The drop in oil prices in 2014 had an effect on most global CEOs, but what does this mean for Russia? Is the era of expats over in Russia? Who will be filling the positions of top managers in the regions? And who are the Ruspats? Tune in to Agree or Disagree to find out more.
Analysts rank Russia among the top ten countries interesting to do business in despite the economic uncertainty.
What makes the country still so attractive for business development and what staff solutions may arise during the economic crisis?
Marina Vishnyakova, managing partner of PM Team, Russia’s business consultancy, and Michael Germershausen, managing director of Antal Russia, one of Russia’s leading recruitment companies, share their thoughts with Agree or Disagree.
What is crisis for you – a threat or an opportunity?
Marina Vishnyakova: For me, it is definitely an opportunity, because the word ‘crisis’ comes from a Greek word that means ‘decision’. So, during this period we all come to a decision making process. And it very much depends upon our decisions with what luggage we will come out of this period.
Michael Germershausen: I'm working in a consulting business and my opinion is two-fold, because, on the one hand, I see a lot of international businesses which are just trying to survive the current situation. They are not going to leave Russia, but they are just going to try to survive and minimize the losses they are making in the current situation. Personally, I would agree with my colleague that it is an opportunity that needs to be grabbed. And that is what we are trying with our company as well.
But how can you actually benefit from crisis?
Marina Vishnyakova: I have an example not form this period of crisis, but from the previous one. We have a client who was brave enough to improve his business and to gain 40% of the market share, just because he tried to save his business, but not his own money.
I would say that is a very forward-looking strategy. But not all managers abide by this strategy. They’d rather start cost cutting in order to save money.
Marina Vishnyakova: It depends on how you come to cost cutting. In 2008 a lot of companies tried to reduce the number of their specialists who were in charge of development. And that is why a lot of real professional marketing people came to the labour market. And because of that these companies had to pay three times more. They had to pay for firing these people. They had to pay for outsourcing their functions, because it had to be done by somebody. And after that they had to pay for hiring another team of people. And if you calculate all the costs they had, it was not a reduction anyway.
Michael Germershausen: What happened then, yes, a lot of companies, including ourselves, we cut quite dramatically and then we found it very difficult to rehire the people. At the current situation a lot of companies are probably not making the necessary cuts, because they are thinking it is going to be the same as in 2008 again – that after a steep drop we will be coming quickly out of it again. But most likely the current situation is going to be different and I think you should still use the current opportunity, even if you use the crisis as an excuse, to make the necessary cost cuts and make the business as efficient, as possible. Now it is the best time to do that.
Not so long ago I heard from one of the bank CEOs that the era of expatriates is over. And what will happen is that Russian top managers in Moscow will be relocated to the regions and they will take the role of sort of the foreign managers in the 1990s. What is your take on the top management in Russia, would they be happy to relocate?
Marina Vishnyakova: I should say that a lot of our clients are looking for managers who are ready to relocate, because the business has turned to regions very much.
So, there are people who are ready to relocate.
Marina Vishnyakova: There aren’t so many, unfortunately.
Michael Germershausen: We are asking every year about 6000 people and there are exactly these questions. At the first, yes, more than 50% would say – we are happily going to the region. And with the current drive for localization, there might be even 70-80% now. But when you actually go to these people and say – okay, tomorrow you are going to move to Naberezhnye Chelny – the day after they come back and say – well, I've spoken to my wife and she is not happy about this, we are not going to move.
The second thing is that if you take somebody out of Moscow or St. Petersburg and you place them into the Russian region, they will effectively become an expat in that region. It is like somebody whom in the 1990s you were placing from New York into Moscow. So, you might be actually going through the same kinds of problems you had with expats, when you brought them to Moscow. We actually meet a more positive experience if you are placing somebody from one region to the other. I find it easier to take somebody from Yekaterinburg to move to Novosibirsk or from Yekaterinburg to move to Krasnodar.
What are the skills that are not developed enough? What is the gap in the skill base that Russia has?
Marina Vishnyakova: It is not only about Russia, but all over the world. Information became very transparent and it is good. You can go to Google and get whatever you want. And because of that people think that it is very easy to get the information they really need. They all become some specialists in the Internet, information, search for information, but they don’t understand how to get deep information. They actually stop thinking. They get the facts, put them altogether and think that it is enough for the solution.
Michael Germershausen: Time is changing so quickly, that I think I will be struggling what to recommend to my children what they should be studying at a university, because by the time you finish the university course, half of what you’ve learnt is already outdated. So, what I think is going to be much more important is competence.
Does that mean that there will be more entrepreneurs?
Marina Vishnyakova: Still, somebody has to work. Entrepreneurs and all this creative staff, it is very good, fashionable and up to date, but still, I think, there is a lack of technical professionals. We already have this lack, but we have a lot of creative people.
So, how do you make crisis an opportunity?
Michael Germershausen: In Russian you have the saying “the fish rots from the head”. And I think now you have to have the right person at the top, with the right attitude. If this person panics, then the rest of the company panics. So, it has to come from the top. And the other advice would be that, if you aren’t an owner or a CEO who reports to an owner it is very-very important that you manage that relationship with the owner so that he doesn’t panic. And even if the owner panics, he knows that you wouldn’t want to translate that into the business, so that the rest panic as well. This is a very important task that general managers at the moment have.