Entering Russian Market: Challenges for HRM of

Finnish Companies Results of Joined Research

“Finish STROI Business Network”

Vera Minina, Elena Dmitrienko, Anastasia KrupskayaP3 Competence of Human Resource

Agenda

• Short description of research project• Factors influencing HRM model

development• Differences in Finnish and Russian HRM

practices• Project business environment and

challenges for HRM• HRM model with focus on core employees• Conclusions

Short description of research project

STROI Business Network project

The aim of the research project was to develop and modify Finnish management and leadership models fitting to Russian business culture and context

The Object of the research – Finnish companies which belong to STROI business network and operate on Russian market

STROI Business Network projectThe Subject of HRM part of the Research:

• The features of HRM in Finnish companies belonged to STROI business network

• Human capital profile required for success in Russian business culture and context

Expected results were • Finding competitive and developing

working conditions •Creating HRM-model applicable in the

Russian market

The purposes of the Research To reveal differences in Russian and

Finnish approaches to HRM practices

To design Human Capital Profile

To work out the recommendations concerning HR practices improvement

Data base

10 Finnish companies which belong to STROI business network and operate on Russian market

17 semi-structured interviews

CEO 5HR managers 6Linier managers

6

Factors influencing HRM model development

Finnish companies

Russian market

Project business environment

Cultural environment

Cultural environment

• Values and attitudes of local employees: Russians do not resist to authoritative methods of management; they avoid uncertainty and taking responsibility, etc.

• Employer’s and employee’s behavioral patterns: personal relations between employer and employee are crucial for decision making, etc.

• National peculiarities of management system: in Russia the personnel are perceived by heads as unlimited, dimensionless resource; managers often ignore common rules and aspire to solve problems differently in each new situation, etc.

Project business environment

• The majority of the companies belonged to STROI Network operate in project business environment

• Project business environment is unstable and unpredictable

• Flexible organizational structure and client-oriented approach are crucial for gaining competitive advantage

Differences in Russian and Finnish HR and HRM

practices

Results of empirical research

Differences in HRFeatures Russian

contextFinnish context

Employees’ competences:• Decision-making skills• Ability to take responsibility in decision-making

- -

++

Decision-making practices:• Long term orientation• Thorough process• Speed of decision-making

--

high

++

low

Discipline on the work place• Using working time for private matters • Importance of following project schedule

+-

-+

The incentives and their impact on employeesIncentives Russia Finlan

dFinancial

Rewording for outstanding performance high high

Covering educational fees high low

Medical insurance high low

Pension programs low high

Support in housing loan and credit high low

Non financial

Work-life balance policy low high

Participating in decision-making process (for some groups of staff)

high high

Best employee recognition (from time to time) high high

Differences in HRM (1)

Features Russian context

Finnish context

Recruiting practices similar similar

Managing adaptation process:• Detailed program of adaptation• Coach support• Colleagues support

--+

++-

Reword system:• Clarity of parent company reward system

low high

Differences in HRM (2)

Features Russian context

Finnish context

Training programs similar similar

Employees` development:• Attitude to development discussion• Development discussion procedure

pressure

assessment

opportunities

support

Project business environment and challenges

for HRM

Result of literature review

Challenges for HRM in project business environment (1)

Project business features

Requirements to HR

Challenges for HRM

Highly dynamic relations

Mobility; permanent improvements

Environment and assistance for competences development

Partnership, collaboration

Social and communication skills

Network supporting

Combination of partnership and competitiveness

Reflexivity, negotiation skills

Focus on learning process

Challenges for HRM in project business environment (2)

Project business features

Requirements to HR

Challenges for HRM

‘Power to the edge’ management philosophy

Ability of taking responsibility

Trust culture creation

New business model: customer-centric approach

Expert service, integrated solutions

HRD approach

Complexity and uncertainty

Ability of risk taking and uncertainty handling

Learning by doing

Collective efforts and performance

Ability of working together, task forces

Team building and developing

Gap analysis

Cultural factors

Business factors

Problems

Low ability of taking responsibility

High ability of taking responsibility

•To find the employees with needed abilities and skills•To create corporate culture adequate to project-based business•To gain competitive advantage trough people

Undeveloped decision-making skills

High developed decision-making skills

Hierarchy-oriented behavior

Network-oriented behavior

Low readiness to follow time schedule of project

High readiness to follow time schedule of project

HRM model with focus on core employees

Results of empirical research

Core Employees (CE) focus

Lack of attention to identification of employees who are responsible for organizational competences Focus on people who are involved in core business

Identification those who have the ability to transform unique and valuable knowledge into organisational competitive advantage CE

CE need to be identified through required abilities (profile)

CE abilities: quotations from interviewsLearning do not afraid of responsibility

and decision-makingCompetence

strategic knowledge and multiple skills

Integration

transmit the feeling of companyhigh level of social or communicative skills, they create partnerships and networks

Reflection constantly monitor client’s situation

Trust whom you can really trust

CE Profile

L e arn in g

T ru st re la tio n s

R e fl e c tio n I n te g ra tio n

C o m p e te n c e

H um an C apital P rofi le for C E

L e arn in g

T ru st re la tio n s

R e fl e c tio n I n te g ra tio n

C o m p e te n c e

С ore E m ployee P rofi le

CE profile: identification

Do abilities mentioned before have to be developed equally?

CE Profile – the set of abilities that are in the certain proportion

Who defines CE Profile and how?

Who – individuals from three different

fields How – different factors and context

Three fields of CE identification

Social

Professional

Organizational

CE

HRM model based on CE focus

CE makes considerable contribution in business development CE focus is valuable for HRM

CE abilities could be managed Different CE Profiles could be

developed based on the abilities There is no universal CE Profile People from three fields of CEs’

identification should be involved in CE Profile development

Risks of implementation of HRM model based on CE

Mistakes in CE’s identification process ‘wrong’ people loosing investments

Self identification as ‘star’ unfounded demands concerned salary and working conditions

CE are difficult-to-manage employees Loosing valuable information because

of CE leaving the company

Conclusions

Key findings

Recommendations for HRM development

•To develop mixed HRM system, based on results of empirical research

•To pay more attention to HRM practices such as new comers adaptation, personnel training, development discussion, rewarding

•To introduce core employee concept in HRM practice

•To regard that core employees are the centre of corporate value translation and new business ideas accumulation

Recommendations for Network development

Social skills are crucial for network development

Employees involved in network relations should be social competent

Social competence includes integration ability and ability in building and maintaining trust

Organisations involved in network should pay enough attention to these abilities development

Thank you for your attention!

Questions, comments…

Vera Minina, Elena Dmitrienko and Anastasia Krupskaya