Business Improvement is a new management and direction system, the result of accumulated experience in business management and is projected to place the socialist state-owned company in competitive conditions at the national and international level. The implementation and consolidation of the Direction and Management System and the associated systems requires the systematic and joint work of managers and workers, which allows the assimilation of structural changes and values in the organization. This paper presents the review of the background, development and perspective of the implementation of this system in Cuban companies.
Introduction
The Business Improvement is a direction and management system that is gradually being implemented in Cuban companies and has gone through several stages to achieve its consolidation.
In the first stage of design and implementation of this system, diagnoses and approval of business files were carried out, in accordance with what is regulated in Decree Law No. 187/1998 "General Bases for Business Improvement".
The experiences acquired in the years of work with companies in Business Improvement and within the policy of improvement in business management lead to the promulgation of Decree-Law No. 252/2007 “On the Continuity and Strengthening of the Management System and Cuban Business Management ”and Decree No. 281/2007 of the Council of Ministers“ Regulations for the Implementation and Consolidation of the State Business Management and Direction System ”that regulate the new stages of development to achieve comprehensive management and efficiency in companies Cuban.
The Executive Group of Business Improvement (GEPE) has developed different methodologies for the implementation of Business Improvement since its constitution, which have been adapted to the context of the situation of companies in the national economy, among which the “Methodology for the Preparation of the Business Improvement Files Based on the New Projections Established by the Legislation ”(2007), the“ Methodological Guide for the Preparation of the Business Diagnosis ”(2007) and the“ Methodological Help for the Consolidation of the Direction and Management ”(2009).
In an analysis carried out by García et al. (2007) on the economic evolution of a sample of 83 companies in Business Improvement in the period 2002 to 2006 concludes that in the sample taken there are companies that are in the groups with low growth rates, with instability in the behavior of the indicators fundamentals such as mercantile production, net sales, total income, profits or losses in the period, total salary fund, etc. and not in a progressive ascent as expected with the application of this business model.
The results of the aforementioned work show, in general, that although from the beginning of this process there has been a policy of the Cuban State to achieve companies of excellence, but like any process of change, a period of assimilation of the new ones has been necessary. methods and systems that are incorporated into business management. According to Zenea (2004), Business Improvement must face the insufficient sensitivity of senior management in these processes and there is insufficient preparation on the part of managers and workers to face change, which constitutes barriers to the consolidation of the system.
From the methodological point of view, there are the necessary tools for the implementation of the Direction and Management System, but in many Cuban companies an extraordinary organizational and collective creation effort is required, since a culture has not been developed in a staggered way. management, if one takes into account that it is necessary to design, document, implement and manage 19 systems, including quality, occupational health and safety, environment and human capital systems, which are subject to certification or endorsed by competent bodies, in addition to those that have traditionally been managed in Cuban companies.
Given this situation, to raise the competencies of the main acting leaders of the entire country, diplomas have been organized in the spheres of Public Administration and Business Direction and Management aimed, among other objectives, according to Díaz (2012) to “promote the proper performance of the management methods and techniques ”.
The implementation and consolidation of the Direction and Management System in the company requires the systematic and joint work of managers and workers for a more or less prolonged period of time, which allows the assimilation of structural changes and values in the organization.
Background to the Business Improvement Process
A detailed review of this period is presented in the works of Díaz Fernández, I. and Echevarría León, D. (2008) and that of Sarduy Meneses. A. (2008), from which the elements set out below have been taken.
The first system as such implanted in Cuba after the triumph of the Revolution was the Budgeted Financing System for Industry and the Economic Calculation for Agriculture. Subsequently, in the mid-1960s, the Economic Registry System was established and in 1975 the System of Direction and Planning of the Economy was implemented, which was in force, practically, until 1986, when it suffered a set of modifications.
The Budgetary Financing System in its conception, revolved around the State Budget as collector and issuer of monetary resources and therefore had a centralizing character, with very little business autonomy. The companies only operated with monetary resources assigned by the Ministry of Finance, in order to guarantee wages and material resources for production. Investments were also made under the National Budget and funds were also allocated by the Ministry of Finance.
In 1975, after the celebration of the First Congress of the Communist Party of Cuba, the Economy Management and Planning System (SDPE) began to be applied, which was based on Soviet-style economic calculations (from the former USSR). The system contemplated socialist planning at its core and a certain relative autonomy of companies, had a centralized approach and some market levers were at work.
The center of the system was planning and among other relevant aspects of it were: economic contracting, consumption standards, statistics, costs, prices, quality, finances (including credit and budget issues), organization of work and salaries (which includes matters relating to job training) and stimulation funds.
In reality, the SDPE had to be implemented without the favorable conditions for it, since the previous system eliminated essential bases such as accounting, the decoupling of wages to results and the existence of gratuities. In its own conception, planning became complex, cumbersome and bureaucratic and had very strong features of rigidity as it did not consider the business diversity in the application and was never fully implemented, in addition to that in this process a set of errors were made that began to distort the system.
In 1986, the process of Rectification of Errors and Negative Trends began, aimed, among other aspects, at solving the problems of the SDPE. As a result of the stage, measures were taken that were systemic in nature, with a view to solving existing problems. The degree of centralization of management increased and the market that had been reached was reduced.
At the end of the decade of the 1980s and the beginning of the 90s of the last century, the country began to suffer very strong restrictions due to the crisis of European and Soviet socialism. This situation imposed an extreme level of rationalization, giving rise to the so-called Special Period, the abrupt fall of the Gross Domestic Product, exports and imports is observed, monetary circulation increases without material support and demotivation increases. All of the above led to the establishment of a set of economic flexibility measures in 1993 (González Sanz, L. 2004).
Starting in 2004, a set of measures are taken that further centralize the country's economic activities, which seek to analyze and propose recovery solutions, with a marked direction towards the social.
The single account in foreign currency is established, which eradicates economic transactions between companies in that currency. As of that date, the economic transactions remain at the disposal of the Currency Approval Committee of the Central Bank of Cuba. The objective of this measure is greater financial control, improve quality in commercial contracting processes and the availability of resources to undertake works prioritized by the Government. Although the measure has had a positive effect, it has also led to a level of centralization that hampers business management both in investments and in buying and selling to third parties.
The aforementioned authors consider that in a general sense, in the management systems applied since the triumph of the Revolution the tendency towards economic centralization is manifested, especially in decision-making related to the development of companies.
The Business Improvement Process
At the end of the 90s of the last century, as part of the set of measures assumed in this stage, the Business Improvement process was extended to the civil state sector of companies, which is based on the experience of the FAR (García Díaz, J. 2009) and Decree Law No. 187 of 1998 is issued. “General Bases of Business Improvement”. In 2007, Decree-Law No. 252/2007 "On the Continuity and Strengthening of the Cuban Business Management and Direction System" and Decree No. 281/2007 of the Council of Ministers "Regulations for the Implementation and Consolidation of the State Business Management and Direction System ”.
The Business Improvement takes a new name as the State Business Management and Direction System and establishes an operating standard for organizations that are in any of the stages of their design and implementation. The implementation of its normative documents has marked the development of this process.
The stages established by Decree No. 281/2007 for the implementation of the Business Direction and Management System are the following:
1. Preparation of personnel.
2. Initial diagnosis of the company.
3. Approval of the Diagnosis.
4. Design of the Business Management and Direction System and preparation of the Business Improvement File.
5. Defense and approval of the File before the Executive Group of Business Improvement.
6. Verification by the Provincial Executive Secretariat for Business Improvement on the satisfactory preparation of the workers and the Board of Directors to undertake the implementation stage.
7. Approval of the File by issuing the Agreement of the Executive Committee of the Council of Ministers that authorizes the application of the System.
8. Implementation in correspondence with the elaborated schedule.
9. Continuous improvement of the system.
10. Consolidation of the system.
18 systems are established in its application, which address essential aspects in business activity in a comprehensive and systemic way and are the following:
1. General Organization System.
2. System of Management Methods and Styles.
3. Man Care System.
4. System of Organization of the Production of Goods and Services.
5. Quality Management System.
6. Human Capital Management System.
7. Environmental Management System.
8. Innovation Management System.
9. Planning System.
10. Economic Contracting System.
11. Accounting System.
12. Internal Control System.
13. Financial Relations System.
14. Cost System.
15. Price System.
16. Information System.
17. Marketing System.
18. Business Communication System.
In Article 9 of Decree Law No. 252 "On the Continuity and Strengthening of the Cuban Business Direction and Management System" it is provided that in order to organize, direct and control the progress of the Business Improvement process, the Government Group is created of the Business Improvement (GGPE), the Executive Group of Business Improvement (GEPE) and the Provincial Groups of Business Improvement (GPPE) and their executive secretariats, which will fulfill their functions in accordance with the provisions of the law.
These groups were created in 2004 as an agreement of the Executive Committee of the Council of Ministers and were commissioned to evaluate, through a Control Guide (GEPE, 2007) the stage reached in the implementation of Improvement in companies, through visits of control and guide in cases that require it; as well as giving feedback to the groups with a view to improving their knowledge about the problems and difficulties experienced by companies and the most appropriate solutions to the corresponding authorities.
Current trends in the implementation of the Cuban Business Management and Direction System
Starting in 1998, with the approval of Decree Law No. 187/1998 “General Bases of Business Improvement”, the most important management instrument was put into effect in the period 1998 to 2007 for the Cuban company, by proposing in an orderly manner the carrying out the necessary transformations in order to achieve greater efficiency and effectiveness in business management in the country (Artiles Visbal, S. 2009).
It is necessary to take into account within this process of organization of the socialist state enterprise the promulgation of Resolution No.297 / 2003 “Definitions of Internal Control. Content of the Components and their Standards ”of the Ministry of Finance and Prices applied to all companies, is a process integrated into the operations carried out by the management and the rest of the company's personnel and has the following objectives:
• Reliability of the information
• Efficiency and effectiveness of operations.
• Compliance with laws, regulations and established policies.
• Control of resources of all kinds available to the company.
Its mission is to achieve the objectives proposed by the entity, it is considered to be effective because it guarantees continuous improvement, implements the necessary corrective measures, promotes knowledge of the missions and objectives to be fulfilled, its ethical values and professional capacity and allows the development of an environment and create a culture of control and prevention (Bejerano Portela, G. 2007).
This system is among those that the company must manage, but it is of vital importance in the design of the remaining systems that make up the Business Management and Direction System, in order to ensure that the documentation and methods for monitoring and measuring the processes respond effectively to internal control with a system approach within the company.
As a process to improve Internal Control, Resolution No. 297/2003 of the Ministry of Audit and Control is repealed and Resolution No. 60/11 "Standards of the Internal Control System" of the Office of the Comptroller General of the Republic is issued. the basic rules and principles of mandatory observance for the Office of the Comptroller General of the Republic and those subject to the auditing, supervision and control actions of this Body, adapting it to the new changes that are taking place in the country.
In Resolution No. 60/11, Chapter IV. “Of the links with other management systems”, the obligation to integrate these systems into internal control and the need to readjust these designs to respond to the requirements established by this document is established.
The implementation of the Business Management and Direction System (Business Improvement) has not been an easy task for Cuban companies. The figures managed by the Executive Group of Business Improvement in 2010 report that there are 2,734 companies, of which 1,031 are applying the Business Management and Direction System, which represents 38% of the total. The opinion of the experts consulted in this work is the entry and exit of the Improvement companies and those that have never been able to integrate the system, as a consequence of the rigor with which compliance with the different steps is required and the accounting situation does not reliable (Mejías Rubio, G. 2010).
Among the factors that are outlined in this article, expressed by the interviewed specialists, is the low autonomy for the management of resources, lack of confidence of the cadres and workers in the system because it has often been imposed without having the conditions to implement it adequately, the inadequate management of human capital and attention to man, low-quality productions and services.
In this same work appear the statements of the Vice Minister of Economy and Planning at that time, who assured that in 2009 the companies in Improvement represented 65% of the country's income and showed efficiency in meeting the main economic indicators. He considered that the most serious problem is accounting and internal control, that companies in improvement are subject to the same problems in the country and in times of crisis it is necessary to buy for the most efficient companies and those that substitute imports such as Biotechnology, those prioritized, such as Agriculture and Construction.
Díaz and Echevarría (2009) refer to the main weaknesses of the Cuban business system, they point out those related to low executive capacity and deficient management methods, insufficient support in resources and little autonomy, lack of preparation in managers and personnel and the absence of competition as a motivational factor. The Business Improvement has been based on its intention to improve and redesign the functional systems of the company, but the company should not be seen as a mechanical set of parts, structures, inputs to produce goods or provide services.
The Executive Group of Business Improvement plans a program until 2015 that allows the consolidation of Business Improvement that appears in the "Methodological Aid to Business Directors for the Consolidation of the Business Management and Direction System" (GEPE, 2009), in order to that contributes to the solution of the country's difficulties. These problems must be faced with the development of the export vocation of products and services, the increase in their levels and quality demanded by the population, the substitution of imports and the production of food from the agricultural sector.
Currently, this process is subject to changes from the approval of the "Guidelines for Economic and Social Policy" (VI Congress of the Communist Party of Cuba, 2011) where in the Business Sphere aspect, which corresponds to the guidelines from number 11 to 24 actions are defined to define powers within the companies in relation to internal finances, working capital, to strengthen the internal control system, the powers to approve the post office staff, the pricing policy and introduction of innovations for the improvement of organizational processes, which directly impact companies in Business Improvement.
Bibliography
Artiles Visbal, S. 2009. The Cuban company in improvement: Relationship with information and knowledge. ACIMED. Available at:
Bejerano Portela G. 2007. Internal Control System. Conference. National Meeting of Directors of Companies in Business Improvement. August 2007, Havana. In: CD Perfeccionamiento Empresarial.
Council of State. Decree Law No. 187/1998 General Bases of Business Improvement. Available at: http: /www.gacetaoficial.cu/
Council of State. Decree Law No. 252/2007. On the Continuity and Strengthening of the Cuban Business Direction and Management System. 10p. Available at: http: /www.gacetaoficial.cu/
Minister council. Decree No. 281/2007. Regulation for the Implementation and Consolidation of the State Management and Direction System. 229p. Available at: http: /www.gacetaoficial.cu/
Comptroller General of the Republic. Resolution No. 60/11. Rules of the Internal Control System. Extraordinary Edition. Available at: http: /www.gacetaoficial.cu/
Díaz Fernández, I.; Echevarría León, D. 2008. The Management System and Business Management in Cuba: An Essential Analysis. In: Center for Studies of the Cuban Economy.
Díaz Ruiz, O. 2012. Diplomas begin for main cadres in office throughout the country. Granma newspaper of February 7, 2012, p. 2. Available at:
García Díaz, J. Evaluation of the Implementation of Business Improvement in the Applied Research Unit for Construction in the period 2007 - 2009. Diploma Work, UCF Carlos Rafael Rodríguez, 2009. 170 p. Available at:
García Leonard, Y., Domínguez Domínguez, M., Nieves Domínguez, Z. 2007. The economic evolution of companies in business improvement in the period 2002 -2006. In: Scientific Yearbook of the University of Cienfuegos. Digital edition. 2007.Available at:
GEPE. 2007. Control Guide for Companies in Business Improvement. Digital format. 21p.
GEPE. 2009. Methodological help to company directors for the consolidation of the Business Management and Direction System. Digital format. In: CD GEPE. 2009.
González Sanz, L. 2004. Brief review of Cuban business improvement. Report of the Specialized Consultancy in Provincial Organizations of the Havana Province. 21 p.
Mejias Rubio, G. 2010. Dress me slowly because I'm in a hurry. Juventud Rebelde newspaper. Digital Edition. Available at:
Ministry of Finance and Prices. Resolution No. 297/2003. Definitions of Internal Control. Content of its components and its standards. Available at: http: /www.gacetaoficial.cu/
Ministry of Finance and Prices. Resolution 297/03. Definitions of Internal Control. Contents of the Components and their Standards. Havana: MFP, 2003. 30p. Available at: http: /www.gacetaoficial.cu/
Sarduy Meneses, A. 2008. Comparative study of the performance between companies in the province of Cienfuegos through the general bases of business improvement. Diploma work, UCF Carlos Rafael Rodríguez. 128 p. Available at:
VI Congress of the Communist Party of Cuba. 2011. Guidelines of the Economic and Social Policy of the Party and the Revolution.
Zenea Montejo, M. 2004. Business Improvement as an organizational development process. Available at: http: /www.gestiopolis.com.
