The Past and Present of Leadership Development in Hungary

Located in Central Europe, Hungary is a landlocked country contiguous with seven other European nations. Hungary spans 93,028 square kilometers and has a population of 9,897,541 (Central Intelligence Agency,

2016). The population, however, has been slowly shrinking at a rate of 0.3 percent (World Bank, 2014). In 2000, Hungary celebrated its 1100 years of history. After the crowning of its first king, King Stephan, Hungary became closely linked with the western Christian church and western European culture. The historical and cultural legacy of Hungary is marked by wars and revolutions fueled by the opposition tradition of its people against occupation. In 1956, Hungary was the first country to rebel against the Soviet-ruled socialist system and economic reforms were introduced in Hungary as early as 1968 (Bakacsi, Takacs, Karacsonyi, & Imrek, 2002). The National Centre for Leadership Development [Orszagos Vezetokepzo' Kozpont (OVK)] was established during this period as part of an International Labor Organization (ILO) project sponsored by the United Nations. The purpose of the center was to develop the leadership curriculum and methodology fitted to the Hungarian context, to invite experts from other countries to share their leadership insights, and to offer grants to Hungarian leaders to study abroad. As a result of these efforts, a cadre of highly qualified leaders emerged in the 1970s and 1980s. At the same time, the gradual relaxation of central control and the development of private enterprise during the 1980s meant that the transition from a centrally planned to a market economy in early 1990s was less of a shock than in some other Central and Easter European countries (CEE).

Currently, Hungary is a parliamentary democracy, a member of the European Union as of 2004, and a member of NATO as of 2009. The economy of Hungary consists of services (64.9 percent), industry (30.7 percent), and agriculture (4.4 percent) (Central Intelligence Agency, 2016). While agriculture has decreased in recent years, the booming tourism industry in Hungary welcomed over 12 million tourists in 2014, up 22 percent from 2010 despite declines in tourism in the region (World Tourism Organization, 2015). According to Mako, Illesy, Csizmadia, and Heidrich (2015) it is also important to mention that during the shift from the planned to the market economy in the 1990s, a radical restructuring of the economy took place. After half a century of dominance by the large state owned firms, now the great majority of the firms (97.3 percent) in Hungary belongs to the category of small and medium enterprises (SMEs) and represents the majority of jobs (55.8 percent). Since the recession in 2008, GDP growth has nearly returned to its prerecession levels at 3.2 percent in 2015 with a per-capita GDP of $24,720 (Hungarian Central Statistical Office, 2016; World Bank, 2014). The labor force in Hungary includes 4,328,334 workers as of 2014 and boasts an unemployment rate of 5.8 percent as of April 2016 (Hungarian Central Statistical Office, 2016; World Bank, 2014).

Despite these economic and social indicators, its more advanced industrial and service sector, and stronger and longer-term ties with Western economies through joint ventures and other partnerships compared to other small countries in the region at the change of the political regime, the long term economic trends were not the ones expected. As Chikan (2014) noted, competitiveness, growth, investments, and employment among other indicators became worrisome and not the ones expected either by the population or by the predictions of the professionals at different major political and social crossroads such as the change of the political regime, the acceptance into the European Union (EU), or the promises presented at each of the national elections. The author discusses these trends in the view of the indicators reported by the 2014 WEF’s Global Competitiveness Report which shows that while in 2001 Hungary’s overall index placed it in the 28th place out of 140 (and ahead of other postsocialist countries such as Bulgaria, Czech Republic, Romania, Estonia, Slovenia, and Slovakia), in 2014 it slipped to the 60th place, with only Slovenia and Slovakia following it. Although all countries in the CEE region were ranked lower during this period, Hungary’s overall placement was the lowest compared to 2001. Among the WEF’s 12 factors, Hungary faired the lowest on the “institutions,” “macroeconomic stability,” and “business sophistication” ones. Although Chikan’s discussion of the causes and consequences of these results focuses on economic dimensions, noting the complexities of the issues, he mentions core values and cultural and educational aspects as the factors that also impacted these results. He also highlights the need for a stable and predictable government approach toward the functioning of the free market economy that respects its integrity and allows for its development. Countries that received the top WEF scores for competitiveness are the most resilient ones and place special focus on educating, training, and rewarding their people (World Economic Forum, 2015). Although Chikan’s paper was not related to leadership and leadership development, in the view of the WEF reports, we believe that mindful, reflective leaders both in the public and private sector, who are open to (1) collaborations across sectors and professions in the pursuit of understanding the complex issues facing the country from different perspectives and (2) leadership processes that are ethical and sustainable, could bring a positive change and address some of the issues raised by the author.

Leadership in Hungary has been studied within the context of the change from a centralized to a market economy (Heidrich & Alt, 2009), in relationship to the development of leadership competencies (Muehlbacher, Kovac, Novotny, & Putnova, 2013) and emotional intelligence (Sandor, 2014), in considering the role of gender (Tanova, Karatas-Ozkan, & Inal, 2008) and in the context of multinational corporations (MNCs) (Poor, Engle, & Gross, 2010). However, there is a dearth of research on leadership development in different sectors in Hungary.

Altogether the landscape of leadership development providers is varied and is represented by international and Hungarian consulting organizations (offering various leadership coaching and mentoring services, change management support, and a wide range of training programs); trade and professional associations (organizing conferences, networks, and meetings); central and regional chambers of commerce (varied activities); business organizations (especially large and multinationals, offering in-house or outsourced leadership development programs); and higher education institutions (offering graduate and postgraduate leadership programs and various courses, degree-related learning and development, some based on the German dual development model involving partnerships with organizations to enhance application of knowledge to practice). For example, one of the most prestigious consulting companies, Grow Groups (www.grow.hu), provides more than ten different types of flexible leadership programs such as: (1) Developing leadership skills, (2) Leadership skills for newly appointed leaders, (3) Motivation, (4) Leading by using coaching skills, (5) Mentoring, (6) Leadership skills: leading meetings and workshops, (7) Team leadership skills: leading virtual teams, (8) Performance management training, (9) Change management training, (10) Managing others: empowerment, (11) Leadership training: Shackleton Story-based leadership, plus three different types of coaching services.

Despite this variety, the demand for leadership development (and any training and developmental programs) is low especially from SMEs. In their study of investments in human capital in different European countries, Mako et al. (2015) found that Hungary and other Southern and Easter European countries are still characterized by low levels of training provision and low innovation performance. Based on Eurostat (2011) data, only 43 percent of Hungarian SMEs provided any type of training program for their employees. In the last few years the Hungarian government also financed various mentoring programs to support the development of SMEs, but the low demand for leadership development could be attributed to the focus of SME owners and managers on the day-to-day survival of their firms and to the long process needed for openness to new ideas and shifting paradigms. The causes of overall low demand for leadership development could be as varied as the providers, and due to the lack of empirical data in this area, our assumptions based on anecdotal evidence relate to challenges in shifting the mindset of leaders and employees, and lack of incentives that could create a culture of continuous learning. For example, in 2012, a government tax benefit program that encouraged organizations to train their employees (including their leaders) was terminated, thus impacting the commitment of organizations toward the learning of their employees. The country also witnessed an influx of shared-service centers that involve cheap labor and require basic technical skills (although a high level of language skills is required) with minimal investment for training and development. We could not find any models of leadership development tailored to the cultural, social, and professional background of the leaders which could be attributed to the lack of medium- and long-term strategic thinking across sectors. The following sections present our findings related to leadership development in different sectors.

 
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