two years. Statutory inspections are paid for by the government and their frequency therefore directly affects the income of companies, such as PUH HANT, which provide such services.

Competition in the industry has intensified in recent years because of the growing number of new entrants in the market. These are mainly companies selling and servicing computer equipment which, due to a weakening of growth in the market for personal computers, have been attracted by the higher margins in the fiscal devices sector.

Restructuring processes

Despite this, PUH HANT’s record has been impressive as it has been installing more or less the same amount of cash registers throughout the whole period of its activity. It should be noted, however, noted that over the same period the average price of a cash register has dropped significantly. In 1997, the average price of a cash register was around PLN 2,000–PLN 2,500 (€ 500–€ 625) whereas in 2012, it is about PLN 1200 (€ 300). However, the margins have remained the same percentage.

The company’s ability to maintaining a reasonable growth in average annual turnover during its 17 years would therefore not be possible without a successful diversification strategy. PUH HANT consistently strives to develop products in related fields and each time there is a slowdown in the market for cash registers the company adapts by restructuring, altering its business model, and increasing its diversification.

The company consciously pursues a strategy of building comprehensive ICT solutions and services for clients in the retail sector in the domestic market. Their range currently includes the sale, installation and service of hardware, software (operating systems, antivirus software, management support systems), CCTV and monitoring systems, development and positioning of e-commerce solutions and operating a local internet provider network.

The restructuring also applies to the business model. For the first few years, the company relied primarily on its own full-time employees or co-operated closely with several self-employed people. Gradually, however, the proportion of partners as independent operators increased, while the number of full-time employees remained constant. It is worth noting that there have never been any job cuts at PUH HANT. As modern logistics, courier services and the internet replaced the need for a traditional office, the company closed its second office in Poznań and focused on building a network of partner companies in the Wielkopolska Region and nationally. This led to one of two employees moving to the main office and another one retiring.

PUH HANT has always tried to develop and strengthen the atmosphere and culture of a family business based on a high level of trust and respect and very stable employment. It supports employees in their professional development, for example through financial help to study in their spare time in university schemes and by funding business trips to foreign trade shows.

The owners make it a top priority to monitor its customers’ development, trying to meet their needs comprehensively, which could mean further diversification of the business. The company’s long-term vision assumes its turnover coming equally from three areas of activity:

  • sales and services related to the cash registers (installation, programming, configuration, maintenance, development and integration of networks with other equipment);
  • domestic sales and export of equipment (industrial computers, servers, programmable keyboards, barcode readers and radio frequency identification technology);
  • distribution and integration of software (operating systems, antivirus and management support systems).

Challenges and constraints of restructuring

There has been only one serious situation in the company's history, a threat of loss of liquidity in late 2008 and early 2009. As a result of economic slowdown in Poland, the company began to have difficulty with delayed payments. In a short period of time, approximately 60% of the company's customers delayed paying charges for over one month. This situation persisted for about half a year. Fortunately, thanks to a good relationship with its bank, PUH HANT managed to obtain additional financial resources and was able to secure liquidity. Finally, a change of the tax regulations, which caused a massive operation to update software update forced the company’s debtors to pay up, as only service technicians who were authorised by the company could reprogramme fiscal devices sold and installed by PUH HANT.

It is worth emphasising that all the investments made by PUH HANT so far have been financed internally. External financing was limited to loans for working capital.

Restructuring advice and support

PUH HANT has not used the services of any external organisation or institution on strategic matters. Only in late 2008 and 2009, when there were serious problems with delayed payments, the company was assisted by the law firm on strategies for dealing with debtors.

It should be emphasised, however, that to diversify and in changing its business model, the company has been actively working in cooperation with a number of different types of entities, including:

  • the Public Employment Office, to organise training for the unemployed in operating cash registers;
  • the European Social Fund and the Ministry of Economy, who gave subsidies to help with job creation and to participate in trade fairs abroad;
  • the Chamber of Physicians and the Bar Association, who support training of their members;
  • Wielkopolska ICT Cluster activities, for example acting as a partner of a conference on the future of internet services, where it provided radio frequency identification (RFID) system support.

Outcomes of restructuring

The company's restructuring strategy of diversifying and changing its business model, implemented in response to adverse changes in legislation and in the market’s evolution should be evaluated very positively. There has been a continued growth in sales, despite a drop in demand in the main area of activity by 75% and the firm has over 2,000 Polish and international clients, many of whom are longstanding. The company has also managed to preserve and strengthen the atmosphere and culture of a family business, with very low staff turnover and high levels of trust and investment in developing the skills of its employees.

Commentary

Management feels that the company’s success is due to long-term planning, rather than rapid and disorganised actions. In practice, this means that the company does not try to win deals and projects at any cost. It prefers to ensure a reasonable margin and quality of traded goods and services. PUH HANT's example proves that quality and reliable service pays off, as customers have no trouble with the tax office and recommend the firm’s services. Its plans for the future involve further strengthening the diversification processes in order to achieve a balance between the three main areas of the company's activity.

Author

Radosław Owczarzak, Eurofound

Information sources

 

Interviews

Andrzej Kurowski, Co-owner and Director of Marketing and Sales, PUH HANT

Maria Kurowska, Co-owner and Executive Manager, PUH HANT

Company website

www.hant.pl

keywords
  • Clusters/Networks/Supply chains