Management in Russia discusses several aspects of management practices in Russia including organizational culture, motivation, planning, organization design, controls, quality, competition, and marketing strategies. Some key points include that Russian management tends to have an intuitive approach to planning without always following plans. Motivation of workers is strongest through financial compensation and friendliness. Transparency remains an issue for some companies due to Soviet-era practices. Competition is improving but still inhibited compared to Western countries. Effective marketing must consider Russia's diversity across its regions.

1. Management in Russia

2. Russian Proverbs about
Work
 “Work tastes bitter, but bread tastes sweet.”
 “To the person who gets up early, God shall give
everything.”
 “To live without work means to blacken the sky with
smoke.”
 Meaning: an idle life is a life wasted

3. Motivation
 Before: Companies not meeting payroll, lack of training, poor working conditions
 In a research by Davidson and Linz found that:
 Organizational Commitment stronger among managers than workers
 Managers erroneously believe workers value their praises
 Low expectations on receiving a reward they desire
 Financial Compensation and Friendliness of Workers top ranked motivators
by workers
 Younger people placed more importance on opportunity to develop skills and
abilities, getting a promotion, and accomplishing something worthwhile. They
placed less importance on pay, security on the job, and respect from co-
workers.
 However, pay at the top for both

4. What motivates Russian
workers?

5. Planning
 Spontaneous and Intuitive approach: creative and
rapid results
 Plans are made but often times not followed
 Planning done by the upper positions then vertically
communicated downward
 Entrepreneurs lack succession plans, not looking to
expand their businesses discourages investors
 Change aversion and view of the future as uncertain
are obstacles for management planning

6. Four Common Organization Designs in
 Bureaucratic Organization
Russia
 Strict administrative hierarchy separating the identity and responsibilities of
employees through where they sit in the hierarchy
 Upward mobility is difficult
 Information is not shared with employees
 Power Organization
 Manager or owner is the undoubted leader with final say
 Top managers are appointed to serve as link to employees
 Employees can take part in decision making though
 Person-oriented Organization
 Employees maintain high level of personal responsibility and independence
(flexible schedules and access to information)
 Work is co-coordinated by supervisors (more egalitarian)
 Because of its independent and egalitarian culture, employees must
compromise
 Problem-oriented Organization
 Employees are given specific task-oriented responsibilities and are strictly
controlled through reporting
 Decisions are made collectively though, and information is shared

7. 
Controls
During the Soviet Union, companies lacked transparency because of
double ethical standards, murky procedures, and unclear goals
 Many companies still lack transparency because of a lack of
information distribution between employees
 Accounting practices can lead to transparency issues as well
 Profit and loss accounts are not foreseen and are booked without details
 There have been improvements to Russian Business controls though
 Companies must file taxes every quarter, receive multiple signatures for
documents, and careful accounting must be practiced because tax
authorities are beginning to crackdown
 Between 2001 and 2004, entry regulation (registration and licensing) and
regulations with existing businesses (inspections) were simplified, which
has encouraged businesses to be legally regulated
 Businesses have began to implement the control method
 They set specific company goals
 They are more transparent
 Their employees are empowered, and therefore, feel more obliged to conduct
proper business methods

8. Quality
 Russian Companies have began to implement western quality control
methods such as TQM
 TQM has been difficult to implement though
 The concepts of customer focus, continuous improvement, process
approach, quality management, employee involvement, and social
responsibility are alien
 Key issues that have to be addressed are a change in philosophy, a
lack of knowledge, a resistance to change, and a lack of senior
management support
 Russian companies have also implemented BS EN ISO
9001:2000, benchmarking, and self-assessment strategies
 1,710 Russian companies achieved BS EN ISO 9001:2000
certification
 However, many did so for marketing purposes, not actual quality
improvement purposes
 Yet, the future does look promising, as a true quality philosophy is
beginning to embed itself in Russian culture and is supported by the
state

9. Competition
 Since the Soviet Union, many
reforms have been made to improve
competition
 Price Controls have been lifted on more
than 90% of wholesale and retail goods
 State-owned enterprises have been
privatized leading to the GDP from the
private sector increasing drastically
 Legislation has been passed to improve
competition
 Innovative companies can receive
funding from the government
 However, due to the difficult
transition that Russia has
faced, competition is still greatly
inhibited

10. Practices Inhibiting Competition according to the
IMF:
 Horizontal dominance in regional markets (high seller and buyer concentration)
 Four-firm concentration is equal to the United States at 60 %, but the average
market share for them is greater than 95%
 Exclusive buyer-seller relationships
 Contracts are difficult to enforce, so trust through continued service is necessary
 Mergers and acquisitions occur not expansion of industry
 Interregional barriers to trade and investment
 Duties on the sale of alcohol, regional pricing differs, registration of workers from
different oblasts is required, and taxes/credit preferences are given to local
businesses
 High barriers to entry
 Lack of access to funding through long term, inexpensive loans
 Difficulty obtaining real estate due to inability to privatize land and pre-existing
monopolies on commercial real estate
 Corrupt business licensing, registration, and inspections through overcharging
 Organized crime must receive a cut of the profits (often around 5 %)

11. Negative Effects of Lack of
Competition and How to Increase It
 Negative Effects of Competition
 Consumers face high prices, reduced output, diminished product
and service quality
 Diminished incentives for companies to incur transactions between
regions
 Decreases the amount of foreign investment
 Lack of the great benefit of capitalism, which is innovation
 Most importantly, small to mid-sized firms have a lot of difficulty
entering and succeeding in industries
 Unless competition improves, the desire to conduct business in
Russia will remain minimal
 On a positive note, Russia is transitioning and identifying the
necessary systematic reforms is fairly simple

12. Marketing Strategy
 Desire to see a
 Russian perception of brands performance, something
 Local brand loyalty - intriguing, spirited
cheaper  Ideally featuring elements of
 Healthy and habitual acting while combining image and
 International brands - product qualities
higher quality and more  Real differences between neighboring
expensive regions in Russia may in fact be
 Rely on local suppliers greater than differences between
 who have well-developed neighboring European countries
service networks, available  Not just one nation-wide plan, but
spare parts, and shorter several business plans or a
delivery times multifaceted plan to reflect the
 Thus, they are able to unique aspects and demands of
secure lower prices different regions
 Best marketing strategies are those
that balance both media and trade
promotions tactics

14. Marketing
 Russia is not a “country”; no unified marketing concept applies
 ELEVEN TIME ZONES, dozens of nationalities/ethnicities and languages, a
huge quilt of mores, religions, buying habits, per-capita incomes, distribution
infrastructures
 Marketing based in statistics and quantitative data
 Russian markets are so dynamic that selling points that work today may
become out of place tomorrow
 No reliable national statistics
 Official data may be wildly inaccurate
 Draconian taxes and organized crime have led to widespread under-
reporting
 Usually a qualitative process based on experience and intuition

15. Marketing Strategy
Low-cost digital campaigns can impact
sales in a big way

16. Corporate Culture
 Dangerous to ever generalize about Russia
 Good quality relationships should not be underestimated
 The state has always been seen as an organ of oppression
and repression
 Laws and statutes are therefore seen as the 'enemy'
 The laws are being rewritten constantly –
unenforceable
 Most agreements have to be made on a trust basis
 Networking and extended interpersonal allegiances
are essential
 One strong central figure -with little or no consultation with anyone
 Too much consultation from a senior manager could be seen
as a sign of weakness and a lack of decisiveness
 Companies tend to have a short-term view of business activities
 Open debate in meetings are not usual or welcome
 Russians tend to dress as well as their salaries will allow

17. Tips for Doing Business
in Russia
Tip 1: Take time to build relationships
Tip 2: Contracts are only as valid as a combination
of your ability to enforce the law and the importance
placed upon the relationship
Tip 3: Middle managers cannot make decisions
Tip 4: Go straight to the top if possible
Tip 5: Managers manage- give precise and detailed
instructions

18. Continued…
Tip 6: Meetings disseminate information or give
direct instruction
Tip 7: Smaller, more informal meetings often occur
behind closed doors
Tip 8: Keep the team together if possible
Tip 9: Russians like to think in silence before
answering a question
Tip 10: Dress smartly and try to look important
Tip 11: Do not underestimate the importance of
entertaining
Tip for women: Women play little part in business at
the senior levels

19. References
 Goreskaya, N. (2009). Changes to russian
competition legislation. Baker &
McKenzie, Retrieved from
http://www.bakermckenzie.com/RROperatin
gRussianCompetitionLaw09/
 Broadman, H. (2001, June). Competition
and business entry in russia. Finance &
development, 38(2), Retrieved from
http://www.imf.org/external/pubs/ft/fandd/20
01/06/broadman.htm
 Frost, R. (2011). Russia's premier vladimir
putin underlines importance of iso
international standards. ISO, Retrieved from
http://www.iso.org/iso/home/news_index/ne
ws_archive/news.htm?refid=Ref1439