first_imgCurtain up on HROn 1 Nov 2002 in Military, Personnel Today After a period in the wilderness following the collapse of the Soviet Union,Russia is beginning to take HR seriously. Ben Hooson reports Misha, an ambitious, young, Russian executive with Western experience,recently joined a Russian mega-corporation that groups telecom, high-tech, oil,real estate, retail and a string of other assets with no obvious connectionexcept location in Moscow. Asked about the company, Misha says: “It’s amini-Soviet Union, like all the big Russian companies.” In Russia and other CIS (former Soviet) countries for much of the past 10years, the name of the game has been cosying up to state officials to grabcontrol of lucrative fuel, chemical and metal production or to supply an easymarket for Western imports. Getting ahead of competitors through betterperformance was not a priority, particularly using something as unfamiliar asHR. Dietmar Kuck, a consultant who has worked at the Swiss Organisation forFacilitating Investments and KPMG for eight years in Lithuania and Ukraine,says: “When I talked to companies about the longer-term, soft side ofmanagement, there might be interest, but no decision to do anything. With$50,000 to spend, 80 per cent of banks and large industrial corporationspreferred to buy a new Mercedes than invest in HR.” The good news in 2002 is that the carve-up of Soviet raw material assets islargely over, and Russia is in its fourth consecutive year of strong economicgrowth, with other CIS economies following suit. Increased competition for markets and quality personnel is making localcompanies wake up to the potential offered by proper HR management, and opentheir wallets to pay for it. Scott Eversman, a London-based American working for Heidrick & Strugglesexecutive search who has recruited for top jobs in Russia since the 1990s,says: “Russian companies are beginning to understand that the humancomponent of their industry is important, that enhanced productivity is aboutthe contentment of your workforce.” What this suggests is a boom for external HR consultants as companies raceto install what they have failed to nurture over recent years. “Whether you are talking about management assessment, audit,compensation and benefit packages, testing and evaluation – there is suddenly ahuge, insatiable appetite for all that in Russia, and Russian companies havenever had it in-house,” Eversman says. Professionals all over the CIS confirm this message. Galina Uteulina, whoheads the HR department at Dutch bank ABN Amro in Kazakhstan and trained forher profession in Amsterdam and London, has local companies asking her tomoonlight as their HR consultant. “It is an unfilled niche: localcompanies want consultancy from HR practitioners who have had experience in thelocal market. I know of no HR consulting like that in Kazakhstan, althoughthere are consultants with more of a training bias,” Uteulina says. In Moscow, at least one new consultancy has plans to fill the niche. HRPartners was set up this July by four experienced local HR people, led byGalina Melnikova, previously head of HR at Citibank in Moscow and personnelconsulting at the CIS base of Ernst & Young. “We already have orders from international Fortune-500 companiesworking here and from some of the top-10 Russian companies – by revenue, staffand role in the economy – and we could take more assignments if we expanded,but I want to focus on long-term relationships. “Three or four of our agreements are for at least one year,” saysMelnikova, who came to HR from a job on the Sports Committee of the USSR. Years of gestation If HR is about to come into its own in the CIS, much of the credit is due toyears of quiet gestation. HR was introduced a decade ago by Western companiesas the Soviet Union folded. Entering a totally unknown market, many newcomersfelt they needed locals running their HR from the start, even though few peopleknew what it meant, let alone how to apply it. Larisa Karimova lived over the road from the factory, which McDonalds builtat the start of the 1990s to supply its first Moscow restaurants. She took ajob as translator, but soon found herself heading the HR department whenforeign managers saw a natural aptitude and relevant experience – married to aSoviet fighter pilot based in Hungary, she worked as liaison officer betweenmilitary wives and the administration. “At McDonalds I had to learn on the job: initially it was justrecruitment, but we had to look at motivation and retention when Mars set upproduction in Moscow and started poaching our specialists,” Karimova says.She never looked back, and did spells at another two foreign companiesbefore Transmark, the Russian subsidiary of international brewer SABMiller,which has entered the booming local beer market with production in the westRussian city of Kaluga. Understanding HR Karimova fits the profile of top HR people in Russia by being female – 90per cent of HR managers here are female – and a having a high-poweredhumanities background. She earned a degree at the prestigious Moscow Instituteof International Relations. Like many colleagues, she freely admits that peoplemanagement at Russian and foreign companies are two different worlds. Unlikesome, she has no desire to take her experience to a local employer. “Some Russian companies offer big money for experienced HR managers,but I would never go, because many do not understand HR and are not ready tolisten to or trust the HR manager: they just want someone to recruit the bestemployees for them,” Karimova says. Professionals who spent most of their HR career in Russian companies alsohave grievances, but say they see changes for the better. Julia Sosnovskaya, who runs HR for a prominent Russian investment company,Nikoil, sees the emergence of major differentiation between companies whichhave accepted western HR and those which have not. “There is a conservative management style which prefers to approach HRas an administrative support function with primitive demands for documentexecution, and there are progressive organisations looking for long-termbusiness development which are ready to invest in their personnel as a majororganisational asset and therefore create ambitious targets and highrequirements for HR professionals, ” Sosnovskaya says. The ‘primitive demands’ are mainly a host of Soviet leftovers: mandatoryupdating of every employee’s personal workbook, which they carry through lifeas a record of their work career for an all-seeing Big Brother – who in factdied with the USSR – and various documentation for the state labour inspectorate,including paperwork on business trips. “There are heaps of papers that have to be filled in for labourinspectors, some must even be hand-written, and inspectors closely monitorobservance by foreign companies particularly,” Karimova says. Overcoming misconceptions A lot of misconceptions in Russian and CIS companies about the nature of HRare, unsurprisingly, based on Soviet workplace doctrines and practices. Kuck ofSOFI had extensive experience of the old regime from his work with banks inUkraine: “The main objective was control, and performance review was justa matter of raising salaries as the employee added know-how to their CV. “When I went to Ukraine in 1997, the relationship of bank CEOs to theirstaff was still a matter of control and checking rather than leading andinspiring: one big bank employed 27,000 people and the CEO still signed theemployment contracts of regional cashiers.” Kuck notes that the old system was broken at a stroke in Estonia, Latvia andLithuania in the late 1990s when Scandinavian banks bought into the localbanking sector and set up modern HR systems. Elena Novikova, who introduces herself as the grandma of Russianrecruitment, set up Ancor recruitment agency with her husband in 1990, to servethe multinationals. The company is now a market leader with branches in 10Russian and Ukrainian cities, around 155,000 CVs, and Russian and multinationalclients including Xerox, Philip Morris, General Electric, and Shell. Novikova points to one reason for the recent surge in companies’ attentionto HR: the difficulty of getting and keeping good employees as economic growthcreates new jobs. “For recruiters the competition now is for candidates, not for clients:it may sound incredible but we only accept 40 per cent of initial requests fromcompanies,” Novikova says. A blessing in disguise? The Russian job market crashed in late 1998 when the Russian Governmentdefaulted on its debt, sending the ruble into a nosedive. But 300 per centdevaluation failed to provoke social or political chaos, and turned into ablessing as it suddenly became profitable to make things in Russia. The upturnon the job market has been almost vertical in 2001-2002. The supply deficit is confirmed by Matthew Igel, head of the Moscow officeof Kelly Services – set up in 1997 – who says it is not just difficult to findexperienced professionals, but manual labour too. “It is not so hard for our other offices, in St Petersburg for example,but here we had an order for 150 people to work in a factory 10 days ago and wehave only filled half of the places,” Igel says. Valery Polyakov, a long-time friend of Novikova, accepts the title ofRussian recruitment’s grandfather. He started in 1989, before private propertywas permitted, by registering his organisation as a ‘consultancy’ attached tothe Moscow city labour department. “I read something about assessmentcentres in a book on US management. I thought it meant special organisationsfor assessing staff, and that is what I meant to set up – a combined assessmentand recruitment service,” he recalls. His company, Metropolis, is now another market leader with 90,000 CVs,serving Russian and multinational companies. Polyakov is also the president ofa Russia-wide network of 73 recruiting companies, and has witnessed the recentrevival of Russian manufacturing which has boosted jobs in production from zeroto around 50 per cent of all vacancies outside Moscow. “Previously the only outflow from Moscow was when a tycoon bought aregional company and sent his men to occupy key management positions, but nowpeople are going freely because a posting at a regional production site offersexperience and enhances career prospects,” Polyakov says. One step aheadNevertheless, Moscow remains way ahead of the rest of the CIS, measured byliving standards and potential for advancement. Recruiters as far apart asKiev, St Petersburg and Vladivostok confirm that the old Soviet capital isstill a magnet sucking talent out of their regions. Another point, is a surge in demand for salary surveys as employers try tofigure out how much they must pay in order to win and retain employees. Thisservice is big in Vladivostok, for instance, Russia’s outpost on the PacificCoast, where the recent election of a new governor ended a long period ofpolitical instability. Sergei Salikov, head of Ancor’s Vladivostok office, says: “A lot oflocal companies asked for salary surveys this year after the political andsocial situation calmed down.” The Vladivostok office serves a stretch ofterritory about 2,000 miles long, from Irkutsk to the island of Sakhalin. Differences in recruitment practice at Russian companies and multinationalsare striking, according to Polyakov. Multinationals make their orders well inadvance, provide a clear job description, and name a salary. Many Russiancompanies want the job filled yesterday, give a vague job description anddiscuss salary at interview. “Russian companies react faster and are more flexible: one foreigncompany needed a specialist to deal with customs, and we found and presentedfive good candidates, but they couldn’t be looked at till the manager came fromBrussels, by which times the candidates had taken other jobs,” Polyakovsays. Unrealistic international companies is another complaint: “They mightask for an accountant with 15 years experience and good English, but olderspecialists are unlikely to have good English. We suggest they hire someonewith 15 years experience and someone fresh from university with good Englishskills and accounting training – that way the company will have two roundedspecialists two years on,” says Dastan Kokeyev, head of recruiting atCAPC, which offers search, training and consultancy in Kazakhstan. Blinkered assessment of job candidates is one obstacle to better HR, butthere are even deeper problems, which will make it hard to get the veryfoundations of proper HR installed at many CIS companies. Kuck summarised one of the main problems he encountered when implementing aKPMG bank support programme in Ukraine: “Beyond a certain level employeesget their official salary grade plus ‘expenses’ [let’s call it that] which areallocated by a superior, and the salary grade plus the expenses determines themarket salary. The expenses are fixed and if you obey orders, you get them; ifyou do not, you lose your job.” The ‘expenses’ are not taxed, and are often based on a verbal agreementbetween employers and employee. They can represent much more than half of aworker’s salary, so what hope is there of establishing proper compensationpackages, performance-related pay and a host of other key HR concepts? “It proved impossible to establish a transparent salary system at banksin Ukraine, even at western banks [they are staffed by locals] and so it wasimpossible to install HR as regards salaries – the banks gave it up and settledfor some soft skills,” Kuck says. Treating employees as assets Galina Melnikova is determined not to delude companies about the possibilityof genuine HR when the employee’s salary is entirely at the discretion of hisemployer: “Suppose I carry over my permitted holiday time to next year, aspermitted under Russian law, and my employer fails to pay me for it – I cannotprove anything to an inspector or a court because I am officially only paid$200 a month, not the $600 I get unofficially.” “The employee cannot even plan their personal budget with certaintyunder these conditions: I work to persuade companies that their loss in rapidstaff turnover due to demoralisation outweighs anything they are saving onpayroll taxes,” Melnikova says. As Melnikova points out, the benefits of HR are only obtainable if employersstop treating their employees as liabilities and start treating them as assets.That evolution in Russia should be encouraged by enlightened self-interest. Asfor the ability of Russian employees to react well to good HR – that is hardlyin doubt. “Enthusiasm is a foreign word, but it is very characteristic of Russianpeople: if they understand what they are doing, why they are doing it and whatthey will gain, they will give it their best: for example, our foreign managersare surprised just how fast work is progressing at Kaluga,” Karimova says.Another Russian characteristic, which should help HR to gel here, iscollective spirit. A sense of pride, belonging, and bonding in any social group– of ‘ours’ and ‘theirs’ – is easily engendered in Russia, and that includescompanies, even with their current inferior HR conditions. One interestingresult of this is under-development of the market for temporary employment. “There is an attitude that a temporary person is not “ourperson”, that he can’t be depended upon,” says Salikov of Ancor. AndIgel of Kelly notes that more than half of his company’s business in Moscow ispermanent staff, despite its worldwide reputation as a temp agency. An old Soviet joke sums up the Russian instinct for collective loyalty, evenin the most dysfunctional groups: A senior ministry official finally confessesto his suspicious wife that he is seeing a ballerina. The furious wife insistson a trip to the ballet. The curtain opens, a ballerina comes on and dances.”Is that her?” asks the wife. “No,” wimpers the husband,”she is seeing the minister.” A second ballerina comes on and dances.”Is that her?” “No, she is seeing the head of anotherdepartment”. A third ballerina comes on and dances. “Is thather?” The husband nods pathetically. The wife looks satisfied: “Oursis the best,” she says. DiscriminationRecruiters are best placed to observe discrimination bycompanies choosing between job candidates, and they all agree it is rife inRussia. Sex and age preference are stated openly in huge numbers of job advertsin the press, even though the Russian labour code expressly forbids it. Racialdiscrimination is only thinly disguised.”Racial discrimination is illegal in Russia but inpractice a lot of employers try not to take people from ethnic groups inCentral Asia and the Caucasus. There is usually no problem with candidates fromMoslem republics inside Russia, such as Tatarstan and Bashkiria, but there is afunny situation with Jews – some companies actively want them and some activelydon’t,” says Valery Polyakov.Unlike sex and age discrimination, which is decreasing asdemand outstrips supply on the job market, rejection of candidates on groundsof race is growing. Companies are particularly fearful that traditions ofstrong family loyalties in Caucasus nationalities could put their business atrisk from criminal elements. Recruiters say that they find the strongest discriminationamong foreign employers, maybe compensating for the impossibility of suchbehaviour at home. “They are afraid of people over the age of 40, andpreviously they would only take men – now they want women, because they havedecided that Russian women are more reliable and flexible,” says ElenaNovikova. The anti-discrimination policy of the Kiev branch of Ancorseems typical of recruiters, who have everything to lose from irrationalcandidate rejections by employers: “When a client sets sex or age limitswe try to offer a good candidate who is outside those limits, in order to makethe employer rethink it approach, whether or not it actually hires thecandidate,” says a branch representative.Case study of a work in progress:Mazeikiu NaftaWhen the Williams companies bought aninterest in Lithuania’s Mazeikiu Nafta oil refinery in 2000, Ron Cordell wasbrought to the Baltic operation as the business’s director of HR and employeeservices to introduce “the human side” of western best practices toits workforce.He bluntly describes the HR practices then in place at therefinery as “Soviet-era prehistoric”.  Performance orientation was intended to become a cornerstone ofthe refinery’s business operations, and nearly three years later, a newbeginning is underway.  Performanceappraisals make their debut this year, as does a performance-based pay system. Old habits die hard there. “Everything takes three timesas long as you think it should, and some things have to be done several timesbefore they get embedded,” Cordell says. “Progress is slow.”At the core of changes needed in the organisation of 3,600employees was a switch from the authoritarian and dictatorial supervisory styleof the old Soviet era to a collaborative, coaching approach that motivated andencouraged the workforce. Typically, respect had been awarded to bosses”with nice suits and big cars”, who did not welcome feedback fromtheir less exalted workers. “It’s been difficult getting a dialogue startedbetween supervisors and employees,” he says.The workforce restructuring has involved streamlining thenumber of job titles from 700 to 450 and creating a hierarchy of 14 differentsalary ranges within the refinery, where typical pay had been twice the nationalaverage. The gradual move to performance-based pay, which kicks into highergear next year, will eventually reward workers for both company and work groupresults – the latter based on achievements identified as necessary for companysuccess by the work groups themselves.Another incentive is being offered to workers at the bottom oftheir salary ranges. By improving their technical or mechanical skills to a newprofessional level, workers can earn a mid-year step increase.The concept of performance-orientated pay has been greeted withsome local apprehension, Cordell concedes, but now the structure has beenembedded in the refinery’s agreement with the trade unions – just as theoperation has been bought out by the Russian oil company Yukos.  Cordell does not anticipate a shift toRussian management at all levels, however, but a continued reliance for sometime to come on expatriates as well as some local talent.”It’s been extremely frustrating at times,” Cordellsays of his experience there, “but after three years, you can actually seesome progress.” Dee-Dee Doke Related posts: Comments are closed. center_img Features list 2021 – submitting content to Personnel TodayOn this page you will find details of how to submit content to Personnel Today. We do not publish a… Previous Article Next Articlelast_img

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