THE HUNGARIAN ECONOMIC REFORM: PROBLEMS OF HUMAN RESOURCE MANAGEMENT AND CORPORATE CULTURE

Introduction The Hungarian economic reform in 1968 was a departure from the centralised, autocratic economic and political system which existed prior to that time. In the old system, those at the different levels of the power structure were absolutely self‐confident about their ability and right to determine what was good for everybody else. They were not interested in the opinions of their subordinates, especially when those opinions concerned poor decision making at higher levels. Human resources were badly managed, and knowledge and skills were misused. This resulted in a lack of commitment by subordinates and also in a lack of interest in doing the right things. Those lacking power and responsibility were depressed with their work and held little hope for future improvement. They were not motivated to improve their performance in the absence of clear, honest performance‐oriented incentive and promotion systems. Personnel departments were more concerned about the political reliability of the people in a company than about their capabilities and skills and the match of these with the company's future plans. Alienation of people, along with dissatisfaction, could have been tapped if anyone had been interested in coping with these problems, which contributed considerably to the growing incompetence in managing the economy and the companies in the changing environment of the '60s. There appeared to be no way out of the crisis other than decentralisation; getting more people involved in decision making and problem solving.