Igor Smelyansky, CEO of Ukraine’s national postal service Ukrposhta since July 2016, continues to pilot his troubled company through challenging waters, while also navigating controversy that seems to never end.
Often targeted in fiery, critical speeches by Ukrainian lawmakers in parliament or by opinion leaders, Smelyansky suggests that his company — the second largest employer in Ukraine with 75,000 workers — is being turned around quicker than it gets credit for.
Gradual turnaround
Until recently, Ukrposhta was widely seen as having lost public confidence after scandals in which the company was accused of being a cash cow for corrupt officials, like other stateowned enterprises. Smelyansky is engaged in a battle to improve not only the company’s bottom line, but also its fragile reputation.
These days, the company says it’s turning things around and reports that it sees annual revenue growth of at least 20, compared with 3 to 5 percent growth in the seven years preceding Smelyansky’s appointment.
Although, at the same time, the company says it suffers losses of Hr 1 billion ($36 million) due to the distribution of state pension payments that Smelyansky says aren’t properly subsidized by the government. The growth and loss figures could not be independently verified at the time of deadline. Ukrposhta’s latest available financial report on their website is from 2012.
CEO speaks out
Speaking to the Kyiv Post on Dec. 11, Ukrposhta’s CEO highlighted key areas of improvement: a program of investment into rural services has doubled the number of computerized post offices, he says, where previously 80 percent were without computers, let alone internet.
And, according to Smelyansky, the digitization hasn’t stopped there: Ukrposhta has taken strong steps into e-commerce, increasing import and export revenue growth by integrating with 150 countries and improving its compatibility with platforms like Amazon, Etsy and Alibaba.
“Today, we’re sending as many express parcels in one day as we sent in a whole year when I started,” said Smelyansky in the interview at the Kyiv Post Tiger Conference, where he moderated a panel discussion.
But Ukrposhta, under huge pressure to modernize more quickly, is still losing ground to the competition: Ukrposhta handles 22 million parcels per year while the private Nova Poshta handles 140 million packages.
As it slowly moves into the 21st century, the top boss say that Ukrposhta is also coping with seismic, national demographic changes, inadequate infrastructure, strong competition and high expectations.
Modernizing, reforming
Developing a number of apps for smartphones and tablets, launching Ukrposhta chatbots for Viber and Telegram and completing a colorful rebrand may have been necessary for Ukrposhta — but it seems that other, more systemic obstacles remain unresolved.
“The key issue for Ukraine is retaining the right talent,” Smelyanksy said “Brain drain is the biggest issue for Ukraine: retaining talent across all levels of the organization… The government needs to realize that we are now competing… pretty much globally,” he said.
“Inherited Soviet rules… mean there is huge inflexibility in how you hire and fire people and how you pay them,” said Smelyansky. Smelyanksy has, at least, been able to start paying his staff what he and top managers think they’re worth, according to market forces.
“We have raised salaries for regular employees by 40 percent. But the key is that we have not raised the salaries evenly… historically, good and bad employees were being paid the same, meaning that we were losing good employees,” he said.
For Ukrposhta, payments, funding, salaries and subsidies continue to attract attention and headlines — unfortunately, it’s usually for the wrong reasons.
State intervention
When he spoke with the Kyiv Post in March 2018, the American-educated executive and corporate law graduate spoke enthusiastically of how the postal firm, now a public joint stock company owned by the Ukrainian Infrastructure Ministry, had been somewhat set free from excessive government control.
Speaking back then, Smelyanksy suggested that increased flexibility and autonomy would allow Ukrposhta to implement better, free-market, competitively-focused reforms.
But in plenty of areas, parliamentarians and the government have shown they’re happy to intervene — especially if it’s popular with the public.
The Ukrposhta CEO earns a salary of Hr 744,000 per month, or about $25,000. He’s regularly criticized for this as postal workers earn Hr 9,000 or less.
At the same time, the postal service boss has also come under fire for suggesting that Ukrposhta could refuse to continue delivering pension payments or close thousands of post offices unless the government increases its subsidy.
“We’re in the process of resolving that dispute right now,” Smelyansky said diplomatically, regarding the pensions issue. “The problem is who is going to pay for public service obligations?
“In Europe, for example, it’s not a question — if you want something done you have to pay for it. Unfortunately, in Ukraine, that hasn’t been the case, especially with Ukrposhta — we’re doing those things but not getting paid for it,” he said.
For Smelyansky, who places his faith in free market forces, it’s a question of how services are valued and how things are paid for fairly — much the same when it comes to the question of his own salary and that of his senior managers and directors.
“I get asked this question a lot,” he said about his salary.
“I always use one example: in procurement, we save Hr 500 million ($18 million) a year… I think I saved the company my salary in my first day on the job,” he said, adding that it is important for Ukrposhta to pay salaries that are at or above market value.
President Petro Poroshenko, wading into the public debate, has joined many lawmakers in arguing that Ukrposhta fulfills an important social role and should act with more socially responsible fiscal policies.
The president, one of Ukraine’s richest men and one of the world’s wealthiest leaders, appears to not agree with Smelyanksy’s free-market, capitalist positions.
“I demand (that Ukrposhta) stop the dismissal of post (employees) and ensure the delivery of pensions,” Poroshenko said in a Dec. 12 statement following a meeting with Smelyanksy and Infrastructure Minister Volodymyr Omelyan.
“The second position is that we must stop the closure of post offices in villages, especially in remote villages,” the president also said, according to his statement, potentially hindering Smelyanksy’s ambition to reduce the company’s more than 12,000 post offices or replace them with mobile, internet-connected post trucks.
“I urge you to revise your salary. I hope that the president’s advice will be heard… I will not retreat from my demands,” the billionaire president and businessman also said in his statement.
