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. Last Updated: 07/27/2016

Working On the Other Side

In 1992, literally thousands of Western entrepreneurs and businesses flooded into Russia looking for deals, joint ventures and any number of opportunities to set up their own companies in what seemed a frontier economy. The one thing they were not looking for was a job with a local company.


But last year, Western executive headhunters started receiving requests for top-level personnel from Russian firms that now had the money to hire them, and felt the need for the business culture or contacts that a foreigner could provide. Today, such requests have already become commonplace.


Tatyana Zaitseva, a consultant for H. Neumann International, an Austrian recruitment company, said it is currently looking for 10 top managers for Russian companies.


Ward Howell International, an executive headhunter with operations in 32 countries, has had 15 requests from six of Russia's largest businesses in the first eight months of this year. A Ward Howell representative in the Moscow office reported that these requests represent 25 percent of the firm's current workload here.


Richard Goode, managing partner of the European department of Korn/Ferry Carre/Orban, said that in the next few years, he expects to see large increases in the number of requests from Russian businesses, especially in the financial sector. He said the trend will not slow until Russian managers reach the skill levels necessary to begin replacing these foreigners.


Indeed, Bank Rossiisky Kredit ran full-page ads this autumn in the British publication The Economist announcing a competition to fill positions on its Board of Directors and in its international banking, portfolio management financial and corporate law departments, as well middle management spots.


According to Richard Ferry, president of Korn/Ferry Carre/Orban, the most highly placed foreign bankers in Russian firms can earn from $100,000 to as much as $300,000 per year. This figure, he says, does not include other perquisites such as housing, cost-of-living allowances, education for dependents and hardship pay: The total for these benefits often ends up matching the executive's base salary. Among Russian businesses, it is mainly banks, investment firms and large holding companies which seek out Western executives, hoping that they will be able to provide much-needed professional experience and contacts. According to Giorge Abdushelishvili, a partner at Ward Howell, these organizations are usually hoping to attract Western investment or to penetrate international markets.


"These market players need people who know how to speak with the rest of the civilized world, who understand the rules of the game and who can represent the Russian company in varying forms in the West," said Abdushelishvili. He added that the companies are looking for foreign employees who "already have contacts in those fields through which they might expand onto external markets."


Russian banks have been among the first to seek out Western financial specialists for this kind of help. In 1994, Daniel McCoy signed a three-year contract with Mezhdunarodny Promishleny Bank. At the time, McCoy was a vice president in charge of international correspondent accounts and international investment policy at Union Bank, one of California's largest and a subsidiary of the Bank of Tokyo, one of the world's biggest commercial banks. This was among the first such high-level job transfers, in which a Western banker left his post for a management position in a Russian company, according to Victor Huaco, president of AOIC Capital investment company.


Denis Smirnov, director of MPB's public relations department, said that while the costs incurred in recruiting McCoy were high, the foreign vice president has had a very positive effect on the bank's activities this year.


"First of all, he has acquainted Russian commercial banks with their American counterparts," said Smirnov. "Secondly, this banker and his wide-ranging ties in the world's banking circles have made it possible to attract international investment. Thirdly, thanks to the activities of his team, the bank has attained a 3 percent share of LUKoil."


At the end of the summer, McCoy was transferred to MPB's San Francisco representative office to oversee operations in the United States. "We decided that his efforts would be more effective in America, where we plan to attract investment," Smirnov said.


Neil Glick, another American, began work this July as executive director of the Kredit-Moskva bank. The former project director for the American Chamber of Commerce from April 1994 to June 1995 said his decision to quit his previous post and accept the offer to head up Kredit-Moskva's bro The cost of hiring this category of foreign employee can be well within the budgetary constraints of even small Russian companies which are just beginning to assimilate modern Western practices. "As a rule," said Abdushelishvili, "these people cost only a little more than the rent for their inexpensive apartments."


Ward Howell's Alan Clack says these are the people his agency often targets: "We look for people who have been here a while, who have experience with Russia and Russians, who preferably speak the language, who have that sort of pioneering spirit, and who are committed to Russia."


Clack, now a partner at Ward Howell, is an example himself, says Abdushelishvili. "We ourselves met Alan Clack in 1990 while we were still in Leningrad," he said. "He's our partner now, yet when he came to Russia, he still had a lot to learn about business. But his example was a big help, beginning with the fact that if you're going to do business, you have to wear a white shirt, and not a sweater -- after all, business is a show."


According to Abdushelishvili, such people "should be hired if for no other reason than to bring a certain civilized atmosphere into the office: They know how the telephone should be answered, how a business letter should be written in English, etc."


In most cases, foreign employees in Russian companies are responsible for establishing ties with foreign partners and preparing the groundwork for international expansion. At Rye, Man & Gor, marketing and analysis is handled by foreign specialists.


"Patti Kostuchuk, our senior sales manager, is responsible for establishing ties with our clients in the West," said Vladimir Tchkikvadze, a trader and analyst at Rye, Man & Gor. "She maintains a dialogue with them, sends them analyses of what's happening on the securities market, keeps them informed about Russian privatized ventures and closes stock purchase deals with foreign companies."


Yury Ismagilov, a representative of Kredit-Moskva's board of directors, said that in a situation where foreigners are investing the lion's share of capital in the Russian stock market, native English speakers are a must.


"In our securities operations, we wanted a specialist with native English and good Russian, and with more or less of an understanding of how things are done in Russia, to deal with our Russian contractors and colleagues," Ismagilov said. He added that along with this the company was looking for "someone who would employ Western thinking and values in negotiations with foreign clients."


Russian employers have to allow time for even the most proficient Russian-speaking professionals to overcome some of the intricacies of specialized terminology. In her first week at Rye, Man & Gor, Kostuchuk -- who is Canadian -- was offering stocks at rock bottom prices, because she was not including the broker's commission.


"When I first came here, I didn't understand the difference in Russian between the terms bid and offer. So talking with clients, I was giving them the bid price instead of the market price. Basically, I was making absolutely no profit during the first week because of the language barrier," Kostuchuk said.


Foreign employees bring other, more long-term dividends, to Russian business, according to some. "When these foreigners go home, they'll report how things really are in this country, what the opportunities are, and because of them, more Western investors will be attracted," said Isaac Correa, an employee at Rosinter, which owns a network of Western-style restaurants in Moscow.


Many foreigners already beyond their first year of working in Russia say money is not the main attraction.


"Base salaries in Russia are competitive with those in America, and the majority of expatriates get a premium for living outside the borders of the U.S.," said David Braaten, the American financial director at LVS, the Russian computer company that landed the $13-million contract to bring the State Duma on line. "But I'm not here for the money -- in the U.S., I would make more than I make here -- but for the opportunity to do a lot of work, to grow and to be part of a growing country."


Braaten, 36, who started out with a Western company, has been in Russia for three years, for one of which he has been with LVS. "Work in a Russian company is more interesting for me because the Russian company is trying to get onto its feet by employing Western management principles without turning into a Western company," he said.


Working for a Russian company can nevertheless take some adjustment. "Russian companies are often structured on an ad hoc basis, as if they had grown organically," Ward Howell's Alan Clack said. "That's disconcerting and it's confusing, but it's nothing to be afraid of, you just have to understand it."


The lack of clarity can be reflected in titles, said Clack. "If I say director of marketing, or consultant, you know what I mean, but if I say expert, it's a little more difficult to understand.


"Another thing that will take getting used to is the difference between Russian and American ethics. There are certain practices that a Westerner might consider unethical, and that a Russian would not, and vice versa."


Examples cited by Clack refer to Russians' legendary skills at circumventing laws and regulations. Westerners pay a lot of money to interpret the law, he says, whereas Russians, dealing with regulations that may be inconsistent and sometimes contradictory, may try just to find ways around them.


"It is a difference. As far as I'm concerned Russians are just as honest and believe in fair competition just as much as anyone else, it's just the way they're set up," he said. "Quite often there is an impression among Westerners that Russians are unethical. It's understandable why.


"We spend a lot of time discussing these issues with our candidates that we are introducing to Russian companies," said Clack, "just because it can be so disconcerting when an arrangement breaks down before the deal even starts."


This is especially important, he said, because the words written in an employment contract may play very little role in how the contract will be fulfilled. What can matter much more is the relationship between the people who signed it.


"We wouldn't be able to take the most rigid Westerner and put him or her into the most flexible or gray company," Clack said.


Making candidates aware of these factors, and careful screening of the candidates themselves, has meant that there has not been a steady trail of those joining Russian companies making a rapid exit. "No one joins a Russian firm lightly," said Clack.


A large number of those who show interest in working for Russian firms are simply not suitable. Recruitment agencies caution against uninformed decisions when hiring foreigners. According to Maxim Chuvayev, a consultant at Korn/Ferry Carre/Orban, his employment agency receives an endless stream of resumes from expatriates who are completely unsuited for the positions they are seeking.


"Because there are no jobs in the West, they come here as freeloaders thinking they're in a primitive society," he said. "Two years ago, there were a lot of these people, but over time their numbers have decreased -- they're not doing well here."


In addition to the barely unemployable, there are the less than honest. Russia's Wild West business atmosphere has attracted its share of dubious characters from the West, including a few fugitives from justice back home. Among those are Andrew Rooke, the British former financial director at the Radisson Slavjanskaya hotel and David Carter, a U.S. businessman being extradited back to the United States. Both have been indicted abroad for fraud.


But so far there have been no recorded instances of a Russian firm falling victim to fraud at the hands of a foreign employee, according to the Moscow branch of the Federal Security Service and the Central Directorate for Criminal Investigation.


Recruitment companies predict that privatization will increase the flow of foreign managers into Russian companies. As the controlling shares in privatized companies change hands more frequently, the new owners will seek to replace old management techniques with experience from the West.


"This process will continue until my having an American in my office is no longer a novelty," Abdushelishvili of Ward Howell said.





-- Jim Kennett and Jonas Bernstein contributed to this article.