Challenges of Entering Russian Market: HRM for Finnish Companies

1. 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

2. 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

3. Short description of research project

4. 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

5. 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

6. 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

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

8. Factors influencing HRM model development

9. Cultural environment Project business environment Russian market Finnish companies

10. 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.

11. 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

12. Differences in Russian and Finnish HR and HRM practices Results of empirical research

13. Differences in HR

14. The incentives and their impact on employees

15. Differences in HRM (1)

16. Differences in HRM (2)

17. Project business environment and challenges for HRM Result of literature review

18. Challenges for HRM in project business environment (1)

19. Challenges for HRM in project business environment (2)

20. Gap analysis

21. HRM model with focus on core employees Results of empirical research

22. 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)

23. CE abilities: quotations from interviews

24. CE Profile

25. 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

26. Three fields of CE identification Social Organizational CE Professional

27. HRM model based on CE focus • CEmakes considerable contribution in business development CEfocus 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

28. 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

29. Conclusions Key findings

30. 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

31. 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

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