Human Resource Management

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Human resources in Russia: The greatest opportunity, the greatest challenge

A report from the Economist Intelligence Unit
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Contents

Russian human resources today The best in the world? Educated and cultured Quality is deteriorating at the margins Which are the difficult positions to full?

3 3 3 4 6

Salaries – what do you pay? The role of pay in staff motivation Competition for talent forcing pay rises The battle with HQ The dollar peg: weak US dollar – what currency to pay in? Defending against the lure of Russian companies The era of 100% pay rises to keep staff?

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Managing staff turnover and retention Is retention getting tougher? The changing role of expatriates Russians vs. expats The Russian repatriate

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The challenge of Russia’s legal environment

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Leadership issues Russian zeal can be disruptive Women outperform men

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Company profiles Baker & McKenzie Ernst & Young Neumann International 22 23 24

Corporate Network 2007

www.eiu.com

© The Economist Intelligence Unit Limited 2007

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Human resources in Russia:
The greatest opportunity, the greatest challenge
By Daniel Thorniley Senior Vice President, Economist Intelligence Unit

The “war for talent” is a cliché, but an accurate one. In nearly all major emerging markets (Russia, China and India among many others), management of human resources is the critical operational business issue today: finding staff, retaining staff, and paying staff are major HR problems facing companies operating in these markets today. In recent EIU surveys of business in China and India, HR issues rated as three of the top six challenges facing western multinational corporations (MNCs) in these markets—and the same would almost certainly apply to Russia too. Put 25 country or regional managers working in Russia together in a room to talk about business in emerging or developed markets and sooner or later the conversation moves to HR issues and stays there for a long time.

Today, a range of thorny issues faces HR managers (and their C-level bosses) in multinational organisations around the world, including: • It is increasingly difficult to get the right quantity of the right quality staff in any one place at one time—retention is getting tougher as competition for talent intensifies • Companies are coping with the globalisation of their staff: moving expatriates from all sorts of markets to all sorts of others; promoting staff from emerging markets into developed markets; western staff being parachuted back into emerging markets to fill a growing number of gaps; and transfers between emerging market operation • The role and profile of the expatriate is changing—the clichéd picture of an expat as a white, middle-aged, Anglo-Saxon male with wife and two kids in tow no longer applies. In the past this standard expatriate would serve 3.2 years in one foreign capital city on a hardship salary and then move on to his next posting. Is this still the best model for all concerned? And what is the career path of returned expatriates? Human resource managers and senior executives in Russia and other emerging markets will be facing these and other key challenges over the next 5-10 years. Indeed the level of complexity will intensify and more time and resources will have to be dedicated to human resources in order to win in business. Human resources is the number one critical business issue for multinationals operating in Russia, and it will only get tougher.

Human resources are the greatest positive factor for western companies operating in Russia; human resources are the greatest operational challenge to business in Russia.

Corporate Network 2007

www.eiu.com

© The Economist Intelligence Unit Limited 2007

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Russian human resources today
The best in the world?
The quality and talent of Russian staff at all levels is unquestioned. It is a defensible statement that Russian HR...
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