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. Last Updated: 07/27/2016

Russian Talent Fills Top Executive Posts

When Kraig Kerfy, director of DHL Russia, recently left Moscow after seven years, the express delivery company decided to hire a Russian rather than filling the post with an expatriate from corporate headquarters in Brussels.

"We thought that a Russian manager understands Russian market better that an expatriate and doesn't need time to settle into the culture and business environment," said Garry Kemp, DHL general director for Russia and the CIS, explaining his decision.

DHL is one of a growing number of multinationals in Russia that have decided to look for local talent to fill senior management positions in recent months.

The reasons for making the change from management brought in from abroad to local talent are diverse, say expatriate managers.

"So many companies are doing this," said Sanjay Razdan, country manager for Honeywell, an American technology firm.

"They do it either because they cannot afford expats, or else they think, 'We already have the right people here, so why should we pay expats to do the work?'"

It appears that in many cases, a combination of the two factors lies behind such decisions.

Many within the expatriate business community say it is natural to replace expats with nationals in maturing markets worldwide, and the process in Russia was accelerated by last year's financial crash, which forced even the big multinationals to look for ways to cut costs.

Finding hard figures on the trend is difficult, although many in the expat business community believe that their numbers are already down by 50 percent compared with July 1998. Local executive search firms have said that orders for expat hires are hovering around 10 to 20 percent, down from 40 percent before the crisis.

However, Kemp of DHL said post-crisis finances weren't a factor in his decision to hire a Russian for the Moscow office's second-to-top job.

"We don't really make decisions like this on a cost basis," he said. "If you get a good Russian manager, it's not really any cheaper than an expat."

The Russian he hired to replace Kerfy had several years of work experience with multinationals in Moscow, as well as a degree from a top American business school - qualifications that demand an expensive compensation package in any market.

Amrop International, an executive search firm with offices in Moscow, confirmed the trend last month when it released a study of the hiring practices of 35 top executives working for Western companies in Russia.

"Our respondents indicated that development of top Russian management was an important part of their companies' human resources development strategy," the report said.

Susanna Stefani, a partner with Amrop International in Italy who came to Moscow for the report's presentation, said firms that choose to place Russians in top management positions often have difficulty finding a suitable candidate for the simple reason that many here who possess the necessary qualifications leave Russia to work abroad.

She said that nearly half of all Russians with top management qualifications who leave to work abroad choose not to repatriate, although it is not yet clear how many will come back later in their careers.

Some decision makers, like Honeywell's Razdan, are sticking with expats in their Moscow headquarters' top management jobs.

"In my experience, [Russians] are very good if they are asked to handle administrative and legal tasks, but the focus tends to be internal rather than on being innovative and trying to grow the market," he said.

"We tend to get more of the latter with expats," he added.

Stefani, of Amrop International, said this might begin to change if more Russians who have opted to pursue careers abroad choose to come back.

"You have to find a way to make them feel that this is their country."