Entering Russian Market: Challenges for HRM of Finnish Companies Results of Joined Research

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Entering Russian Market Challenges for HRM of
Finnish Companies Results of Joined Research
Finish STROI Business Network

• Vera Minina, Elena Dmitrienko, Anastasia
  Krupskaya
• P3 Competence of Human Resource

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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

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Short description of research project
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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
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STROI Business Network project

• The 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

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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

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Data base

• 10 Finnish companies which belong to STROI
  business network and operate on Russian market
• 17 semi-structured interviews

CEO 5
HR managers 6
Linier managers 6
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Factors influencing HRM model development
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Cultural environment
Project business environment
Russian market
Finnish companies
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Cultural environment

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

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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

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Differences in Russian and Finnish HR and HRM
practices

• Results of empirical research

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Differences in HR
Features Russian context Finnish 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 - -
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The incentives and their impact on employees
Incentives Russia Finland
Financial Financial Financial
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 Non financial 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
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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
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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
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Project business environment and challenges for
HRM

• Result of literature review

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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
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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
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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 To find the employees with needed abilities and skills To create corporate culture adequate to project-based business To gain competitive advantage trough people
Hierarchy-oriented behavior Network-oriented behavior To find the employees with needed abilities and skills To create corporate culture adequate to project-based business To gain competitive advantage trough people
Low readiness to follow time schedule of project High readiness to follow time schedule of project To find the employees with needed abilities and skills To create corporate culture adequate to project-based business To gain competitive advantage trough people
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HRM model with focus on core employees

• Results of empirical research

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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)

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CE abilities quotations from interviews
Learning do not afraid of responsibility and decision-making
Competence strategic knowledge and multiple skills
Integration transmit the feeling of company high level of social or communicative skills, they create partnerships and networks
Reflection constantly monitor clients situation
Trust whom you can really trust
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CE Profile
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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

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Three fields of CE identification
Social
Organizational
CE
Professional
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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

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Risks of implementation of HRM model based on CE

• Mistakes in CEs 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

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Conclusions

• Key findings

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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

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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

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Thank you for your attention!
Questions, comments
Vera Minina, Elena Dmitrienko and Anastasia
Krupskaya