Business Quarterly Association of European Businesses

AEB Business Quarterly Association of European Businesses

Quality Information • Eff ective Lobbying • Valuable Networking Spring 2013

1010 yearsyears ofof HRHR inin Russia:Russia: AchievementsAchievements && ProspectsProspects With AEB updates on:

HR market in Russia / The role of HR leaders in change management / Updates on employment law in Russia / Updates of the Russian state pension system / AEB Networking…and more НАБОР ПЕРСОНАЛА ПРОФЕССИОНАЛЬНАЯ МОБИЛЬНОСТЬ ОБУЧЕНИЕ

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Dear Friends,

Welcome to the Spring edition of the AEB Business Quarterly, which is dedicated to the HR industry in Russia. Globalization and the rapid advance of information technology have deeply aff ected the political and socio-economic environment, creating new opportunities along with new challenges. Now it is evident that to address emerging needs and combat upcoming challenges, businesses need to master the “human element” of change. In recent years we have seen signifi cant changes in the fi eld of human resources. Th eir role has grown considerably, and they are now recognized as a key function infl uencing business strategy. Russia’s markets are growing in volume so it is crucial for companies to understand what they should do to be an attractive employer and to manage eff ectively. According to the AEB–Gfk survey conducted in 2012, qualifi ed personnel along with large market potential and positive market developments are the key factors which attract foreign investment. In addition, Russia’s WTO accession is expected to facilitate investment, accelerate the modernization of the Russian economy and thus trigger the further development of the HR sector of the country's economy. Such a development is sorely needed, since effi ciency is the critical operational business issue today. However, work effi ciency in Russia is relatively low. As a consequence of the demographic crisis of 1990s, the lack of qualifi ed staff is a burning issue for some companies. Also, salary costs are increasing. In addition, the Russian labour code imposes quite some restrictions on business. Th ough there are many challenges to meet for foreign companies operating in Russia, the overall economic situation is positive. It means there are new opportunities available and new tasks to tackle. Th e AEB will take an active part in continuing to promote the interests of our member companies in Russia’s ever-changing commercial landscape. Th is edition of the AEB Business Quarterly features articles from leading experts in the HR sector in Russia. It will provide you with an insight into the Russian labour market, its legislative developments and much more.

Enjoy reading!

Dr. Frank Schauﬀ Chief Executive Oﬃ cer Th e Association of European Businesses

AEB SPONSORS 2013 • Allianz IC OJSC • Alstom • Aon Hewitt • Atos • Bank Credit Suisse (Moscow) • BP • BSH Group • Cargill Enterprises Inc. • Cliff ord Chance • CMS, Russia • Continental Tires RUS LLC • Deloitte • DHL • DuPont Science & Technologies • E.ON Ruhrgas AG • Enel OGK 5 • Eni S.p.A • Ernst & Young • GDF SUEZ • Gestamp Russia • HeidelbergCement • ING Commercial Banking • INVESTMENT COMPANY IC RUSS-INVEST • John Deere Agricultural Holdings, Inc. • KPMG • LEROY MERLIN Russia • MAN Truck & Bus AG • Mercedes-Benz Russia • Messe Frankfurt Rus, O.O.O • METRO Group • Michelin • MOL Plc • Novartis Group • OBI Russia • Oranta • Pirelli Tyre Russia • PwC • Procter & Gamble • Raiff eisenbank ZAO • ROCA • SERVIER • Shell Exploration & Production Services (RF) B.V. • Statoil ASA • Strana Detey • Telenor Russia AS • TMF Russia • Total E&P Russie • Volkswagen Group Rus OOO • Volvo Cars LLC • VSK • YIT Rakennus Representative Offi ce • YOKOHAMA RUSSIA LLC • Zurich Insurance Company

AEB BUSINESS QUARTERLY • Spring 2013 2

AEB BUSINESS QUARTERLY, Spring 2013 CEO Letter Introductory words from Dr. Frank Schauff , Chief Executive Offi cer of the Association of European Businesses in the RF 1 10 years of HR in Russia: Achievements & Prospects Introduction and General Overview Introduction

Olga Bantsekina, Chief Representative, Coleman Services UK; How HR leaders can support corporate transformational programmes, p.18 Chair of the AEB HR Committee; Deputy Chairman, AEB Board 4 Occupational Standards Lyubov Yeltsova, Deputy Minister of Labour and Social Protection, Russian Federation 5 Spanning a decade: HR market in Russia Andrey Chulakhvarov, Head of Permanent Staffi ng, Coleman Services 6 Start in competence! Shostak Natalya, Head of Human resources department OJSC «Hlebprom» 9 Specifi cs of the Russian Candidate's Market Alexey Mironov, Director for strategic development, ANCOR; Elena Vitchak, Executive vice president for HR, AFK Sistema 10 EU Comission President Jose Manuel Barroso meets AEB representatives, p.43 How to Win in the Human Age Market for high-potential graduates Felix Kugel, Vice-President and Managing Director Safronov Ivan, Partner, Future Today; Larysa Vaypan, of Manpower Group Russia & CIS 14 Head of HR, Bain & Company 24 How to Become the Best Employer? Employment Law in Russia – Developments Elena Petrova, Head of HR, DHL Express CIS and SE Europe 16 over the last Decade Change management and how HR leaders Julia Borozdna, Head of Employment and Migration Law Practice, can support major corporate transformation Pepeliaev Group, Deputy Chair of Labor Law Sub-Committee of AEB, and Valentina Matveenko, HR Manager CIS, Boart Longyear 28 programmes Ongoing reforms of Russian state pension system Ruxandra Stoian, Partner, HRC, PWC; Anton Nagralyan, Head of HR department, Russian Ralways 18 Alexander LORENZ, Chairman of the Council Raiff eisen Pension Fund, Chairman of the AEB Insurance and Pensions Committee; Elena Gorshkova, Executive Director, NPF Raiff eisen 30 Legal and practical aspects of assessing workplaces exposed to hazardous and dangerous conditions: how to minimize costs and raise effi ciency Ludmila Sokolova, Head of HR, The Knauf Group CIS; Andrey Slepov, Senior Associate, BEITEN BURKHARDT Moscow 32 Labour Migration in Russia and Aspects of its Development Asida Agrba, Associate, CMS, Russia; Irina Agadzhanyan, HR director, NORAUTO Russia 34 How to become the best employer, p.16

AEB BUSINESS QUARTERLY • Spring 2013 3

Association of European Businesses

Board Bantsekina, Olga (Deputy Chairman) Becker, Christian Hartmann, Reiner (Chairman) Hellevig, Jon Ketting, Jeroen Munnings, Roger (First Deputy Chairman) Pegorier, Philippe Sakuler, Gerald (Deputy Chairman, AEB Treasurer) AEB holds its Annual Strategy Meeting, p.41 Vertanen, Vesa

Recruiting Environmental, Health and Safety managers – needs Council of National Representation and problems Austria — Dietmar Fellner Mikhail Divovich, General Director, ECOTEAM; Olga Zinina, Environmental, Health and Belgium — Tikhon Evdokimov Safety Manager ROCKWOOL Russia 37 Czech Republic — Jiri Sterba Modular employee development program: key success factors Denmark — Aage Nielsen Anastasia Mizitova, Expert trainer, CBSD/Thunderbird Russia 39 France — Luc Charreyre Germany — Michael Harms AEB Updates Greece — Stefanos Vafeidis Networking 41 Hungary — Sandor Rethi Iceland — Ingolfur Skulason Committee Updates 43 Ireland — Declan O’Sullivan Member News 48 Italy — Costante Marengo Appointments 51 Lithuania — Julius Salenekas Montenegro — Luka Nikčević New Members 53 Netherlands — Lodewijk Schlingemann Poland — Karolina Skrobotowicz Sweden — Frederic Svensson Switzerland — Michael Roedter Turkey — Ali Tunc CAN United Kingdom — Don Scott (Chairman)

Auditing Commission Koschier Marco (Chairman) Roman Semiletov Gerard Uijtendaal

AEB CEO Dr. Frank Schauff Conference on Basel Recommendations, p.41

Publication name/Наименование издания: AEB Business Quarterly Cost/Цена: Distributed free of charge/Бесплатно All copyrighted images are taken from Katerina Grekova, magazine/ Ежеквартальное деловое издание АССОЦИАЦИИ Publisher’s address/Адрес издателя, редакции: www.shutterstock.com and www.dreamstime.com/Фотографии: ЕВРОПЕЙСКОГО БИЗНЕСА 16, bld. 3, Krasnoproletarskaya str.,, 127473, Moscow, Russia/ Екатерина Грекова, www.shutterstock.com, www.dreamstime.com Published by/Учредитель: Non-profi t making partnership Россия, 127473, г. Москва, ул. Краснопролетарская, д. 16, стр. 3 The opinions and comments expressed here are those of the "Association of European Businesses"/Некоммерческое партнерство Printed by/Типография: MEDIACOM, Stolovy per. 6, 121069, Moscow, authors and do not necessarily refl ect those of the Non-profi t "АССОЦИАЦИЯ ЕВРОПЕЙСКОГО БИЗНЕСА" Russia/«МЕДИАКОМ», Россия, 121069, Москва, Столовый пер., д. 6 Chief Editor/Главный редактор: J. Bendel/Бендель Ю. Э. The AEB Business Quarterly is registered with Rosohrancultura, making partnership "Association of European Businesses"/ Publication volume and number/Номер выпуска: 1 (28), 2013 Certifi cate registration ПИ № ФС77-24457/СМИ " Ежеквартальное Мнения/комментарии авторов могут не совпадать с мнениями/ Released date/Дата выхода в свет: 5 April, 2013/5 апреля 2013 г. издание АЕБ" Зарегистрировано в Росохранкультуре, свидетельство комментариями учредителя публикации, Некоммерческого Circulation/Тираж: 16,000 copies /16 000 экз. о регистрации ПИ № ФС77-24457 партнерства "АССОЦИАЦИЯ ЕВРОПЕЙСКОГО БИЗНЕСА"

AEB BUSINESS QUARTERLY • Spring 2013 4 INTRODUCTION Olga Bantsekina, Chief Representative, Coleman Services UK; Chair of the AEB HR Committee; Deputy Chairman, AEB Board

2013 is another notable year for the Irina stopped and said: “We will do it! It as the HR Committee Chair; Olga AEB HR Committee. On May 16 we will be the best in Moscow!” Gadetskaya (Sanofi -Aventis Group) are going to have our 10th Annual HR It took her quite some time to per- – Deputy Chair of the Committee; Conference (“10 Years of HR in Russia: suade her management as well as Tim Tatiana Khvatinina (SHL) – Assess- Achievements & Prospects”), which Carty, who was the HR Committee ment, Training and Development Sub- we believe will be a most interesting Chair at that time. (By the way, Tim Committee Chair; Ekaterina Ukhova event for the Russian HR and business has kindly accepted our invitation to (Ernst&Young) – Compensation community. participate in our jubilee conference and Benefi ts Sub-Committee Chair; Since this is the jubilee Conference, this year as a keynote speaker – please, Michael Germershausen (Antal) – we are planning to look back at the past come to listen to his fascinating stories.) Recruitment Sub-Committee Chair; ten years of the labour market in Russia, Finally, next spring, we did it. And it David Gilmartin (Troika Relocations) to evaluate its current conditions and was a success! Amazingly simple – just – Relocations Sub-Committee Chair. peculiarities as well as to forecast its the focused intention of two people, I would like to express my deepest immediate prospects and opportunities. plus perfect support from the team – gratitude to our team, who are always Any jubilee is a proper time for and 10 years have passed as one! active and involved, eager to invest evaluating what had been done in the Irina left the AEB last year, for a their time, knowledge and eff orts in past, and for deciding what else might challenging top position in a profes- our Committee’s activities and to do be done, as well as planning for the sional institution. We wish her success their best in the interest of our respect- future. in her career and highly appreciate ed Members of the AEB. I recollect how the idea of the con- Irina’s invaluable input into the devel- Special thanks for sure go to the ference arose. I was walking in the opment of our Committee during the whole AEB team, who are always sup- autumn streets of Sochi, after a work- past decade. portive and helpful in any of our activi- ing day of the Kuban Economic Forum 2012 has been memorable for ties. with Irina Aksenova (who was our HR us due to the establishment of our Th is edition is not dedicated to a Committee coordinator for more than fi fth Sub-Committee, on Labour Law, single topic. We have decided to collect ten years) and arguing about, and dis- which is going to address the most articles, which illustrate the most inter- cussing, possibilities for developing the important and vital issues in the Rus- esting and important issues in the pres- HR Committee’s work and making it sian Labour Code, including lobbying ent labour market situation in Russia, more lively and attractive. At the time, activities and the development of leg- from the perspective of specifi c market the AEB HR Committee was more islation in the area of human resources. participants. We hope that these points about breakfast meetings dedicated to We welcome Evgeny Reyzman (Chair- of view, from diff erent professionals certain HR issues on a monthly basis man, Baker and McKenzie) and Julia representing a wide variety of business and to general committee meetings, Borozdna (Deputy Chair, Pepelyaev sectors, will build up a realistic general which used to be organizational ones. Group) onboard and wish them an picture of how HR in our country fares During our discussion I mentioned active start (which has already hap- today. that I had attended an HR conference pened), interesting invovlement and I hope you will enjoy the reading at another business association, which further development. this magazine and soon become one I enjoyed but which could have been As of now, besides Evgeny and Julia, of the active members of the AEB HR considerably improved and developed. our Steering Group consists of myself, Committee.

AEB BUSINESS QUARTERLY • Spring 2013 5 OCCUPATIONAL STANDARDS Lyubov Yeltsova, Deputy Minister of Labour and Social Protection, Russian Federation Th e schedule defi nes top-priority fessional society and employers, those occupational standards to be devel- who have a direct interest in these oped in 2013–2014 that cover 11 occu- qualifi cation requirements. Th us, the pation groups on the basis of the All- primary function of the Expert Council Russian Job Classifi er (in total – about is to adopt the occupational standard 800 occupational standards). or, if need be, to reject or return it for Th is approach ensures development improvement after an expert exami- of occupational standards based on spe- nation. Having been endorsed by the cifi c types of labour activity with regard Expert Council, the occupational stan- to the international standard occupa- dard will be approved by order of the tions classifi cation as well as uniformity Ministry of Labour. Th e priority task is Th ere is such a gap between the in their development and application in to determine the typical layout of the realities of the labour market and the the sphere of labour, employment and occupational standard in partnership education system that employers often professional education. with employers, professional associa- have to re-train yesterday’s graduates as Th e number of occupational stan- tions, and trade unions. Today we have well as carry out long-term adaptation of dards has been determined with the the foundation. Th e Russian Union of employees. For this purpose a program involvement of employers and expert Industrialists and Entrepreneurs has updating the current system of qualifi ca- associations, the Autonomous Non- been developing occupational stan- tion requirements has been prepared. Profi t Organization “Agency for Stra- dards for several years. Th e concepts of occupational stan- tegic Initiatives on Promotion of New According to many employers’, an dard and employee qualifi cation were Projects” as well as on the basis of offi cial cannot write a good occupa- introduced to the Labour Code in 2012. proposals made by federal executive tional standard. Th at’s why we have A procedure for development, bodies due to priorities in various eco- arranged the work in such a manner approval and application of occupa- nomic sectors’ development. that employers are the key developers. tional standards has been established by Th us, the new qualifi cation system Th e professional society will recom- the government of the Russian Federa- will enlarge qualifi cation requirements mend them for preparation of occupation applying the views of the Russian as compared to the existing system of tional standards. Tripartite Commission for the Regula- guides (URSG, USG) that includes over Th e state, in its turn, will help in tion of Social and Labour Relations. A 7,500 worker jobs and occupations and relation to compliance with the law procedure for establishing a correspon- employee and specialist positions. It and provide organizational and instruc- dence of job titles, occupations, and will result in the emergence of occupational assistance. Once again, the most specialties in occupational standards tional standards to form the basis for important point, I emphasize, is that and unifi ed rating and skills guides will educational standards and programs business and professional associations be established in the same way. as well as companies’ job descriptions. should constitute the main driving force. It should be noted that in accor- It is very important to explain the First of all, we plan to develop an dance with the Labour Code occupa- procedure for developing occupational occupational standard for teaching. tional standards as well as URSG will standards. Professional associations In the near future it will be publicly be in the form of recommendations. or employers are expected to initiate discussed and approved. After that At the same time in appliance with the development of occupational standards much will depend on activity of busi- new Educational Law, training pro- taking into consideration labour market ness organisations. It’s planned that the grams will be obligatory developed on needs. An Expert Council under the update of professional standards will be the occupational standards’ basis. Russian Ministry of Labour has already performed on the regular basis. At the same time job titles for which been established. We attach great I think both employers and employ- any compensation, benefi t or restric- importance to it, and have granted it a ees are interested in occupational stan- tion are assigned must correspond to lot of power. It is important that busi- dards today. For companies, fi rst of all, those indicated in skills guidlines or ness sector representatives play the key it means the involvement of qualifi ed occupational standards. role in it. As for the areas where the employees with specifying new stan- Th e government of the Russian Fed- State is an employer (fi rst of all, the dards. For an individual, occupational eration has approved a plan for developing budget sphere) the Council will include standards will help to in the selection of occupational standards for 2012–2015. An representatives of ministries. occupation, area of employment, career occupational standards preparation sched- Why do we need the Council? Th e planning, and choice of areas for pro- ule for 2013–2014 has been approved by occupational standards that are devel- fessional education, additional training, an order of the Ministry of Labour. oped, should be approved by a pro- and skills developmentimprovement.

AEB BUSINESS QUARTERLY • Spring 2013 6 SPANNING A DECADE: HR MARKET IN RUSSIA Andrey Chulakhv arov, Head of Permanent Staffi ng, Coleman Services a cautious revival in late 2009. A multi- where public sector and state enterpris- tude of tendencies, both logical and at es remain the biggest employers. Small odds with expectations of both candi- and medium enterprises are respon- dates and employers alike, emerged in sible for no more than 20-22% of the 2010, leading up to an almost mature nation’s GDP. By and large, the labour (in a Westernized sense) labour market force is not encouraged to develop in 2012. Now we observe a market competencies. Having a job and being where talent is available but at a price satisfi ed with it makes a world of dif- liable to raise eyebrows even in well- ference, when it comes to effi ciency. developed economies. A person who does a job because he Let’s look in more detail the current knows he can’t subsist on state unem- he number of events packed into realities of the labour market in Russia, ployment allowance is only marginally a decade in an emerging economy clarify the roots of all the trends and better off than an unemployed person may well defy the imagination of try to catch a glimpse of the future. in the US or EU. In practical terms it an outside observer. Such events Many economists agree that 2012 was means two separate worlds – one of notT only encompass the transformation the year when the Russian economy Russian giants, state-owned or leaning of economic realities, but deeply aff ect caught up with its pre-crisis levels on heavily on the state, where competition the fabric of society itself. No aspect all fronts. With respect to the labour is either limited or minimal, and the of daily life remains unchanged, and market, Russia recorded an all-time other in which Western and Russian the transformation goes at a tremen- lowest unemployment rate of less than counterparts act in the markets with a dous pace. Th e amount of change that 5% nationally, with a staggering 0.9% in high degree of rivalry. the past decade had brought us, and Moscow (according to Rosstat bulletin Remarkably little has changed in its rapidity, had made it seem much of December 2012). Th ese fi gures look the system of government bodies dur- longer than 10 years. But that hardly all the more impressive in comparison ing the last decade. Quick advance- comes as a surprise. Rapid develop- with southern European economies. ment is unavailable to an ambitious ment of an economy literally creates But many authoritative sources person, and opportunities are based a new environment where the pace insist that human capital in Russia is mostly on nepotism or seniority. On of life quickens to a new pitch, and not yet up to its potential, the underly- the other hand, if the ambitious person fresh opportunities arise, like volcanic ing problem being ineff ective manage- in question chooses to jump ship and islands following a major earthquake, ment, regulatory limitations and lack of join the real business world, he will not and they can be just as alluring. competition. Th erefore labour produc- always fi nd a meritocratic system there Th is pace is all the more evident in tivity is still much lower than in devel- either. Connections are still the major the fi eld of human resources, which has oped economies, as is the automation source of both fi nding a job and get- undergone something close to a revo- of processes. Russia remains a country ting promotion. Th us, the two worlds lution in just a decade. In this article we shall attempt to describe and analyze the most signifi cant changes which we have witnessed since 2003. Lack of qualifi cations, combined with abundance of trainable personnel, would be the snapshot of HR market realities ten years ago. Th is was followed by an explosive growth in headcount across all industries in the subsequent 4-5 years, resulting in a personnel defi cit, irrespective of qualifi cations. Th en there was a feverish recruitment drive, which ended in a crash in mid-autumn 2008 and was followed by

AEB BUSINESS QUARTERLY • Spring 2013 7 co-exist quite peacefully in terms of companies brought in the experience, As a result, amateurism and bad man- labour migration. People adjust and methods and management necessary agement are ubiquitous, and good pro- concentrate on establishing a network to capitalize on those opportunities. fessionals hard to come by. Th e head- of personal connections. Most careers In such circumstances, a speculative long growth of the economy did push are made through that, not by sus- approach was prevalent: there was sim- salaries up but effi ciency remained low. tained eff ort and achievement. Rus- ply no way to go but up. New factories And now the personnel defi cit hin- sian businesses still prefer rank and fi le were put into operation, real estate ders further development. A paradoxi- executors and coordinators rather than properties were built, the consulting cal situation arises: (A) businesses are managers (and never mind the offi cial industry thrived. And of course, salaries reluctant to expand into regions where titles). Th at is one more aspect of the grew across the board. Ambitious goals labour is not only unqualifi ed but labour market that is strangely imper- were set and achieved, careers were scarce; (B) the local labour force, des- meable to change. But it is nothing to made, unique experience acquired. But perate for a chance to move, is left to be marveled at – after all, a shift in busi- just how much of the labour market hold onto whatever jobs it has. Region- ness mentality requires a signifi cantly did this transformation impact? How al labour markets grow stagnant, and longer period of time than a shift in the deep was its penetration? It is clear that migration seems the only way to eff ect economy’s rules. Even two decades of everyone benefi ted from the growing a change for the better. While regional the market economy have not much economy – new products, new ser- salaries are a fraction of those in Mos- aff ected the mentality of the labour vices and hence new life. But if we look cow, moving offi ces is not an option force in general. at the labour force as a whole, we see for most employers. Transferring call But business opportunities follow that change has not been conspicuous. centres and back offi ce functions to demand, not mentality. Th e soaring It is all the more evident if we com- regional cities is still a rarity. consumer demand of the past decade pare the Moscow labour market with When it comes to a new generation has opened wonderful opportunities the general national one. Th e diff er- of workers, there is still not much hope to retail, production and service indus- ence is staggering. What regions lack in for a quick change in quality. Gradu- tries. Markets grew in volume, they competence, they make up for in atti- ates are still poorly prepared for work diversifi ed and became increasingly tude. Even so, the lack of a competitive in a real business environment. Th e complex, as they followed the path environment infl icts serious damage educational system has not adapted to of the developed economies. Western on the desire to develop professionally. employers’ requirements over the past Advertising

AEB BUSINESS QUARTERLY • Spring 2013 8

decade. Every third graduate chooses good news for a conscientious employ- to work outside of his or her special- er who values employees and is ready ity. Qualifi ed graduates need to be re- to invest in them. On the other hand, trained and supervised in their new engagement levels must be monitored responsibilities. English profi ciency is as employees accustomed to changing on the rise, although lack of conver- jobs frequently may succumb to routine sational practice leads many to for- and let their performance slip. get what they have learned. Th e vast Furthermore, employers will face majority of workers, especially in the the challenge (many already do) of Russian regions, still see no point in maintaining their profit margins learning languages. despite the rising cost of labour. Th e On the positive side, training and necessity to increase labour productiv- development budgets have grown sev- ity will be paramount. Such a challenge eral times during the last decade and with rare qualifi cations will be in high can be met either through the automa- we can see the gratifying results: useful demand and their salaries will likely tion of processes or by diversifying qualifi cations can be found. Experi- approximate to those of their manag- business lines for sustainable develop- ence has accumulated. So talent is out ers. Th e war for talent will continue, ment. In any case, the cream-skimming there. But an employer who invested especially as the demographic trough era is drawing to a close, calling for stra- heavily in his employees is not likely of 1990s will begin to take its toll, with tegic reviews of business and long-term to give them up so easily. Sourcing fewer graduates during the next 5 years planning. Th ese latter are the two man- talent is diffi cult. It is costly to recruit or so. Th e length of service with one agerial competencies most diffi cult to and train someone who might not fi t. employer will grow from the current fi nd in contemporary Russia. After all, Retention has become the buzzword of two years to three and more. Promotion Russia is still a young market economy the 2010s. Inevitably, salaries grow and will be the best way to replace employ- and, though many markets approach labour costs rise signifi cantly. ees, but on the whole attrition rates will saturation, businesses still have a long Th e future of the labour market diminish. Hence the career growth of way to go before achieving maturity. is not hard to predict. Th e trends we younger specialists will be impeded by Th ere are still a lot of challenges and currently see will continue. Specialists fewer available opportunities. Th is is opportunities here. Advertising

AEB BUSINESS QUARTERLY • Spring 2013 9 START IN COMPETENCE! Shostak Natalya, Head of Human Resources Department, OJSC «Hlebprom» For supporting a standard imple- competence, collected the maximum mentation kit a communication pro- number of votes. Awards were present- gram was developed directed at fol- ed at the company’s New Year party. lowing tasks: Th ey included diplomas and valuable ■ Extension of corporate competences prizes. In addition, other diplomas and to all levels of personnel; smaller prizes were given to other par- ■ Involvement in detection of marked ticipants of the Marathon. and developed corporate compe- After the award ceremony, infor- tences by colleagues; mation about the winners was placed ■ Inspiration of employees’ desire to on the corporate portal, and special develop company-oriented impor- posters were made with photos of the n the 1970s American businessmen tant competences. Marathon leaders. started making models of compe- Th is program lasted for a year, so it Without doubt, the Marathon has tences for their organizations. Twen- was called “Th e Competence marathon been a great success. Th e model of ty years later, the idea was picked – 2012”. competences at “Hlebprom” became Iup in Europe. Now in Russia the vast As in sport, our program has a not a Western novelty, but a working majority of employers compile their number of rules: tool for assessment and development. own corporate models of competences. ■ An employee can announce himself/ Besides, for a company with such Th ese models are used in diff erent herself or other employees to one or a wide geographical presence as ways. Some prepare lists of important more competences. “Hlebprom” the Marathon became an competences, place them on a cor- ■ Many employees can be announced to additional way for employees to get porate stand and forget about them, the same competence. An application to know each other. By illustrating rel- others estimate the level of knowledge, form should be supported by an exam- evant competences employees were skills, abilities, and personal qualities of ple illustrating a relevant competence. writing interesting stories about their candidates for vacancies. Th e model of For providing a fair estimation of everyday work and became a good competences was not widely used as it results all the participants are divided example for others. Each division and was not properly implemented. in two groups – “Top management each employee became a little bit clos- One model was developed in 2011 league” and “Specialists league”. er by voting for each other. in OJSC “Hlebprom”. It consists of nine Th e program was announced by Not only the HR department and fundamental competences: email and on the company’s web por- the company’s management, but also ■ Approach to development tal. Colorful posters with information the employees themselves came to the ■ Result orientation about the “Marathon” were placed on conclusion that “Th e Competence Mar- ■ Eff ective communication skills information stands throughout 2012. athon” program is necessary for the com- ■ Ability to work in a team Emails included photos of employees pany on a constant basis. A new start in ■ Initiative and enthusiasm and examples illustrating the relevant 2013 was recently announced. ■ Approach to changes competence. All employees could vote ■ Planning and work organization online on a specially created internal ■ Self-discipline and orderliness internet resource. Votes were counted ■ Systematic thinking automatically, and total rankings could However, developing a unique be checked online. model of competences which suits a company’s strategy is just the fi rst step. Finish Lots of work follows at the stage of Th e participants became increasingly implementation. active before the end of the year. Grow- Th e Human Resources department ing numbers of employees joined the has not only to inform staff about the Marathon, and encouraged others to developed model of corporate com- participate. petences, but also to explain it to each In total, within the year 11 announce- employee, teaching them to estimate ments were made and 39 employees the level of development of each com- joined the Marathon. petence, and also to stimulate a desire In December 2012, the HR depart- to develop them in the future. ment identifi ed three leaders in each

AEB BUSINESS QUARTERLY • Spring 2013 10 SPECIFICS OF THE RUSSIAN CANDIDATE'S MARKET Alexey Mironov, Director for Strategic Development, ANCOR; Elena Vitchak, Executive Vice-President for HR, AFK Sistema professionals in is another challenge for employers. Th e the coming years. overall mobility of work force in Russia However, the is still quite low. Th ere are specifi c rea- current unem- sons behind the Russian people’s com- ployment rate of mitment to living in the same place all 6% (a third being their life, and their needs related to this, young people) is including work, provision of products one of the lowest and social services. Th e psychological in the developed factor plays a major role. People avoid Introduction countries. Considering the decreasing uncertainty and the fear of leaving the Russia is widely recognized as an labour pool and the increasing demand region where they grew up and to emerging economy which is expected for new staff , there is likely to be a fur- which they are accustomed. to grow at an above-average rate in the ther decline in unemployment. Th ere are many stories about the coming years, and is likely to become residents of single industry town one of the most attractive places in Mobility (mono-towns, which suff er from a the world in which to do business. It is not uncommon for recruiters to high unemployment rate) who refuse GDP growth of 3.75% is forecast for search for candidates abroad or, at to relocate to other regions to look 2013, which will drive consumption, least, across the country. Th ere have for work. Th e following question then boost investment in local production been projects in our practice when an arises: “How do they manage to survive by international businesses, and thus appropriate candidate was found by a in this situation?” For many people a drive the growing demand for staff . targeted search in one of the Ameri- household plot is the main source of At fi rst sight, investors do not seem can universities, then was relocated to income and food. to be aware of the potential challenges Russia. Th e current situation—imbal- Among the economic reasons is a of the labour market related to the ance of supply/demand in the labour huge gap in real estate prices between number of people living in Russia market in the Russian regions—forc- the regions. It’s almost impossible to now (about 142 million people), and es businesses to invest in relocating sell property in one region and then therefore expenditures that need to be employees within Russia. But mobility buy at the same price in another. More- incurred. Among the major challenges for most of employers is recruitment of qualifi ed staff , the mobility issue, salary expectations of candidates and aspira- tions of the coming “Y generation”.

Economic Trends Th e cost and time needed to recruit qualifi ed professionals can be considerable. Th e growing shortage of staff in the labour market is mostly caused by the demographic crisis. Th e current population of 142 million people, with half of that of working age, has been declining, and will continue to decline considerably, due to a reduced birthrate in the 1990s. Th is will limit supply in the labour market and will increase the competition for qualifi ed

AEB BUSINESS QUARTERLY • Spring 2013 11 over, residential registration still exists on the other. Moreover salaries in Rus- Specifi cs of X and Y generations in Russia, restricting access to state sia have caught up with European lev- Th e specifi cs of diff erent generations services like schools, nurseries, medical els, and sometimes exceed them. also have a serious impact on a can- assistance and so on. didates’ market. Generation X (29-48 Due to these diffi culties, employ- Specifi cs of Graduates years old) tends to gradually build their ers face a shortage of labour. And so Recent graduates are generally in low career, moving in one direction during recruiters have to spend more time demand due to the inadequate stan- their lifetime. It’s common for them to searching for, and selecting, candidates, dard of education. Th e exception is work for the same company for their as well as motivating them to take the small number who developed entire life, moving from junior posi- new employment opportunities. In our their careers and gained experience tions to the top level. practice, recruiters have sometimes while they were in high school. Th e By contrast, generation Y (21-28 been able to persuade a candidate’s best graduates are usually recruited by years old) appreciates freedom above husband or wife to relocate. Th e con- employers while they are still studying. all. Personal life is as important for sultants had to make a presentation Employers need to develop partner them as a successful career, and they’re about living conditions in the area and relationships with higher educational seeking balance in life. Th eir mental- the options for a candidate’s relocation. institutions, in order to persuade them ity is not bounded by any restrictions, to adjust their educational programs to and embraces risks and rewards at the Salaries business requirements, and to improve same time. It is widely accepted that a high salary the quality of education their would-be Y-employee management can be doesn’t guarantee high labour effi cien- employees are getting. quite challenging. Th ey tend to change cy. Salaries have been growing above It is also true that students and a job quickly and easily, as soon as the infl ation rate, but still in the can- graduates are not well enough it doesn’t seem rewarding any longer. didates’ market, salary expectations of informed about which professions Th e employer “brand” is not of great professionals are sometimes unrealis- are in demand, and what companies’ importance to them. It is opportunities tic. Th ese expectations are mainly due requirements are. Th e result is high and to participate in the decision-making to a shortage of qualifi ed candidates on sometimes unrealistic salary expecta- process which matter. And immedi- one hand, and candidates’ exaggerated tions, and therefore unemployment ate compensation is the highest value. perception of their own qualifi cations among young professionals. However Y-employees are the most

AEB BUSINESS QUARTERLY • Spring 2013 12 creative and fresh-minded category, Th e use of social media will defi - do not know where and how to search and that can be used to develop a com- nitely grow further. Th is might slightly for a job. It also worth noting that pany’s projects and products. change the business model of staffi ng recruitment hasn’t been recognized as Th ough currently company man- companies, without having a major a respectable profession for very long. agement is mostly represented by the general impact on the industry and its Th e lack of proper legislation for X-generation, the Y-generation will growth rate. contract and temporary staffi ng is also a take on managerial positions in the It should also be noted that job hurdle to development. New legislation near future. Th ey will develop and boards like linkedin.com, superjob.ru, is expected to be introduced soon in drive business, and it is they who will hh.ru or job.ru are also very popular the State Duma, which might drastically ensure a company’s success in the next and are often the fi rst stop for job seek- change the temporary staffi ng business. few years. According to statistics, this ers who wish to post a CV and look for generation will account for 47% of the vacancies. Conclusion labour force by 2014. In spite of all the restrictions related Th is is why employers can’t ignore Other Issues to work with the job-seekers market, the Y-generation, and have to adjust Th ere are other challenges which have Russia is still an attractive market for management strategies accordingly. It is indirect impact on the staffi ng market foreign companies to develop business crucial for HR specialists to be informed which, in Russia, is still far from being in, as well as to sell products. Th e staff - about this category of employee, and mature. Th is poses a big challenge for ing business is no exception. not just be informed, but know the val- both employers and HR agencies. On Th ese factors, amongst others, will ues of this generation. Th ey are driven the one hand, there is a lack of trust boost the growth of the local recruit- by immediate results, are not willing to in recruiting agencies since it is widely ment market (currently valued at 1.4 sacrifi ce personal time for work, and believed that HR agencies provide paid billion USD) quite substantially. Unlike expect immediate compensation. Th is services to candidates. On the other European markets, the Russian recruit- changes a company’s management and hand, the immaturity of the HR mar- ment industry has had a double-digit HR department signifi cantly, and the ket infl uences the culture of job-search annual growth rate over the last few focus is shifted to attracting and retain- among the candidates. A lot of people, years. Projections for years to come are ing talent, to motivational tools and to especially those who live in the regions, also favorable. strengthening the competitive advantage of an employing company.

Mental Issues On the average, Russians change jobs 3-5 times through their working life, as opposed to, for instance, Asians, amongst whom it is common to work for one employer for your whole life. Generally speaking, frequent job changes have an adverse eff ect on a career. But employees’ tendency to acquire diverse professional experience is largely driven by employing companies themselves which, when recruiting staff , consider candidates’ professional experience in diff erent companies and projects as an asset.

Social Media Th e social media have become very important for candidates’ search all over the world, and Russia is no exception. Here there are a few social networks which are popular among candidates, including Vkontakte and Facebook. Many companies feature on these networks in order to attract candidates and develop their HR brand. Recruiters also widely use LinkedIn in order to attract candidates, as well as to interact with people and communities on a regular basis.

AEB BUSINESS QUARTERLY • Spring 2013 13

Advertising AEB BUSINESS QUARTERLY • Spring 2013 14 HOW TO WIN IN THE HUMAN AGE Felix Kugel, Vice-President and Managing Director of Manpower Group Russia & CIS fi nd, creating a mismatch between the organizations. As the global econo- skills available and those needed by my improves, that situation will only employers. According to the Manpow- worsen. er Group’s most recent Talent Shortage Business leaders can and should Survey, which polled more than 35,000 meet this challenge head-on. Now is the employers across 36 countries, more time to devise and implement a work- than 30% are struggling to fi ll jobs they force strategy that takes account of the desperately need to in order to succeed. increasing pace of change and which Th at fi nding suggests that the “tal- drives corporate growth. In short, an ent mismatch” – the inability to fi nd organization’s workforce strategy must the right skills in the right place at the be able to generate the talent needed to he world is on the cusp of a new right time – is a looming threat to all achieve the chief executive’s vision and reality in which human potential employers. Even those who are com- the long-term goals of the business. itself will become the major agent fortable with where they are right now of economic growth. need to think hard about whether the Where we are and how we got here TIn the past, human ingenuity, recruitment plans they have in place Over the last few years, businesses have endeavor and innovation led to new will generate the talent that is needed been preoccupied with taking costs out technologies, or ways of organizing the in the rapidly changing world of work. of the system to improve productivity. world, which transformed it. Previous Increasing competition, chang- Th is was most recently demonstrated eras were defi ned, fi rst, by the raw ing demographics and demands from at the height of the recession with wide- materials our ancestors utilised – stone, individuals as well as technology are scale reductions in workforce numbers. iron and bronze – then they were char- putting unprecedented pressures on At the same time, market demands acterized by the domains people con- businesses. Employers need to ask have increased, which means compa- quered with ever-improving technol- themselves: “Do our current workforce nies often do not have all the right peo- ogy – industry, space and information. strategies and plans support our goals- ple with the right skills to drive innova- Next, it will be human potential itself for long-term growth in this changing tion and business growth. And they that will be the catalyst for change, and environment?” tend to assume that there will be a ready the global driving force – economically, Knowing how dramatically the supply of such people when they need politically and socially. In this new real- world has changed, and the fact that them. Given the demographic shifts, ity, humans are rising to the challenge the speed of change is accelerating, the this assumption will not serve compa- and taking their rightful place in the answer is probably: “No.” nies well. Business leaders can’t reset centre of the stage as the world’s only In this new and complex environ- to pre-recession thinking. Th ey must source of inspiration and innovation. ment, talent is increasingly the key take a new approach to their workforce Th is new era (the Human Age) is competitive diff erentiator. In less than and the assumptions they are using to creating a situation in which the only a decade, people with high-demand inform their strategy planning. way to adapt, evolve and rebuild will skills will be the scarcest resource for Too few organizations are prepared be through the determination of the companies. Even now, the talent gap is to address their long-term needs in the human spirit. Th e single-minded focus slowing recovery and growth for many rapidly changing world of work. Sus- on reducing costs (to do more with less) is creating innovation like we’ve never seen before. Companies that can harness this, and individuals who can truly engage with it and participate in the Human Age, will be those who get ahead. Employers need to adjust their mindset to ensure that they have the right workforce models and people- practices in place to attract, retain and unleash this inner human potential in order to succeed in the Human Age. Unfortunately, this type of talent is becoming increasingly diffi cult to

AEB BUSINESS QUARTERLY • Spring 2013 15 tained competitive advantage requires formance. Th ey need to facilitate the ■ Be self-critical to the extent of under- not only a smart business strategy but discussion with the leadership team standing which people-practices also a workforce that is equipped to around what the business needs from need to be updated. execute that strategy, and which under- its workforce in the short term and in ■ Be inclusive by taking an outside-in stands its role in achieving its goals. the long term, in order to close the gap view to talent sources. Th e Manpower Group’s new Workforce between what the workforce is able to ■ Be clear where the organization can Strategy Survey reveals that nearly a do and what the business needs it to do. “build” the skills and talent it needs quarter of employers across 36 nations HR needs to not only help the busi- rather than “buy” them. concede that their organizations’ work- ness identify the gaps between its busi- Aligning workforce strategy to the force strategy does not support their ness strategy and its workforce strategy, business strategy is not a “once-and-done” business strategy, or they do not know but it needs also to design a roadmap activity. Just as with their business strate- if it does. for success. Armed with the survey gies, leaders must regularly revisit and Even more alarming: among those of needs and the gap analysis, the HR challenge their workforce strategy for two subsets of respondents, more than leader can then help his or her business strategic alignment and accountability. It half (53 percent) admit that they are not colleagues through the process of cre- is the HR leader’s role to facilitate this pro- doing anything about it. In too many ating a workforce strategy and later an cess with his or her company’s leadership. cases, the emphasis on talent manage- action plan that ensures that the orga- Until HR leaders consider the impact ment is tactical and short term when it nization will always have the right array of external forces (such as demographic ought to be strategic and long term. of skills in the right places and at the trends) combined with internal forces right times to meet its evolving needs. (such as demography of current work- Connecting strategy and To attract, develop, engage and retain force) on their company’s ability to exe- organizational performance the talent needed, a robust and well-doc- cute its business strategy, eﬀ orts will be Human Resource (HR) leaders are the umented workforce strategy will: no better than tactical plans and actions essential link in aligning workforce ■ Be more comprehensive and longer- that are hit or miss. Th e organizations strategy to business strategy. HR lead- term focused than an annual talent plan. that get this right will have a competitive ers must help their organization align ■ Be focused on which work-models edge. Th is is the time for HR to step up its workforce strategy to its business will produce the best results for the and lead the way to ensure their company strategy in order to drive business per- organization. has the talent it needs to win. Advertising

AEB BUSINESS QUARTERLY • Spring 2013 16 HOW TO BECOME THE BEST EMPLOYER? Elena Petrova, Head of HR, DHL Express CIS and SE Europe them as guidance, they don’t hesitate to of what is happening in our company, demonstrate it to others. and where we are in terms of engage- “Certifi ed International Specialists” ment. Such a view is necessary for any (CIS) – the term our London courier business aiming to achieve maximum used – is a training program launched effi ciency with its human resources. in 2011 when 100,000 people in 220 So what did we do in this training countries learned the basics of the to help the level of engagement? How DHL Express business. So did our 2500 do we encourage people to help each employees in Russia. other, to be proud of working for DHL? For two days they were steeped in First of all, we formed mixed groups corporate strategy, the importance of of employees: one team had to include customer service, brand values etc. In people of diff erent ages, levels of expe- ne of my colleagues went on a busi- our country, we chose to train people rience (both DHL newbies and veter- ness trip to London. On her way using our own resources. So our man- ans could work together), grades and back, heading for Heathrow, she agers became trainers and facilitators business functions. A courier, a sales got stuck in a huge traffi c jam and who help others to become a single representative, a fi nancial analyst, a Oseemed in danger of missing her fl ight. team and connect wsith people from secretary – they all swapped roles in a Th en the driver took her to the wrong diff erent business units, functions and business game. Th ey were all equal, and terminal, and the people at the informa- departments. everyone’s contribution was important tion desk there gave her such compli- Th e CIS Foundation training was and highly valued by the others. Th at’s cated instructions for fi nding the correct something that infl uenced the level of how we helped people to know each one that she was completely confused engagement in our company dramati- other and learn to appreciate the work and worried that she really would miss cally. Every year we ask our employees we do together. And this is why the the fl ight. to take part in the Employee Opin- London courier is as proud of his job as By good fortune, she saw a man wear- ion Survey (EOS). Th e 2011 results a training manager from Russia. ing an outfi t that was very familiar to her, showed that our staff became 7% more It is not only the principle of equal that of a DHL Express courier. He had opportunity that is implemented in our come to make a delivery to one of the "It is not only the principle of equal training. We try to follow the Respect offi ces in the airport. She introduced opportunity that is implemented and Result approach, both inside the herself as his colleague from Russia and in our training. We try to follow the company and when communicating noticed how keen he was to help. Respect and Result approach both with our customers (and we evaluate He listened to her attentively, then inside the company and when com- our behavior according to these values found a public bus (which turned out to municating with our customers..." – I’ll discuss this below). be the best way to get to the terminal) For example, an employee at any and talked to the driver explaining the level is welcome in any of our senior whole situation. She didn’t even have to engaged,that the quality of communi- managers’ offi ces. Th e doors are always buy a ticket! cations was 9% higher and teamwork open, so long as there is no meeting or Before getting on the bus, my col- became 10% more comfortable. conference call in progress. No one has league thanked the guy and all he Our success in building an attrac- to arrange a visit beforehand. Anyone answered was: “Th is is what Certifi ed tive HR brand was acknowledged can come in with a question or an idea. International Specialists are for!” not only by our own studies. In 2012, Our managing director even chose to It wasn’t the fi rst time I have heard we took part in AON Hewitt’s Best have his offi ce in the busiest area in our stories like that from our people. Will- Employers study, where DHL Express building: the fl oor where the call centre ingness to help and a supportive atti- in Russia took the 6th place in the is located. He says that seeing a lot of tude are the most obvious signs of Employers rating. people answering our customers’ calls employee engagement. We see these Th e Best Employers Study is widely all the time helps him to stay involved. signs quite often. What is even more recognized as one of the most in-depth So no wonder that his own example interesting about the situation I’ve just and true-to-life HR studies in the defi nes standards for others! described, is that our staff do not just world, and for a few years in a row it By the way, showing a good exam- share corporate values and consider has helped us to get an objective view ple is also a necessary condition for

AEB BUSINESS QUARTERLY • Spring 2013 17

The Best Employers study, which Aon Hewitt has run in Central and Eastern Europe since 2001, recognises companies that stand out from their peers through the high quality and effectiveness of their HR practices, which have a positive impact on business results. The study looks at both the employer’s and the employee’s perspectives with business indicators to provide a fully objective picture. Best Employers study 2012 – the numbers: • Eight countries – Bulgaria, Czech Republic, Hungary, Lithuania, Poland, Russia, Slova- kia and Turkey. • More than 400 companies • More than 250,000 participating employees, including 41,000 managers • More than 2,600 senior leaders • 29 Best Employers (three rankings according to size of company) Aon Hewitt's Best Employers study examines people-management practices in leading organisations. It provides insights into how L-R: Edward Stanoch, European Talent Practice Market Leader and Elena Petrova, Head of HR, DHL Express CIS and SE Europe they can achieve a real competitive advan- helping engagement to grow. I believe al of all our staff . Th is is a procedure tage through their people, explores what this is what many companies in Rus- which can open doors for professional makes an organisation a good place to work sia still lack. You’ll never make people and career growth, and it works as an and identifies a shortlist of the Best Employ- behave the way you want if you don’t important motivating factor. At DHL ers in each country. set a good example. Th ere is no point in Express, we have created a "talent pool", The research shows a strong correlation propagating corporate values if no one and all our employees know how to get between high employee engagement and knows how to implement them. themselves included. better business results. On average, CEE Best At DHL Express, our managers pay Th e evaluation criteria are 100% Employers companies: great attention to this aspect. For exam- transparent, and are based on fi ve main • out-perform on financial targets (108% ple, many of them volunteer at events, competencies that all employees should of EBITDA goal realisation versus 93% for especially during Volunteer’s Day, an have, regardless of their role and posi- other organisations), event happening in Deutsche Post DHL tion. At the same time, growth opportu- • have lower staff turnover rates (6% turn- all around the world in September. nities are almost unlimited. Our senior over versus 9% for other organisations), Th ey also share their experience dur- management team mostly consists of • have lower absenteeism (3.5 day/employing town-hall meetings and seminars. people who started their careers at the ee versus 5.5 day/employee for the rest). So, those successful and high-skilled bottom. In Russia the survey is conducted by AXES professionals, who get a lot of respect Th e results we have achieved in pro- Management, an exclusive partner of Aon in the company, are able to motivate moting staff are signifi cant. Over 60% of Hewitt in Russia. There were more than others. Even the most active employees employees included in the "talent pool" 110,000 employees surveyed in Russia in 2012. change their behavior little by little, and get promotion within a year. An average Best Employers in Russia 2012 not only as part of volunteering events. DHL Express manager stays in the com- 1. Tenex For example, recently we had a team pany for 7 years! In fact I don't know 2. Microsoft of sorters who off ered their help to the why so many Russian companies prefer 3. Hilti communications department with cor- to “buy a pig in a poke” rather than pro- 4. Takeda porate souvenirs. Th ey could have used moting their own talented and eff ective 5. Mars their break during the working day to people. It costs less, and obviously helps 6. DHL Express rest. Instead, they chose to carry heavy to increase your staff ’s engagement. 7. Eli Lilly boxes from the storeroom. Th e way DHL Express in Russia has 8. Roche Of course, helpfulness and open- developed its reputation as an employer 9. 3M ness are widely recognized in our of choice illustrates that fact that you 10. Tele2 company. We make such people the can't have a good HR brand unless you The survey is conducted annually from Febru- “heroes” of articles in our internal become a good employer. Th ere is no ary till September. The results are announced media (we have a monthly news bul- diff erence between the advertising you at the end of November. To take part in the letin and a 24-page color magazine use to sell your product and the advertis- study call +7 (495) 665 6399 issued quarterly). But we also take this ing you use to attract talented employ- or email: [email protected]. into account during the annual apprais- ees. It only works if the off er is fair!

AEB BUSINESS QUARTERLY • Spring 2013 18 CHANGE MANAGEMENT AND HOW HR LEADERS CAN SUPPORT MAJOR CORPORATE TRANSFORMATION PROGRAMMES Ruxandra Stoian, Partner, HRC, PWC; Anton Nagralyan, Head of HR Department, Russian Railways ern business lead- Since a company is like the human ers recognise that body, where everything is intercon- companies must nected with everything else, even be fl exible and minor changes can have an impact take into account that is felt beyond the primary object changes around of change. To understand the impact of the world and in change, an operational model should global markets. be considered and all processes aff ect- Why change management is so According to ed should be highlighted. popular now: era of challenge – Howard Schultz, CEO of Starbucks, his era of change company is “operating in an intensely However… Th e fi rst decade of the 21st century was challenging environment, one in which 75% of change initiatives fail on their a tumultuous one, setting the stage our customers and partners have for an ongoing culture of challenge extremely high expectations of Star- promises and change. As the pace of change bucks. And we have to step up to the 98% of critical success factors depend accelerates, every company is com- challenge of being strategic as well as on people pelled to react and transform itself to nimble as our business evolves.”1 remain competitive. Much dynamic As the title of a popular business Personnel issues and organisational and inspiring change has come about book puts it: “Change or die”. While this problems can wreck opportunities for through the infl uence of factors that may be slightly exaggerated, the idea is meaningful and sustainable change. are well beyond the control of any right, as most companies that rejected Th ese challenges fall into fi ve categories: single entity, including: change have been relegated to oblivion. 1. Lack of clear connection between ■ globalisation; the project and the organisation’s key ■ the technological revolution; Although the recipe for successful strategy priorities create a situation ■ the Great Recession; and organisation change is not hidden where the organisation is mired in ■ heightened regulatory and public within a Sphinx-like mystery: a state of inertia while training and scrutiny. Aligning the people, processes, and coaching fail to fi ll in knowledge gaps. In turn, these have prompted busi- technology to the strategy, and 2. Lack of rigour in benefi ts tracking nesses to respond by implementing and accountability for change levers connecting the dots … a multitude of changes of their own, creates a situation where changes, such as: … it remains an elusive task – a benefi ts and success indicators oper- ■ enterprise resource planning (ERP); classic case of ‘easier said than done,’ ate independently and fail to interact ■ M&A; that remains just out of reach for too eff ectively. ■ optimisation of operations including many leaders in spite of their best 3. Confl icting stakeholder interests, shared services and outsourcing; and intentions. which can produce many small ■ enterprise-wide business transfor- issues and gradually push the pro- mation and reorganisation. 1 Howard Schultz, email to all Starbucks part- gramme off course, create a situation Along with challenges, such chang- ners, STARBUCKS MAKES ORGANIZA- where the company’s priorities end es bring opportunities, especially for TIONAL CHANGES TO ENHANCE CUS- up competing with each other and those organisations that have the right TOMER EXPERIENCE, – http://news.star- not with the market, while cross- bucks.com/article_print.cfm?article_id=66 approach to their business. Most mod- functional collaboration lags behind.

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4. Lack of sustainable buy-in and adop- Although change can be tricky, Management, a study of 200 organisation throughout the organisation companies still experience it and, tions, PwC 2004): causes a struggle to “sell” the need for with the appropriate implementation, ■ quicker ROI, change, even as senior and middle it delivers many advantages to busi- ■ expected attainment of productivity managers lack of crucial manage- ness. Research confi rms a clear link goals/business benefi ts, ment skills for change. between a disciplined change manage- ■ improved technology, processes, and 5. A piecemeal approach where chang- ment approach and high performance. people capabilities, es are not supported or followed Of the 27 companies that scored the ■ reduced transition costs, through at all levels (up-, down- and highest in performance, 26 always or ■ clarity about new job roles, responsi- cross-stream) means employees often use a standard change manage- bilities, and behaviours, have diffi culties understanding and ment and communication approach in ■ less retraining/post-rollout support, making changes while resources are their projects (Boosting Business Perfor- ■ sustained capability for extensive strained. mance through Programme and Project leverage of programmes such as ERP.

Why change? The story of British Airways The airline industry is an intensely competitive increasing the ways in which customers can deal motivated the company to change: maintain- market. It is generally characterised by low prof- with us." says Paul Coby, former British Airway’s ing customer satisfaction, fostering brand rec- it margins and high fixed costs. According to CIO. Along with Self-Service Check-In kiosks, Brit- ognition and brand identity (as a provider of the Air Transport Association (ATA), labour costs ish Airways improved its corporate website and high quality services), and reducing costs. are an airline’s No.1 costs, with fuel ranking sec- databases. People think of queues when airports This change had an impact on the company ond. Other huge costs are airport capacity, tech- come to mind but British Airways were about to in several ways. Firstly, IT and airport personnel nology and leasing or buying actual aircraft and change the stereotype. Passengers would access were directly affected by change. Furthermore, fuel. A minor shortfall in forecast revenue can the site “BA.com” to do things they would usu- the company had to carry out major changes in be harmful for business. ally do in airports like book and pay for flights, operations to make use of the new technology British Airways is the United Kingdom's big- or select a seat. Later at the airport, passengers effectively. Changes in information flow and the gest airline and one of the largest international would check themselves in at Self-Service Check- total information received impacted on how IT airlines, flying more than 27 million passengers In kiosks. Help services would assist those with specialists worked and their required skills set. annually to over 550 destinations worldwide. Its questions or problems. The new technology was Customer services at the Airport Terminal faced two main operating bases are London Heathrow, implemented to reduce service costs, keep prices the same challenge. The introduction of Self-Ser- the world's biggest international airport, and low and compete with low-costs airlines. vice Check-In kiosks also influenced how other London Gatwick. With this in mind, British Air- British Airways is one of the top-10 airlines departments functioned. HR, Airport Operations, ways looks for ways to keep customers, improve in the world under criteria such as international Brand and Marketing, Communication and so on its services and boost efficiency. In 2003, the passenger transport, total destinations and all had to deal with the new system. For instance, company decided to set up Self-Service Check-In airliner fleet. However, British Airways was not HR faced a new set of requirements and rules for kiosks. "[Self-Service Check-In] kiosks are a great the first company to set up Self-Service Check- new staff at terminals. Brand and Marketing and example of how we are investing in modern In kiosks. Continental Airlines was the first to do Communication, in turn, started promoting the technology while at the same time improving this in 2005. change to the British Airways clients and em- customer service and achieving greater levels British Airlines needed to catch up because ployees. A chain reaction was felt throughout of efficiency. We are making travel easier and of the intense competition. Three key factors the company because of this change.

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Why change? A story of change – Russian Railways In 2001, Russia’s Ministry of Railways (after • Phase IV. Creation of target model for railway and management of government-controlled 2004 – Federal Agency of Rail Transport) em- market infrastructure and reduction of total economic barked on a comprehensive Railway Structural The main objectives of reform were: costs. The positive result for the industry was in- Reform Programme that had been developed in • Fostering competition in the railway market so flow of external private investment to upgrade cooperation with the government and published quality of service improved, fixed assets. Also, incentives for innovation and as Decree No. 384 of 18 May, 2001. • Improving transparency, modernisation appeared. Russian Railways also The Reform Programme set out the stra- • Developing balanced control of operations and focussed on developing profitable freight opera- tegic priorities for the rail industry until 2010 costs, tions, options for disposing non-core assets, and and beyond in order to boost the efficiency and • Implementing organisational and legal changes. reduction of subsidies for passenger transport. profitability of rail services in Russia by encour- This enormous change in the industry was It is almost impossible to estimate the im- aging investment in modernisation and creating meant to achieve a difference for all stakehold- pact of change on employees when considering a highly functional holding company. The reform ers in the company. Meeting growing demand that Russian Railways is huge company with phases are: for freight and passenger transportation, im- operations all over Russia, especially for trans- • Phase I. Preparations (2001-2003) proving the quality and range of services and forming a large and lumbering government-run • Phase II. Asset unbundling along functional accessibility of railroad transportation were company into a modern transport operator. This lines (2003-2005) the main benefits for consumers. The desirable would affect the values, culture and behaviour • Phase III. Increased Competition (2006-2010) result for the economy was continuous control of every company employee.

How to make change work when it’s inertia” is a potential barrier which is 1. Strategy and Assess – understand- unavoidable? seen as diffi cult/ extremely diffi cult; ing the business necessity, generating For a change process to be successful, it ■ Without Incentives, resistance to insights and providing options for should feature fi ve essential elements: change will increase – 98% of com- change; ■ Vision (why the initiative is being panies cite “sponsorship from senior 2. Design and Construct – designing undertaken and what are the desired management” as important/ extreme- changes to the operating model to future outcomes and benefi ts), ly important factor for success; optimize benefi ts, building and test- ■ Knowledge and skills (“what” and ■ Without a Plan, change is chaotic – ing the operating model changes “how” of work: the individual must 80% of comapnies consider “Pro- needed to generate benefi ts; know what to do and how to do it), gramme management” to be impor- 3. Implement, Operate and Review – ■ Resources (adequate amount of tant/extremely important for success. roll-out and stabilisation of oper- resources with the correct skill sets Change can be implemented when ating model changes and planning and experience, as well as access to all of these elements are together. PwC further benefi ts delivery, establish- the right assets at the right time), methodology states that change man- ing the operating model changes in ■ Incentives (the right tools to encour- agement can be presented as a life cycle usual operation, bearing the benefi ts, age people and make the eff ort, as with several stages: and continuing improvements. well as accept the risks involved in doing something new), ■ A Plan (the work that needs to be completed in every stage of transformation). All of these elements should be considered and be in place for a successful transformation. If one element is missing the whole process can fall apart: ■ Without Vision, uncertainty will rise, thereby confusing employees – Management Barometer (PwC, May 2006) shows that 94% of companies consider “clarity about priorities” to be important/extremely important; ■ Without Knowledge and skills people have a sense of hopelessness – 82% of companies see “training” as important/extremely important for success; ■ Without Resources there is a possibility of greater disappointment – for 71% of companies “organisational

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What role does HR in change? and start making it so in daily work. A ing tools and instruments, monitoring All roles in change can be divided into Change leader should have leader- feedback and fi nding ways to motivate four types: Driver (initiator), Change ship, problem-solving and communi- personnel. leader, Change management and Target cation skills, and experience in project When acting as a change manager, audience. Every role has its own func- management. every line manager has to ask them- tion and factors for success. Formal support and/or change selves several questions: A Driver is usually the company’s implementation are fulfi lled by the ■ How can I recruit new employees owner whose main function is to com- Change manager. Th is person com- under the new conditions? municate vision and strategy, provide municates the advantages of change ■ What should I do to push through resources and minimize risks. To per- and manages the eff orts to be under- the change? form these functions, the Driver has to taken. In order to succeed, the ■ How should I instruct employees to hold a top position and possess leader- Change manager should have tech- make the change work? What would ship and communication skills. nical, problem-solving and commu- be taught? Top-management usually bears the nication skills. Usually line-managers ■ How can I motivate people to carry role of Change leader. Th ese people and HR specialists perform this role out the change during their regular are talented and responsible for imple- in a company. working day? mentation process. Th ey usually have a And fi nally, the Target audience In turn, every employee aff ected by positive attitude toward change or they are those infl uenced by change. Success the change would have doubts about might be convinced about the need for in this area would be informing people his/her future and work: change earlier than other employees about the change, employing train- ■ Can I get fi red or laid off ?

How British Airways changed… recruiting policy to fill vacancies with appropriately skilled people. British Airways combined all the elements of change to achieve its goals. Essential resources were put in place in order to finalise the change pro- First of all, the company developed clear and compelling vision: the "BA cess. Firstly, the timeframe was mapped out: the project was given a five- Way" to check in by making Self-Service Check-In the usual preference for year timeframe (2003-2008). Secondly, a change group was formed to man- customers and simplifying check-in. The company planned to sell 50% of age the process. Implementation was gradual so that all resources would be its tickets online and 80% of passenger would use the kiosks to check in. E- ready. Heathrow’s Terminal 5 was the first point of implementation. tickets would be presented at all check-ins. This vision was properly com- British Airways provided incentives to make sure change was made. municated to the employees through means such as “Up to Speed” (the For instance, the company awards employee performance. The company’s company’s magazine), intranet communications, major conferences and culture also encourages personal engagement in change thanks to its ac- events, and staff communication within their respective departments. tive promotion of diversity and understanding. The quality commitment As the airline carried out these changes, knowledge and skills were of BA’s Customer Services is promoted from day one. For instance, the Ter- revised while new skills were developed. A new IT system and new equip- minal is the customer’s starting point from where a smooth check-in is ment means that employees should know how to use them. So training made, directions to the right gate are given, and assistance for disabled needs were assessed and, based on the findings, a strategy was devised. passengers is available. All of these services create a lasting impression British Airways has over 300 training programmes. Since the programmes on customers during the course of their trip. In this regard, change was cover new systems and operations, employees gain the necessary knowl- presented as one more way of putting the customer first. edge and skills in IT, Head Office, Project Management and Customer Furthermore, the plan for change was used when developing a step- Services on the job at Terminals. In addition, the company reshaped its by-step course of action.

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Constant support for change – internal communication at Russian Railways One can imagine – over million employees, communications. Igor Molodtsov, Deputy Head etc. Reaching this audience helps involve youth plus those who are potential and former em- of the Centre for Internal Policy and Organisa- and advise them on achieving their potential. ployees. And all of them are a target audience tional Culture Development says, “Russian Rail- Communication oriented for younger employees who can be influenced by any change in a com- ways doesn’t only use radio for its internal com- produced a great result. Young people got togeth- pany. munications.” er and started to develop other communication In this situation, internal communication Russian Railways has conference calls for lead tools on their own (the company helps them and plays a dramatic role as a key channel for in- staff (so-called selectors), telegraphic messages, takes away barriers for new initiatives). However, forming employees, shaping their opinion and electronic systems of data and documents circula- the most important result from focusing on com- collecting feedback to provide support, involve- tion, internal magazines, electronic mass media, munications with young people in the company ment and the ability to take opinions into con- a TV channel (Russian Railways TV), many internal was an increase in innovative suggestions from sideration. Internal communication is a part of events (meetings, youth gatherings, competi- younger employees. These ideas touch on many HR at Russian Railways since the audience is the tions and so on) and hotlines for employees. different company operations and all were impor- same, a broad number of employees. Secondly, Russian Railways’ internal communication tant for ongoing improvements. Although youth internal communications is a two-way channel, is also used for dialogue where the company had been identified as a particular target commu- that allows HR to set up employee programmes is happy to receive feedback from employees nication group, they have the same set of corpo- based on both the company’s and employees’ about internal issues. User-generated channels rate benefits as all other employees. Identifying goals and objectives. This may include revamp- and the company’s needs form make input to youth as a target group means that they were rec- ing the education system based on company’s flexibility and increasing actuality of content. ognized as a separate segment. Russian Railways move towards competency management and Communication is adjusted according to tracks communications between different groups rewards, as well as motivating and involve key audience segment. The company’s strategic pri- in order to make the process easier. audiences within the employee population. orities demand that the process be remade for Some might consider support for change Internal communication is one of key several groups. For example, youth is a communi- through a large company division to be enor- enablers for change Russian Railways. The cation target group and has its own channels for mous and cumbersome but it is important when company has about 40 different types of internal information flows: gatherings, internet resources, the company is engaged in change.

■ Would my compensation decrease? in some cases, will speak to HR special- ■ HR specialists should have the ■ Do I have to work more? ists about these particular issues. employees’ trust, thereby adverting ■ What will change in my working Th erefore, HR specialists are usu- resistance to change. day? Will it become more diffi cult? ally change managers for the following Th e downside of HR’s role as Although managers and employ- reasons: Change manager is that HR specialists ees may pose diff erent questions, ■ HR specialists are close to the target are not always taken seriously since they should all be addressed to make audience, they do not have enough organisational change work. Managers seek guidance ■ Th ey are professionally competent in power and they may not be knowledge- in planning and communications, and internal communications and learning, able about the operations undergoing HR specialists can help in this regard. ■ HR is usually independent in the change. Nevertheless, companies tend Employees want clarity about their change process since it might not to delegate the role of Change manager future and job security. Th ey may and, directly aff ect HR’s functions, to HR since companies can outsource

AEB BUSINESS QUARTERLY • Spring 2013 23 administrative HR functions, providing more time for strategic HR eﬀ orts.

Continuous change Change is part of life and companies of all industries face this demand every day. Th e necessity for change may appear from inside or outside a company. If this need is not addressed in time, the company can lose customers, market share or employees, eventually losing money. To respond to a changing environment, companies develop ways of bringing in new ideas such as tools to share ideas, assess them, create an implementation plan and manage the change with ease. Change is part of a company’s life since it is a never-ending process. Continuous change as competitive advantage: The case of British Airways A group of employees is given new British Airways continues to improve and engage in change management in its day-to-day opera- responsibilities to carry out the entire tions. For instance, a new programme was launched in 2012. Jo Boswell, the company’s head of transformation. Often this group is Customer Analysis says, “Last year [2011] we were re-committed to the ethos: To Fly. To Serve. comprised of HR specialists who make That’s what ‘Know Me’ is all about – enabling us to recognise our customers in a way that is indi- change happen regularly by cultivating vidual to them. We’re essentially trying to recreate the feeling of recognition you get in a favourite the right conditions in the company restaurant when you’re welcomed there, but in our case it will be delivered by thousands of staff (culture, policies, compensation, inter- to millions of customers.” nal IT software, etc.). Th is function ﬁ ts The company is now open to transformation and has the tools to react to the changes around it. in with HR’s strategic nature. Advertising

AEB BUSINESS QUARTERLY • Spring 2013 24 MARKET FOR HIGH-POTENTIAL GRADUATES Safronov Ivan, Partner, Future Today Larysa Vaypan, Head of HR, Bain & Company a very selective its eff orts on targeted events which hiring process. would allow the fi rm to establish a bet- Th is was due to ter and more personal contact with its both the general target audience. Th e event format gives demographic situ- students an opportunity to personally ation, and a rela- meet Bain employees, and is much more tively low brand memorable than internet banners or awareness of advertising. At the same time, the Bain Bain among stu- team has a chance to meet students dent and gradu- individually and spot the high-potential ate communities, candidates. he demographic crisis of recent especially in comparison with key com- An important factor to bear in mind years in Russia has had an infl u- petitors who had been in the market when planning events is company posi- ence on the labour market of longer. Th e situation called for action. tioning. For Bain, the correct positioning the country, and the situation is of the fi rm as one of the most prestigious becomingT rather worrying for many Project idea companies in its sector and a recognized employers. Although the total number A comprehensive graduate recruit- top-tier employer worldwide was of the of students in all leading universities ing program was launched. It aimed utmost importance. has been increasing over the years, the To satisfy this goal, FutureToday number of really talented, qualifi ed and As the demand for young profession- developed for Bain a series of smaller knowledgeable graduates continues to als grows, refl ecting the growth and events run on a regular basis with a decline. And as the demand for young development of the economy, more pre-selected group of high-potential professionals grows, refl ecting the companies are starting to launch candidates rather than hosting a single growth and development of the econ- graduate programs to nurture a pool big event. At each event every candi- omy, more companies are starting to of unique experts diffi cult to fi nd on date can be given enough attention. No launch graduate recruitment programs the market. questions are left unanswered by the to nurture a pool of unique experts dif- participants. fi cult to fi nd in the market. Many of the to combine diff erent formats and Deciding on an event format that top employers believe that employees serve both to raise awareness of Bain’s would be diff erent from a traditional trained and promoted internally have employer brand, and to help attract the company presentation was the next step. a much better understanding of a given best recruits. Th e goals Bain Moscow Th e format chosen eventually was a business and its values, and prove to be pursued with the launch of its graduate series of events, called case clubs, aimed more loyal in the longer run. recruitment initiatives were multiple. at helping students learn while prac- Recognized as one of the top First of all the company had to fi nd a ticing solving business cases. Th is was employers, Bain & Company attracts way to increase Bain employer brand a simplifi ed version of real consulting young professionals around the world awareness with the student body, intro- projects which are also used as an inter- and invests substantially in their profes- ducing the unique corporate culture viewing tool at Bain. Each case club sional development. As in its other offi c- and values of the fi rm, while distin- meeting was moderated by Bain consul- es, the Moscow branch of Bain has, since guishing it from competitors. On the tants, who are experts in solving cases it opened in 2007, launched a number other hand, Bain aspired to educate on a daily basis. In addition, this for- of initiatives to attract the best gradu- potential recruits by providing a realis- mat served as a demonstration of how ates from most prestigious universities tic picture of what a consultant’s job at the consulting profession works, and so in Russia. Bain hires top calibre people, Bain is like and, in doing so, to recruit helped students get a better understand- applying the same selection criteria in all the best talent. Finally, Bain wanted to ing of the business of the company. of its offi ces. attract quality rather than quantity. Case clubs were perceived as a very Keeping the recruiting bar high in Several options for a recruiting valuable and practical format by stu- Russia, Bain faced the challenge of fi nd- activities format were considered. While dents. By providing instructions, and ing enough good-quality candidates online advertising is generally a cheap teaching students how to solve cases, able to successfully pass all stages of and easy option, Bain decided to focus Bain at the same time helped them pre-

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AEB BUSINESS QUARTERLY • Spring 2013 26 pare for the recruiting process of the As the project started, it became approach to solving business cases and fi rm and, thus, helped them increase obvious that due to their lack of experi- hopefully come up with the right recom- their chances of successfully passing ence students were not doing well in mendation. Bain interviews. Given that case crack- solving cases, though they were keen to While a proper communication ing is not normally part of the univer- learn. Th e big plus of the case club meet- campaign, and a growing awareness of sity curriculum, and even smart, capable ings was the interactive format, in which the Bain employer brand, contributed students do not necessarily know how each student had the opportunity to to the high interest in the fi rm among to approach it correctly, the case clubs actually practice solving cases, and not the student audience, one of the biggest proved to be very useful and sought- just sit and listen. challenges for the case club format was after event for interested students. internal. Guaranteeing the participation The event format gives students of several Bain consultants at multiple Project implementation the opportunity to personally meet events each running for a few hours Starting in 2011, the Moscow offi ce of Bain employees, and is much more proved to be diffi cult. Bain & Company added the case club memorable than internet banners or Working in a client-oriented busi- format to the broader graduate recruit- advertising. ness where delivering results for the ment program. Th is initiative consisted client is the number one priority, con- of a series of case club events at three At each event, pre-selected students sultants’ time is obviously a scarce universities that were considered core formed four teams of six participants. resource. At the same time, Bain places for Bain’s graduate recruiting: the New Th ere were also those students who a lot of emphasis on maintaining its Economic School, the Higher School opted to not be active participants, but professional yet easy-going and down- of Economics and MGIMO. At each still attend the event as observers. Th e to-earth corporate culture. Th is, in university Bain organized three on- discussion with the participating teams turn, leads to the fact that many of campus case club meetings held on a was always led by a Bain consultant, who current Bain consultants are happy to bi-weekly basis, followed by a fi nal case guided them in solving cases by asking volunteer and participate in numerous club event held for the best perform- questions, providing feedback on stu- recruiting activities. Th ey are proud to ers in the Moscow offi ce of Bain & dents’ answers and hypotheses, discuss- be part of the Bain team and are willing Company. ing suggested solutions, and just gener- to help shape the future classes of new Th e promotional campaign at each ally helping participants understand the recruits. of the target universities started three weeks before the fi rst meeting. Obvious- ly, an interesting format attracts participants. However, there are many events at top universities organized by diff erent employers these days, and more often than not there are several events on the same day. So proper and timely communication is critical to any given event: it guarantees that the maximum number of students is aware of it and has a chance to plan their attendance beforehand. We worked closely with the university career centres running a broad promotional campaign. Univer- sity stands were used for the placement of printed posters, while online communication channels included university mailing lists and websites. Unfortunately, even the best universities career centres can reach only part of the active student audience. Relying on university channels was therefore insuffi cient, so FutureToday made an eff ort to work with student associations and student clubs, putting roll-ups on the university premises, and using fut.ru mailing lists. It was not an easy task, and it required careful planning and meticu- lous attention to detail. But we managed

it successfully! Advertising

AEB BUSINESS QUARTERLY • Spring 2013 27

Results Th e case club meeting project has generated a number of positive results for Bain and is seen as a success. Th e initiative created a real buzz in the student audience, and especially among those who want to start a career in strategy consulting. It attracted a lot of attention from high-potential graduates to Bain. Th ere were many examples of students who would attend all the Bain events on campus, week after week. Th e number of applications for entry level positions in the Moscow offi ce of Bain & Company has gone up. Moreover, the Bain recruiting team has proactively reached out to the select list of the best performers in the fi nal case club meeting and asked these students to come However, wanting to help and selected by consultants during three for an interview. A number of these be involved on one hand, but hav- sessions at each institute, were invited participants received off ers and joined ing demanding client commitments on to attend. Th e opportunity to visit the Bain after graduation. the other, can be problematic. Th ere- actual offi ce of the company served as In addition, Bain has moved up in fore, the Bain internal recruiting team an additional motivation for students. the rankings of the best employers in works with consultants and their proj- Th e fi nal case club meetings gave Russia after having been on the mar- ect managers. participants an opportunity to once ket for just fi ve years. Th e company is Volunteers for recruiting events are again practice solving a business case, consistently recognized as one of the selected well in advance; their respec- but also to see the offi ce, and meet more most desirable employers for Russian tive project managers are notifi ed and Bain representatives during an informal graduates. their approval is obtained; and consul- reception hosted by the company. In conclusion, we believe that a top- tants’ time is booked. Bain also enforces Th is fi nal event was the icing on tier company like Bain should have well a replacement policy: in the event that the cake. Students were impressed by thought-through and well-planned grad- a consultant who has confi rmed atten- the hospitality of the Bain team and the uate recruiting programs with a focus on dance an event has to cancel, it is his/ chance to see the actual working prem- hosting targeted events as a way of meet- her responsibility to fi nd a replace- ises of one of the world’s top consulting ing, communicating with and attracting ment. In addition, the Bain recruit- companies. high-potential candidates. Experience ing team continuously recognizes top When asked, “Are you planning to shows this format is a guaranteed way to recruiters – consultants who are espe- apply to Bain?” the answer was a defi nite meet and hire the best and most talented cially active in recruiting. “Yes”. potential employees. It is also worth mentioning that events with the same format can have a Bain & company's position in FutureToday ranking of the most diff erent atmosphere in diff erent univer- attractive employers (Moscow top-10 Universities) sities: NES students come across as very serious and analytical; MGIMO students have better knowledge of English and are more versatile in their interests; and HSE students, in addition to a good educational base, are the most proactive. Bain tried to take into account the peculiarities of each student body when preparing consultant-moderators for each of the 22 case club meetings. Th e three case clubs in each university took place over a period of two 28 43 months. After these, Bain organized a fi nal, fourth event for best candidates from each university. Final events took place in the Bain offi ce and only the 2010 2011 2012 smartest and most motivated candidates

AEB BUSINESS QUARTERLY • Spring 2013 28 EMPLOYMENT LAW IN RUSSIA – DEVELOPMENTS OVER THE LAST DECADE Julia Borozdna, Head of Employment and Migration Law Practice, Pepeliaev Group; Valentina Matveenko, HR Manager CIS, Boart Longyear the employee’s disciplining employees, restructuring original signa- and other signifi cant HR manoeuvres. ture to acknowl- Of course, the role of court precedents edge their being in Russia diff ers from case law in coun- advised of the tries such as the UK and the USA and duties; otherwise a ruling here should not be regarded the employee as more than a useful guide. Th e only is deemed to be exception is that a Resolution of the en years ago the new Russian free of them. Global corporate poli- Plenum of the Supreme Court sum- Labour Code came into force, cies are only mandatory for employ- marizing court practice in employment replacing the old Soviet-style ees if “localized” for Russia and trans- disputes does set out rules that bind all “KZoT” (Code of Labour Laws). lated into Russian. Non-competition courts in Russia. ThT is was a new dawn for employment and non-solicitation provisions are not Given that employment litigation relationships in Russia. Since then, enforceable even if the employee agrees can last for several years and the award practicing labour lawyers and HR spe- to them in writing. Waivers of rights are to an employee may include average cialists have witnessed far more dra- not eff ective. monthly wages for the whole litigation matic developments and moderniza- Th us, for example, if an employee period, plus reinstatement in their job, tion in the sphere than in the preceding agrees to work longer hours without employers’ risks in litigation can be high. 30 years or more. additional pay or have less than the 28 Another specifi c feature of Russian Across most of Europe HR and days’ holiday required by law, such waiv- employment litigation is that employers employment law issues have long been ers are treated as invalid. At the same cannot recover their litigation costs. In regarded as among the most signifi cant time, there is no Russian equivalent contrast, employees face practically no for business. In contrast, just a decade of European transfer of business rules, fi nancial risks even if they lose the case ago in Russia the picture could not have under which the employee follows the as they do not even bear the burden of been more diff erent. Very few lawyers business in a corporate acquisition. payment of the State fee. For them, the had much interest in practicing labour Notably, Russian labour law applies to whole exercise may be a free ride. law as it was considered a secondary all employees working in Russia, even Nonetheless, trends in employment area of law. those who are foreign nationals. litigation show a very positive improve- We are pleased that nowadays the A defi ning characteristic of Russian ment for employers. A decade ago it tables have been turned: businesses employment law is that it is extremely was almost impossible for a company place a much greater emphasis on HR formalistic, with form usually prevailing to win an employment litigation case: issues generally, and there are dramati- over substance. Ultimately, employers fi rstly, judges were extremely employee- cally fewer violations of the law than should focus their attention on com- protective, and, secondly, companies there used to be. As a result of the plying with legal formalities, especially were too prone to disregard employ- change in attitude to labour law, now upon hiring, changing employment ment law requirements. Now the pic- there are plenty of very experienced terms and parting with employees. Th is ture looks signifi cantly brighter. Judges and talented experts capable of han- will mean their legal position is more today take an independent, impartial dling complex matters. secure if the Russian labour inspectors position when they hear most cases, Russian labour law diff ers consider- carry out audits, or if disputes with while employers pay greater attention ably from that in other countries. Vari- employees go to court. to employment law rules thus ensur- ous institutions that are commonplace A recent positive and very impor- ing they have a solid legal position in elsewhere do not work in Russia. For tant development is that all court rul- disputes. example, an employee has no implied ings on employment cases are now Th e increased employers’ con- duty of loyalty. Moreover, the company available on the websites of relevant sciousness of labour law issues has must document all job duties and obli- courts. Companies are thus much bet- gone hand-in-hand with employees gations in writing, in Russian, obtaining ter able to plan HR actions, such as becoming very well-informed of their

AEB BUSINESS QUARTERLY • Spring 2013 29 employment rights, especially during companies can prepare for pre-planned and cost-eff ectively using this out-of- the recent economic diffi culties. As a visits of various inspectors, including court procedure in a similar manner to result, employees at all levels require labour inspectors, by checking online: that used in the majority of developed their employment rights to be observed all pre-planned checks for 2013 are countries. and are quick to challenge employers’ listed at http://plan.genproc.gov.ru/ Increased attention to labour law actions by lodging claims with Labour plan2013/. issues and the need for moderniza- Inspectorates, the State Prosecutor’s Trade unions are now very active tion of the law has resulted in there Offi ce and the courts. and continue growing far beyond their being more than a hundred draft laws Th e serious risks when employment traditional manufacturing stronghold. pending in the State Duma currently. disputes arise or if a check is carried Th ey can appear in companies in any Th ese, for example, include the Law out by labour inspectors are driving sphere of business, including IT, beauty, on Remote Labour that would allow increasing compliance by employers. cosmetics and consulting. Currently, electronic signatures in employment Th e adverse consequences may include the Russian Labour Code lets trade relationships. Th is would be almost a the need to correct all mistakes, make unions have their cake and eat it. For revolutionary change as currently the changes to employment contracts and a trade union to be created just three law and courts only recognize employ- other HR documentation, and pay persons is suffi cient and there is no ers’ and employees’ original signatures amounts that were not paid earlier. Also, duty to inform the company manage- which is extremely inconvenient in the company and its offi cers could face ment when it is formed. Th eir rights are cases where employees work in remote administrative fi nes and, most impor- extremely wide and there are almost areas and it could take more than a day tantly, for repeated breaches of Russian no sanctions if they commit abuses. to deliver original documents. labour law requirements, the head of the Th is encourages them to get in the Importantly, there is currently a company could be disqualifi ed for up to company’s hair, creating considerable high risk of agency labour and sec- three years from holding similar senior work for the company’s HR specialists ondment being signifi cantly restricted management positions. In the worst and lawyers. or even banned outright in Russia. case, albeit an exceptional one, heads Th e State is now far more hands-on Th is would be the eff ect of draft law of companies can face criminal liability. when it comes to monitoring compli- No. 451173-5 On Prohibiting Agency Th e number of checks conducted ance. For example, companies have long Labour, initiated by Russia’s Federation by Labour Inspectorates has increased been required to provide workplaces of Independent Trade Unions. It passed considerably in the last decade. Gen- for disabled individuals. In recent years its fi rst reading in the Duma in 2011 erally, these checks are scheduled in the regime has become stricter and the and is slated for its second reading dur- advance or are held after an employee Russian labour authorities harsher in ing spring 2013. All companies that cur- complains that the employer infringed applying it. Th e Russian labour authori- rently use these types of employment their employment rights. Examples ties are also keen to ensure that compa- arrangements should keep a close eye are when a bonus is unpaid, terms nies assess workplace conditions and on developments. of employment have changed, or an make sure that employees with harmful To address the increased impor- employee is dismissed unfairly. A recent working conditions or hazardous jobs tance of Russian employment law, in positive development is that now the receive additional pay, additional vaca- September 2013 the AEB HR Commit- tions and reduced hours. tee formed a new sub-committee with In order to push employers even the principal objectives of: harder towards compliance, there are (1) coordinating and lobbying activi- plans to increase sanctions, including ties in labour law and related areas, penalties for failure to observe labour including, for example, preserving law rules, meet requirements relating agency labour and secondment; to disabled individuals and assessment (2) collecting information on labour of working places, and infringement of law cases and best practice, and trade union rights. One of the draft laws arranging for this information to be that is currently before the State Duma shared among members; proposes to raise such penalties to RUB (3) creating a permanent forum for HR 3 million (approximately USD 100,000). Committee members, including HR It is very unlikely that such extreme professionals and employment law- amounts will be legislated for but it yers, to discuss the most important does illustrate the prevailing trend. labour law-related problems they Development continues apace with face, including seeking to protect new areas such as data protection and companies in dealings with the ever mediation of employment disputes. For more powerful trade unions. instance, the new Law on Mediation All AEB members who wish to be became eff ective over two years ago, involved with the new sub-committee allowing employment (and other) dis- are very welcome to take part in its putes in Russia to be resolved quickly activities.

AEB BUSINESS QUARTERLY • Spring 2013 30 ONGOING REFORMS OF RUSSIAN STATE PENSION SYSTEM Alexander LORENZ, Chairman of the Council Raiff eisen Pension Fund, hairmanC of the AEB Insurance and Pensions Committee; Elena Gorshkova, Executive Director, NPF Raiff eisen

the 2002 reforms to a non-state pension fund or asset and re-channel management company before 31st the 6% back December 2013. For them, the con- towards funding tribution will stay at 6%. So essen- current pension tially there is a choice for employees: payments. This either outsource and stay at the 6% would be, eco- level or become a “dormant” account o recapitulate: in 2002, the Russian nomically, only a short term fi x, but with a 2% contribution. government introduced a wide- it would be a solution without much ■ As of 1st January 2013 new addi- ranging pension reform which, in political fall-out. tional employer contributions will essence, entailed adding a 2nd pil- Th e government opted for the lat- have to be made for workers who larT to the existing pay-as-you-go sys- ter. In December 2012 the Russian work in harsh and dangerous work- tem, as well as a 3rd voluntary pension state Duma approved Federal Law 243, ing conditions, who are entitled to pillar. Under the newly introduced pil- which stipulates the following: early retirement. Th e extra amounts lar, all citizens born in or after 1967 will ■ As of 1st Jan 2014 contributions made charged are staggered, and they have the right to an individual account into the fully funded part of the 2nd depend on the type of work involved. held at the state pension fund. Th is pillar pension accounts of entitled In 2013 the fee will amount to 2-4% will be funded by social security pay- employees will be reduced from 6% to of payroll, in 2014 to 4-6% and in ments by employers, to the amount of 2%. Th e 4% diff erence will be diverted 2015 6-9%. Also, there will be no cap 6% of salary. Instead of going to fund to fund the insurance part of the on the base salaries used to compute payments of existing pensioners, these pension system, i.e. will go towards the additional fee and these fees 6% deductions will now go towards funding payment of pensions to the will not be personalized, meaning creating retirement savings within the current pool of entitled pensioners. that they will be transferred into individual’s own account with the state ■ Th is reduction applies only to the the general pool used to fi nance old pension fund. At the same time, these so-called “dormant” accounts in the age pensions. Certain exemptions account holders have been given the state pension fund and not to those to these additional contributions right to outsource the account to a individuals who have or will have are possible after a comprehensive licensed non-state pension fund or to transferred their 2nd pillar account analysis of the relevant working outsource the asset management to a third-party asset manager. Th ose who did not opt to outsource, in Russia termed “molchuny” or “the silent ones”, will have their assets managed in a pool by the state-owned VEB Bank. By 2012, the Russian state pension fund was running an ever-increasing defi cit. Th is required annual subsidies from the government, which was now faced with two rather unpleasant options. Either increase the pension age from current 55 (female)/60(male), which would be the most sensible solution economically but which would be highly unpopular with what is a key electoral group, or try to back-track on

AEB BUSINESS QUARTERLY • Spring 2013 31

pillar pensions. Th ere are numerous providers (mostly Russian, one foreign) active in this market segment and willing to provide information on pension reforms, and to give free presentations to employees or workers on-site. Also, useful information on the reforms is provided by the government and on www.pfrf.ru. Secondly, since the government is reducing its commitment to funding future pensions, it is important that employers start taking more responsibility in this area. Russian citizens are amongst the least disciplined savers conditions, which could lead to a funds they receive in a diff erent way. in the world, a fact for which there reclassifi cation of the type of work Th ese reforms mean that payments to are many diff erent reasons (distrust environment. current pensioners will be secure for of fi nancial institutions, “live now” a while longer, while at the same time mentality, etc.). Employers can help What will this mean for employers? savings for individual employees (and by off ering instruments to staff to start For employers that have employees the pension they can expect) will be generating long-term retirement sav- working in harsh conditions there will reduced dramatically unless they are ings. Even if it is a corporate pension be an immediate increase in pay-roll with a private pension fund, or switch plan with small monthly contributions costs. For those employers that do not to one, during 2013. made by employer and employee (e.g. have such employees, there will be 1 or 2% of salary by each party respec- no immediate eff ect: they will pay the What should employers do? tively), this can make a very big diff er- same social security contributions; First, it is important to raise awareness ence to savings discipline and actual but the government will distribute the amongst employees concerning 2nd asset accumulation of employees. Advertising

AEB BUSINESS QUARTERLY • Spring 2013 32

LEGAL AND PRACTICAL ASPECTS OF ASSESSING WORKPLACES EXPOSED TO HAZARDOUS AND DANGEROUS CONDITIONS: HOW TO MINIMIZE COSTS AND RAISE EFFICIENCY Ludmila Sokolova, Head of HR, The Knauf Group CIS; Andrey Slepov, Senior Associate, BEITEN BURKHARDT Moscow from 1 October In addition, amendments to the 2012 to 13 Febru- assessment procedure adopted by Min- ary 2013 the Min- truda at the end of last year came into istry issued three force on 26 February 2013. Th e best letters specifying news for employers in this respect is the obligations of that standard offi ce workplaces, where employers to pro- employees work on PCs and use other vide guarantees to similar devices, are as a rule not subject employees based to an assessment. In contrast to the ne of the hottest topics on the on the assessment results. Mintruda had, previous version of the assessment pro- agenda of most HR and labour in the fourth quarter 2012, advocated an cedure, the range of workplaces subject safety managers today relates to approach which stipulated that all mini- to assessment has been narrowed from the assessment of workplaces mum guarantees indicated in Resolution all to specifi c categories. Oexposed to hazardous and dangerous No. 870 of the Russian Government, Another notable amendment is a conditions (“assessment”). Th e follow- dated 20 November 2008 (36-hour complete revision of the timescale for ing key questions arise: When should working week, seven additional days of assessments. An employer must con- the assessment of existing workplaces paid leave per year and 4% increase in the duct the fi rst assessment of a workplace start? Which workplaces are subject to base salary), are binding for employers within a year of establishment of this assessment? How can assessment costs on sites where hazardous and dangerous workplace, while the creation of a new be minimized? And fi nally, how can working conditions have been identifi ed workplace should be duly documented. a business avoid the negative conse- as the result of an assessment. Repeat assessments are not required quences of an assessment if hazardous On 13 February 2013, however, the if the initial assessment demonstrates and dangerous conditions are identifi ed Ministry suddenly changed its position, that there are no hazardous/dangerous (including the provision of guarantees and stated that before specifying guaran- factors and there are no other grounds to employees exposed to hazardous and tees relevant to the categories of work- for a new assessment, such as a pre- dangerous conditions at their workplac- ing conditions, employers are free to scription following a state inspection. es, such as a shorter working day and choose one or several guarantees from Th e introduction of economic extended leave, and also an increase in a list. Mintruda intends to elaborate on motivation for employers to maintain their base salaries)? Recently some of this after consultation with representa- safe labour conditions is also apparent these questions have been clarifi ed. tives of employers and employees. in the rules of Mintruda applicable to On the one hand, currently we can point to the evident liberalization and modernization of the approach adopted by the regulator responsible for assessment (the Russian Ministry for Labour and Social Development (“Mintruda”)). On the other hand, we can see some initial steps taken by Mintruda to establish the economic mechanism previously announced to motivate employers to provide safe working conditions. Th e change in the approach of Min- truda is evidenced in the offi cial letters of Mintruda, and also in amendments to legal acts regulating assessments initiated by the Ministry. During the period

AEB BUSINESS QUARTERLY • Spring 2013 33 the calculation of discounts and addi- gypsum mine in Europe, in the city of Th e Knauf Group is carrying out tional charges on insurance tariff s for Novomoskovsk, Tula Region, in 2009. at its Russian enterprises its own plan mandatory accident and occupational Th e company built an underground rock to implement “Knauf Safety Standard”, disease insurance, which came into grinding complex, and loading, storage drawing on international experience eff ect in September 2012. A devia- and transport facilities on the surface, with implemention of the Standard tion from the existing tariff , to a maxi- and also introduced a unique method OHSAS 18001, while taking account mum of 40% plus/minus, will be based of lifting the raw material on a vertical of Russian legislation on occupational primarily on the assessment results. conveyer system, Pocketlift. Th e new health and safety issues. We invest mate- Meanwhile the actual assessment costs system replaced all the old equipment, rial resources to improve the working may be partially off set from social con- raising productivity and at the same time conditions for our employees, and look tributions. improving occupational health and safe- for state support in consolidating mini- As a result, employers today would ty. Project investments totaled EUR 42 mum requirements for safe occupation- appear to be in a more comfortable posi- million, and all activities were automat- al health and safety conditions. Such an tion than in the past. In practice, how- ed, obviating the use of manual labour. incentive could be provided through ever, a number of questions related to However, during the subsequent the adoption of an approach involving a the assessment procedure and its con- implementation of corporate standards, progressive reduction in the tax base for sequences remain unanswered: How the enterprise was confronted by a con- profi ts, taking into account the degree of should employers react to the ever- fl ict of laws due to loopholes and the stringency of the Occupational Health changing position of Mintruda (includ- inconsistent position of the Ministry of and Safety Standards implemented at ing employers who have already con- Labour and Social Development. the organization. Th e reduction in the ducted an assessment) when it comes Workplaces as assessed in 2012 off er transport tax in the European Union – if to guarantees? To what extent should a greater list of guarantees for reduction a car complies with a higher environ- employers comply with the old Soviet in hazardous conditions than the same mental standard (Euro-3, Euro-4, etc.) – rules on establishing enhanced guaran- workplaces as assessed in 2010. At the could serve as an example. Such mea- tees for specifi c categories of employ- same time, however, the application of sures would make it possible to eff ect a ee? When will Mintruda fi nally adopt diff erent norms of guarantee for the same qualitative transition from the paradigm the long-awaited elaboration of details work positions is impossible without dis- “Compensation for Hazards” to the para- on specifi c types of guarantee? How criminating against some employees. digm “Safety is Benefi cial”. can equal treatment be established for employees occupying similar workplaces that have been assessed diff erently? Th e instability of legislation and law Thinking Relocation? enforcement practice in the area of assessment can be attributed, among Think Interdean. other things, to the contrasting interests of the stakeholders in this process (including the state authorities, businesses, the accredited assessment agencies, trade unions and employees). It would appear that there is only one way of resolving these contradictions: more constructive dialog between all the interested parties. * * * * * Th e Knauf Group CIS may serve as an example of an organization which has decided to go further than existing legislative initiatives and provide enhanced occupational health and safety conditions for its employees. In the period 2008-2012 it implemented a number of corporate initiatives aimed at improving the state of the environment and the occupational health and Contact Interdean Relocation Services safety conditions of employees at its T: +7 495 933 5232 production sites and in offi ces. E: [email protected] A particular example of the auto- www.interdean.com mation of production processes is pro-

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AEB BUSINESS QUARTERLY • Spring 2013 34 LABOUR MIGRATION IN RUSSIA AND ASPECTS OF ITS DEVELOPMENT Asida Agrba, Associate, CMS, Russia Irina Agadzhanyan, HR Director, NORAUTO Russia 3. Amend- permits (“TRP”) in Russia are no lon- ments to the law ger required to apply for work per- on the legal posi- mits to engage in employment activ- tion of foreign ities. Pursuant to Article 13.4 of Fed- nationals, effec- eral Law N 115-FZ dated 25.07.2002 tive 1 December (as amended on 30.12.2012) “On the 2012; the amend- Legal Position of Foreign Nation- ed law requires als in the Russian Federation”, the that foreigners employment procedure rules that he existing mechanisms regulating willing to work in the retail, utilities require foreign employees to have labour migration in Russia indi- and public service sectors pass an the work permits do NOT apply cate that migration policy tends examination in the Russian language; to foreign nationals permanently or towards a liberal approach. At the 4. Article 13.4.6 of Federal Law No. temporarily residing in Russia (as sameT time, it remains essential to con- 115-FZ, dated 25.07.2002, eff ective amended by Federal Law N 320-FZ trol migration eff ectively and to secure 1 January 2013; the article provides dated 30.12.2012). the interests of all stakeholders in the that foreign nationals arriving in In June 2012, President Vladimir migration process (the state, individu- Russia from visa-free countries must Putin approved a long-awaited stra- als and society). undergo a fi ngerprinting procedure tegic document, entitled the Concept Below we summarise the measures when applying for work, for tem- of the State Migration Policy for the that have been implemented over the porary residence or for permanent Russian Federation until 2025. Both past few years to improve migration residence permits. We note that in experts and the public have expressed legislation in Russia: addition to crime-fi ghting consid- the need for a policy that fi ts in with 1. Th e Federal Law “On Retail Mar- erations, the objective of the data modern life. First of all it was essen- kets” adopted in 2007; the law pro- collection is to control the migrants’ tial to design certain national security hibits foreigners not registered with activities, to prevent illegal labour mechanisms and create conditions to the local executive authorities from exploitation, to recover documents, ensure sustainable economic growth engaging in activities in domestic in the event of loss, and to establish amidst globalization. However, the markets. In the same year, Russia the identity of a foreign national. formulation of the integral migration and Switzerland signed an execu- 5. Starting from 1 January 2013, foreign strategy proved to be costly in terms of tive protocol on readmission by the nationals with temporary residential time, money and expertise. Th is is not Federal Migration Service, Ministry of Internal Aff airs, Federal Securi- ty Service, addressing the national security issues arising in connection with migration fl ows from the CIS countries; 2. Th e notion of “highly qualifi ed specialists” introduced on 1 July 2010; highly qualifi ed specialists have become eligible to apply for work permits under a simplifi ed procedure (14 business days), and the eff ective term of these permits has been extended to 3 years (as compared to 1 year under the previous restrictions, and at least 3 months for obtaining the required documents);

AEB BUSINESS QUARTERLY • Spring 2013 35 surprising, given that the Russian Fed- dure for issuing residence permits to According to experts, in the near eration is one of the largest countries foreigners working in Russia over a future labour will become one of the in the world and one of the richest in long period of time, and introduces a most critical, if not the most critical, natural resources. It also has under- scoring system for migrants, will be resource issue in Russia. Migration will developed, sparsely populated territo- introduced early in 2014. Th is will also play a key role in the country’s develop- ries and shares its borders with many defi ne a simplifi ed entry procedure and ment, economic growth, social stabili- densely populated countries that are lift restrictions on work and study for ty, balanced regional development and, not so rich in natural resources. families of those foreigners who have fi nally, in maintaining its integrity. An Today, in order to make the com- long-term employment contracts. adequate migration policy is essential plex migration-related measures really Furthermore, before the end of Q1 for further development. Also, imme- work, the government has decided 2014, the State Duma will consider a diate action is required to prevent a to set up a regulatory framework. An draft law simplifying the procedure for labour resource collapse in certain Rus- encouraging sign is that the Federal granting Russian citizenship to entre- sian regions. Some people think that Migration Service (FMS) has already preneurs, investors and qualifi ed spe- neither technical improvements nor published an action plan for the imple- cialists holding residence permits, and modernization of the economy will mentation of the fi rst stage of the Con- to their family members, as well as to work without adequate labour resourc- cept. Furthermore, a number of draft graduates of Russian educational insti- es. Th at is why state and civil institu- laws have been actively developed as tutions. Further developments antici- tions have become more aware of not part of the Migration Policy Concept. pated in the middle of 2014 include an only migration challenges and risks to In particular, these include certain leg- improved procedure for evaluating the society, but also the opportunities that islative initiatives that require labour need for foreign workers and measures inward migration presents. migrants to pass an examination in the for attracting foreigners to fi ll vacant Th e main goal of these measures Russian language and the fundamen- jobs not popular among Russian citi- is to develop a system that regulates tals of Russian law. Moreover, a draft zens. Th ese measures are expected to Russia’s migration processes and to law imposing criminal and administra- result in an annual migration gain of support the sustainable social and eco- tive liability for organising illegal migra- 200,000 people (fellow nationals liv- nomic development of the country. tion is expected to emerge in Q2 2013. ing abroad) by the end of 2015, and Th e key point is that migration policy A draft law that simplifi es the proce- 250,000 by 2020. must meet the realities of today and Advertising

AEB BUSINESS QUARTERLY • Spring 2013 36 the changes that are occurring in the Th e third stage (2021-2025) will design a structure for national migra- country and around the globe. So it include a performance assessment of pro- tion processes by means of an appro- is notable that as early as at the fi rst grams implemented as part of the main priate legislative framework. Until now, implementation stage, the Concept policies of the Concept, revision of the the only document regulating the fl ow proposes to create so-called migration strategic framework, priorities and key of migrants was the compatriot reset- support centres. Th e program propos- implementation guidelines. Upon com- tlement program. es conducting medical examinations of pletion of the third stage, the Concept is It appears that with the adoption of migrants, developing residential infra- expected to have achieved an infl ow of the Concept there is a real trend towards structure for labour migrants on a PPP immigrants to Siberia and the Far East. a straightforward set of rules and condi- basis, creating conditions for their inte- To ensure consistency with the goals tions designed not only to reduce illegal gration and adaptation, including infor- and objectives set out in the Concept of immigration, but also to attract the edu- mation and legal assistance centres, the State Migration Policy until 2025, cated and qualifi ed labour migrants that arranging courses in Russian language, and to improve regulation of external the country needs, and to help them history and culture and conducting labour migration, the current migration integrate into society. It is notable that selective studies on local and interna- laws are likely to change signifi cantly in the document was approved by the Rus- tional migration issues. Th ese eff orts the near future. Furthermore, knowing sian tripartite commission represent- represent a new approach by the state that the Concept has been developed ing government, employers and trade in terms of solving a whole range of by migration specialists relying upon unions. Importantly, the Concept has migration issues. both domestic and international expe- also received the seal of approval from Th e second stage, which is sched- rience, as well as considering world- the International Labour Organization, uled to be implemented between 2016 wide globalization trends, it is hoped the International Migration Organiza- and 2020, includes the consolidation that the measures proposed will help tion and the World Bank. and analysis of law enforcement prac- restrict illegal migration while at the In sum, the Government is tak- tices to enable the implementation of same time allowing foreign specialists ing steps to enhance, liberalize and the goals, objectives and directions of to enter the labour market. It should be improve current Russian migration leg- the Concept. Th is, it is hoped, will stop emphasised that the Concept adopted islation, which should have a positive the migration outfl ow from Siberia and by the President constitutes the fi rst- impact on both migration processes the Far East by 2021. ever attempt in modern Russia to and the country's image in general.

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AEB BUSINESS QUARTERLY • Spring 2013 37 RECRUITING ENVIRONMENTAL, HEALTH AND SAFETY MANAGERS – NEEDS AND PROBLEMS Mikhail Divovich, General Director, ECOTEAM Olga Zinina, Environmental, Health and Safety Manager, ROCKWOOL Russia philosophy to be sphere for learning the language at the their EHS man- work place. Usually it takes several ager. He refused, months to learn English well enough to but recommend- be able to communicate with English- ed a friend who speaking managers and colleagues. had just graduat- Underestimating the importance ed. Th ey took the of qualifi ed EHS managers is also a friend because big problem. Practical environmental there was no other protection issues are often not high ctivity in the EHS (Environment, option. Despitу all this, there are compe- among company priorities. Th e same Health, Safety) sphere includes tent specialists in the EHS sphere receiv- can be said regarding Health and Safety. environmental protection, labour ing low salaries in Russian enterprises. We know of cases where the manager protection and industrial safety. Why? We discussed the problem with who was in charge of cleaning and land ACreating a corporate EHS department the EHS manager of Rockwool Russia, improvement was made responsible led by an EHS manager is now com- where an eff ective EHS department has for environmental issues. mon practice. Recruiting a good spe- been created. Th ere is also a lack of understanding cialist in this sphere is important, but Th e fi rst thing to consider while of the level of responsibility and work- it is not easy. recruiting workers in this sphere is load that an EHS manager in Russia has. knowledge of English. Th at is why the An American pharmaceutical factory Case study job was off ered to the philosopher. For was sure that one person for this job is Let us begin by imagining a situation an engineer, it is preferable to learn more than enough. Th at was one of the in the factory of a well-known multina- English on the job. In Rockwool Russia reasons why nobody wanted to work tional corporation based in a megapolis. there are no mandatory requirements there, so the company had to search Th ere is a good atmosphere and high in language competence for engineers. among people with diff erent qualifi ca- salaries, but despite all these advantag- But the company creates a good atmo- tions. Th ere are no places which train es, the search for an EHS manager had taken more than six months. Finally one is hired, even though he made an unfavorable fi rst impression. His performance on the job confi rmed that initial impression: he involved the factory in problems with prosecutor's offi ce. Th ough he left six months ago, the factory has still not found a satisfactory replacement. Th ere are simple answers to the questions raised by this case. Th e HR manager in this factory used to work as a nurse. Another explanation is that somehow nobody wanted to apply for the job. Read- ing the requirements list in the vacancy advertisements helps to explain why. Another multinational company invited a person with an education in

AEB BUSINESS QUARTERLY • Spring 2013 38

EHS managers in Russia – at least we hired a smart graduate and a consult- tion is obligatory so there is no scope do not know of any reliable ones. ing company instead of one specialist. for negotiation. You can try to fi nd a qualifi ed EHS Th e cost of both of them was com- It is not like land transaction issues, manager but it takes a lot of time. parable with that for a qualifi ed spe- where the result partly depends on GR In most cases you will be forced to cialist. Smart young engineers and a qualifi cations. Agreements with the “headhunt” such a specialist from his consulting company can help a trainee authorities are risky. Because new author- present job. So there is a reason for tak- become a highly qualifi ed specialist in ities can easily renege on any agreement ing a good specialist in one of the EHS the future. made with previous ones and you will spheres (environmental pr otection, One of the co-authors of this arti- have many more problems than before. labour protection or industrial safety) cle is an environmental engineer who So hiring non-professionals will cost you who has good learning ability, creativity gained knowledge and experience in much more than fi nding specialists or and dedication to the job. labour protection and industrial safety smart graduates and consultants. Russian EHS legislation requires with the help of training, consultants In short, hiring professional EHS diff erent degrees and certifi cates, so and self-education. Th e desire to do her manager is not less important than a you certainly will need training for job well was her strongest motivation. qualifi ed top manager. your employees. You can try to fi nd a In Russia, an EHS manager is often In recruiting EHS managers it is suitable company that gives not just considered to be similar to a GR man- necessary to consider: a certifi cate, but real knowledge and ager. But that is a big mistake! An EHS- ■ ability to think and develop skills skills. Unfortunately there are few manager has to be an engineer. You during the working process companies like that in Russia, and cannot put a psychologist in a chief ■ dedication to the work they charge extremely high rates for engineer’s position, however convinc- ■ an engineering degree (alternatively their educational services. In the EHS ing he may be. At least we do not know hiring a consulting company on a sphere, knowledge comes from experi- examples of that working. If you need permanent basis) ence. So it is good idea to be backed by a GR manager, take a GR manager and ■ knowledge of English a consulting company. he will help an EHS manger. But our ■ professional experience (in the Almost all multinational compa- experience shows that trying to solve absence of experience a consulting nies which have factories in Russia use EHS issues by means of “talks” will lead company’s services are necessary, at external consultants. For example, one to even bigger problems. EHS legisla- least at fi rst). Advertising

AEB BUSINESS QUARTERLY • Spring 2013 39 MODULAR EMPLOYEE DEVELOPMENT PROGRAM: KEY SUCCESS FACTORS Anastasia Mizitova, Expert Trainer, CBSD/Thunderbird Russia grams could last from only 2 training opment program for HR management, days to as many as 70 training days, with CBSD as a designated provider. with an average of 15. Target audiences Th e program consisted of four 3-day could vary from 5 to 2,000 employees, modules and covered a variety of areas, with a median of 30. from fi nance, strategy and HR to lead- Th e most common characteristic ership and soft skills. Th e participants of such programs is their consistency were expected to complete homework with corporate competency models between the modules and present their and corporate values. Th e most popu- results to an expert panel. lar modules include leadership, person- Th is project was regarded as valu- al and team eff ectiveness, and business able and productive by the corporate simulations. client, the participants and the pro- an you think of a reputable compa- Other features vary widely. Only vider. Th e positive outcome of the pro- ny that does not train and develop half of the companies in the survey gram was driven by at least two key its employees? By now most lead- reported using homework as an addi- success factors described below. ing companies in the Russian mar- tional development tool between the ketC have various employee develop- modules. Half of the survey respon- Management support ment programs targeted at employee dents reported having a compulsory Management support is by far the most audiences. As a result, most companies project presentation by the participants important success factor in corporate off er their employees a multitude of at the end of the course. Just a few employee development initiatives. Th e courses. Th e question is – are compa- companies off er online support to their commitment of the course participants nies really trying to make these multiple modular programs, or consistent read- increases dramatically when they real- courses work as consistent programs? ing and eff ective follow up activities. ize that the course outcomes really If so, how are courses meaningfully According to the CBSD survey, matter to their management and orga- linked together to create a successful consistent modular programs make up nization. impact? What are the key success fac- from 5% to 70% of all employee devel- According to the CBSD survey tors that ensure a higher impact for opment programs off ered by leading results, management is most frequent- modular and complex programs? employers in the Russian market, with ly involved in employee development the median of 20%. programs by way of cost control, less What makes it modular? frequently by content control and only According to a survey by CBSD of the Key success factors seldom by direct process support. largest companies operating in the Rus- In 2012, TNK-BP undertook the third Th e 2012 TNK-BP HR program sian market, consistent modular pro- roll-out of a complex employee devel- was outstanding in terms of ensuring

Popular training modules Leadership and management

Personal effectiveness and skills

Business simulations

Change management

Marketing and sales

Strategy

Finance

AEB BUSINESS QUARTERLY • Spring 2013 40

Interview with Tatyana Sergeeva, Manager, Corporate Learning and Development department, TNK-BP Management How does TNK-BP evaluate the extent to which participants deployed their learning on the job? In March 2013 (3 months after the completion of the program) TNK-BP will survey the participants’ mana gers to discover the impact of the acquired knowledge and skills in practice. We are aware that the program participants held workshops to transfer program knowledge and skills to their colleagues. the management support necessary for tion. Th e participants presented some Is it possible to estimate or forecast any success. First, a senior management excellent projects, including research business results associated with this devel- team member was invited to mark on the T&D procedures for regional opment program? the beginning of the program and to line managers. It is a challenge to determine the effect of a speak at each module on a relevant particular training program on, say, improv- subject. Th e speakers maintained an Inter – modular work ing the service provided by HR business part- open dialogue, addressing challenging Th e CBSD survey revealed that inter- ners to the business. Some of the observed questions and providing a helicopter modular work is widely recognized as improvements in the HR organization include: business prospective to the partici- a powerful development tool, yet only established professional trust with business pants. Th e speeches and discussions a few companies have been able to managers, more confident use of financial were structured around the module at successfully introduce it into their pro- data, improved delivery of project presenta- hand, which gave a great kick-start to grams. When implemented properly, tions and consultation on HR matters. the learning process and the chance for such work helps maintain participants’ The program participants have been initiat- the participants to validate the learning interest throughout the whole course, ing change actions which we are now discuss- outcomes of the module. ensure meaningful links between the ing. These will be implemented in their home Second, each module culminated modules and build up knowledge, skills business entities and may be transferred to with participants’ presentations deliv- and energy with each session. other entities as best practice. We will be able ered to an expert panel represented by One of the main success factors in to provide success stories soon. TNK-BP senior management as well the TNK-BP program was the assign- as L&D leaders. Careful consideration ments that the participants were Do you believe the training investments was given to the role expected of the expected to complete between the paid off? panel. Considering that the key pur- modules. Th e purpose of this work was Definitely! Business leaders responsible for pose of the overall program was to to provide real life context to learning budgeting (including employee develop- promote continuous learning and initi- and to promote teamwork between ment) are annually increasing their corporate ate new ideas in the regional HR team regional staff . Last, but not least, assign- employee development investments – this is the best role for the expert panel was ments help establish personal account- a pretty convincing argument. to minimize judgment and promote ability for the learning process. collaboration among the participants. Th e TNK-BP participants worked fi ndings through examples drawn from Th is approach proved to be immensely on a large case throughout the whole their own professional experiences. successful and provoked in-depth class program. Th e case described a produc- discussions following each group pre- tion company in an M&A transition Are the modular programs more sentation. that required a number of HR deci- eff ective? Finally, as a part of inter-modu- sions to be taken. Th e issues in the case According to the CBSD survey, modular assignments the participants were were relevant to each course module, lar employee development programs expected to work on some real-life and the participants were expected to prove to be more successful in achiev- projects. Any necessary management research the whole case gradually as ing company's goals than one-off or support was made available for the they progressed, and to produce their non-related courses. On the other purpose of this project – all course fi nal recommendations at the end of hand, such modular programs are participants could approach senior the course. Additionally, they were more diffi cult to manage and can be management for any relevant informa- expected to support their logic and more expensive.

AEB BUSINESS QUARTERLY • Spring 2013 41 NETWORKING Polish Euro Reception On 22 January 2013, the Polish Embassy opened its doors to high-ranking guests, top businessmen, AEB member company representatives and the media. We would like to acknowledge our sponsors: Oran- ta, Lindab, Vinogradnye Vina, Bella. The guests

L-R: Frank Schauff , AEB CEO; Wojcieeh Zajaczkowski, Ambassador of Poland L-R: Zbigniew Majchzzat, Allianz oyscIC; Piotr Kowalcczewski, Oranta; Kzzysztof Majczuk, IBEC Bank

AEB Strategy Meeting 2013 H.E. Fernando Valenzuela, Head of the EU Delegation On 24 January 2013, the AEB held its Annual Strategy Meet- to Russia, spoke on the EU-Russian Summit that took place ing. AEB Board members, Council of National Representa- in December 2012, and answered numerous questions con- tion members, Auditing Commission and AEB Committee cerning EU-Russia relations. Th e meeting was chaired by Chairpersons took part. Questions about the AEB’s strategic Reiner Hartmann, Chairman of the AEB Board. development and possibilities for the future were discussed.

L-R: H.E. Fernando Valenzuela, Head of the EU Delegation to Russia; Reiner Hartmann, Chairman of AEB Board The participants

Conference “Recent Developments in the Regulatory Environment for Russian Banks with Speciﬁ c Focus on the Basel Recommendations” Th e AEB Finance and Investments Committee and the AEB Banking Committee held a Conference on “Recent Developments in the Regulatory Environment for Rus- sian Banks with Speciﬁ c Focus on the Basel Recommen- dations” on 29 January 2013. One of the keynote speakers was Nout Wellink, former Chairman of the Basel Com- mittee on Banking Supervision and former President of the Dutch Central Bank. Mr Wellink was involved in the development and implementation of the Basel recommendations, and brought a unique insight into how these have impacted on the banking industry to date, and might do so in the future. Another keynote speaker was Alexey Nout Wellink, the former Chairman of the Basel Simanovskiy, First Deputy Chairman of the Central Bank Committee on Banking Supervision; former Alexey Simanovskiy, First Deputy Chairman of the of Russia, who added his comments on recent and propo- President of the Dutch Central Bank Central Bank of Russia

AEB BUSINESS QUARTERLY • Spring 2013 42 sed changes to the regulatory environment for Russian banks. About 200 banking specialists participated in the event. Th ese speeches were followed by an open debate among a Th e AEB expresses its sincere gratitude to the Platinum panel of some of the leading Russian specialists. Sponsor of the event Ernst & Young.

L-R: Zeyn Adam, Managing Director, Basel II Project, Alfa Bank Russia;Thomas Huertas, Partner, Ernst & Young, London; Vasily Pozdyshev, Director, Banking Regulation Department of the RF Central Bank; Stuart Lawson, Chairman of the AEB Finance & Investments Committee; Executive Director, Ernst & Young; Nout Wellink, former President of the Dutch Central Bank and former Chairman of the Basel Committee on Banking Supervision; Dmitry Ananiev, First Deputy Chairman, Committee on the Budget and Financial Markets, the Council of the Federation; Bruno Oppliger, Basel Specialist, Ernst & Young, Switzerland; Ekaterina Trofi mova, First Vice-President, Gazprombank

Brieﬁ ng by Eric Peters On 30 January 2013, the AEB once again welcomed Eric Peters, Adviser from the Bureau of European Policy Advisers (BEPA), who briefed the audience on EU Priorities in the Crisis and Relations with Russia. Th e event was co-chaired by Frank Schauﬀ , AEB CEO, and Philippe Pegorier, President, Alstom Russia and an AEB Board Member.

L-R: Philippe Pegorier, President, Alstom Russia; Eric Peters, Adviser from the Bureau of Eric Peters, Adviser from the Bureau of European European Policy Advisers; Frank Shcauff , AEB CEO Policy Advisers The audience

Presentation on the investment potential of the Tula region Th e AEB opened its doors to high-level representatives of the Tula region on 4 February 2013. On behalf of the AEB, Chairman of the AEB Board Reiner Hartmann welcomed Vladimir Gruzdev, Governor of the Tula Region, and Denis Tikhonov, Deputy Chairman of the Administration of the Tula Region, and Minister of Economic Development and Industry of the Tula region. Discussion focused on the investment climate, Denis Tikhonov, Deputy Chairman of the Administration of the Vladimir Gruzdev, Governor of the Tula region as well as the industrial potential of the region. Tula region

The AEB visits Brussels A delegation from the AEB visited Brussels on the 5-6 March 2013, meeting with representatives from the Euro- pean Commission, the European Parliament, the European Council and some Brussels-based European business associations. Th e AEB's delegation had a chance to present the work of the Association and its vision for the future of EU- Russia relations in the context of Russia’s accession to the WTO, and negotiations for a new EU-Russia Agreement. Th e AEB Board voiced the concerns of European businesses working in Russia, especially regarding migration policy, visa issues, the utilization fee for wheeled transport. L-R: Philippe Pegorier, AEB Board member, Alstom Russia; Jane Amilhat, DG Trade; Olga Bantsekina, Deputy Chair of the AEB Board, Coleman Services; Peter Balas, Deputy Director General, DG Trade European Th e government-to-government meeting that took place Commission; Andra Koke, Head of Economic Section, EU Delegation to Russia; Frank Schauff , AEB CEO; Timo on 21-22 March 2013 was also discussed. Hammaren, Directorate General for Trade, EU Commission; Roger Munnings, Deputy Chairman of the Board

AEB BUSINESS QUARTERLY • Spring 2013 43

Meeting With Moscow Deputy Mayor Regarding Quota Reduction in Moscow

On 7 March 2013, Frank Schauﬀ , refusing to approve the quotas for 2013 would now have to arrange the depar- AEB CEO, and Ludmila Shiryaeva, for certain companies, the revocation ture of certain foreign employees (and Chairwoman of AEB Migration Com- of the some previously approved quo- their families). mittee, met with Leonid Pechatnikov, tas for 2013, and the adjustment of The participants in the meeting Moscow Deputy Mayor, on the issue quotas in connection with violations agreed on the following. By the order of 2013 quota reduction for AEB of the current law requirements. of Leonid Pechatnikov, a special one- member companies. Frank Schauff underlined that cer- window procedure will be established Th ey discussed the decision of the tain aspects of the IDC decision of for AEB member companies. Each Interdepartmental Commission on the 28 January 2013 were applied incor- case involvoing an AEB member com- Employment of Foreign Workers in rectly, as they are not envisaged by pany will be reviewed individually, as Moscow (hereinafter, the IDC) which federal legislation. As a negative will be any possible grounds for quota was adopted on 28 January 2013. In consequence of such a decision, and reduction/refusal. particular, the discussion covered such inability by the companies to apply for The IDC decision from 28 Janu- issues as the legality of the grounds for new work permits, certain employers ary 2013 will be revised.

Meet ing with European Union Commission President, Jose Manuel Barroso On 21 March 2013, the Board of the Association of European Businesses had a breakfast meeting with European Union Commission President, Jose Manuel Barroso, at the Baltschug Hotel, Moscow. Th is was the fi rst event in Mr Barroso’s programme during the largest-ever EU Commis- sion visit to Russia, with the delegation including L-R: Gerald Sakuler, AEB Deputy Chairman and Treasurer, Bene; Vesa Vertanen, AEB Board Member, Itella Logistics; Reiner 16 Commissioners. Th e AEB was represented by Hartmann, AEB Board Chairman, E.On Ruhrgas AG ; Roger Munnings, AEB Board First Deputy Chairman, Individual member; Reiner Hartmann (Chairman of the AEB Execu- Jose Manuel Barroso, EU Commission President; Joerg Schreiber, Chairman of the AEB Automobile Manufacturers Committee, Mazda Motor Rus; Jon Hellevig, AEB Board Member, Awara Group; Olga Bantsekina, AEB Board Deputy Chair, Coleman Services tive Board), Frank Schauff (AEB CEO) and other UK Ltd; Philippe Pegorier, AEB Board Deputy Chairman, Alstom Russia; Frank Schauff , AEB Chief Executive Offi cer; Fernando M. AEB Board Members. Valenzuela, Ambassador, Head of the Delegation of the European AEB COMMITTEE UPDATES Automobile Manufacturers Committee th The 6 Annual Press Conference press-conference were Frank Schauff , that the market should consolidate at, or “REVIEW 2012” AEB CEO, and Joerg Schreiber, AEB close to, the level of the year 2012. Th e AEB Automotive Manufacturers’ AMC Chairman (Mazda Motor Rus At the press conference the main Committee held its 6th Annual Press LLC). Th ey presented sales results for issues on the AMC Agenda such as Conference “REVIEW 2012” on 15 Janu- the Russian automotive market in 2012, distributor-dealer relations, disposal fees ary 2013. and prospects for 2013. Sales of new pas- and Consumer Protection law were cov- 200 representatives of leading media senger cars and LCVs in Russia in 2012 ered. Th e AEB thanks the sponsors of and automobile manufacturers took part increased by 11% as compared to 2011. the conference: Cesar Satellite, Conti- in the event. Th e main speakers at the Th e AMC forecast for 2013 suggests nental, Goltsblat BLP, MetLife Alico.

Frank Schauff , AEB CEO Participants Joerg Shcreiber, the AEB AMC Chairman (Mazda Motor LLC)

AEB BUSINESS QUARTERLY • Spring 2013 44

Commercial Vehicles Committee Press conference “Commercial Vehicle Sales in Russia in 2012” On 21 February 2013, the Commercial Vehicles Committee of the AEB held its annual press conference, “Commercial Vehicles Sales in Russia in 2012”, at the Marriott Grand Hotel in Moscow. A welcome speech was made by Philippe Pegorier, AEB Board Member and President, Alstom Russia. Andrey Chur- sin, Committee Chairman, Scania-Rus LLC, presented sales results for the Russian commercial vehicles market in 2012 and described the committee's activities. L-R: Philippe Pegorier, AEB Board Member; President, Alstom Russia; Andrey Chursin, AEB Commercial CEOs and representatives of major commercial vehicle Vehicles Committee Chairman; Sales Director, Scania-Rus LLC; Ruslan Kokarev, AEB COO companies participated in the press conference. Leading media showed great interest in the event. Michelin was the gold sponsor of the conference.

L-R: Sergey Bogocharov, Key Account Department Director, MAN Andrey Chursin, AEB Commercial Vehicles Committee Chairman; L-R: Vladimir Semakov, Autospeztehnika; Andrey Savchenko, Truck & Bus RUS; Francois Poirier, CEO, Peugeot Sales Director, Scania Rus LLC Avtotransport Energy Committee

Briefi ng by Vladimir Konovalov, Executive Director of ence on energy policy developments. He addressed such issues Petroleum Advisory Forum as oil and gas prices as a key factor in policy, major projects in On 8 February 2013, the Committee held its regular meeting the Russian oil and gas sector with foreign participation, the with a high-ranking speaker, Vladimir Konovalov, Executive legal framework for subsoil use, the role of state and private Director of Petroleum Advisory Forum, who briefed the audi- companies off shore, and taxation initiatives. Small and Medium-Sized Enterprises Committee Managing fi nances in crisis time Th e AEB Small and Medium-Sized Enterprises Committee at such institutions as the European Bank for Reconstruction held an open event, dedicated to fi nancial management for and Development, SME Bank and NOMOS Bank. Participants SMEs, on 4 December 2012. received high-quality information from professionals working Th e event provided a platform for discussion of such impor- in these areas. tant topics as due diligence, factoring, private equity and ven- Th e AEB thanks the Platinum Sponsor of the event, the ture investment and fi nancing programs available for SMEs Alinga Consulting Group.

L-R: Konstantin Dzhimbinov, Partner at RB Partners; Roman Lesokhin, Director of the Small Business Department at NOMOS Bank; Chet Chet Bowling, Partner at Alinga Consulting Group (gold sponsor) Bowling; Kristoff er Laurson, Principal Banker at the EBRD; Orlin Efremov, Chairman of the SME Cte, General Director of Manutan.

AEB BUSINESS QUARTERLY • Spring 2013 45

Health and Pharmaceuticals Committee

Ceremony of the Prix Galien Russia Awards recognizes outstanding eﬀ orts to improve human health and On 7 February 2013, the Chairman of the AEB Health and well-being through the use of biomedical and technological Pharmaceuticals Committee, Sergei Smirnov, took part in the innovations, and is highly regarded in the biopharmaceutical launch ceremony of the Prix Galien Russia Awards at the resi- research domain. Th e AEB is represented on the Organiza- dence of the French Ambassador to Russia. Th e Prix Galien tional Board of the Prix Galien Russia.

Guests at the ceremony Human Resources Committee Labour Law Sub-Committee formed In September 2012, the AEB HR Com- ■ To create a permanent forum for eration of Independent Trade Unions mittee formed a new sub-committee, HR Committee members and other of Russia. Th is bill, if passed into law, the Labour Law Sub-Committee, the HR professionals to discuss the most will materially aﬀ ect the business inter- principle aims of which are: important labour law-related prob- ests of many AEB members. ■ To coordinate and promote the lob- lems of HR practitioners. All AEB members are kindly invit- bying activities of AEB HR Commit- Currently the most important ed to participate in the activities of the tee members with regard to labour topic at Labour Law Sub-Committee new Sub-Committee. Please share with law and related areas; meetings is the status of the draft bill us your ideas as to the most important ■ To collect information on labour law intended to ban contract labour (staﬀ topics for HR professionals and options cases and best practice, and arrange leasing and partial secondment), which for enhancing our lobbying activities. the sharing of this information with is pending in the State Duma. It was Your participation in the work of our Sub-Committee members; introduced at the initiative of the Fed- Sub-Committee is highly welcome! Intellectual Property Committee Meeting with Natalia Romasheva, Head of Legal Department of the Ministry of Culture of Russia Th e AEB Intellectual Property Committee, represented by of Culture. Th e Law aims to strengthen the responsibility of Chairman, Eugene Arievich, had a meeting with Natalia internet providers, owners of sites and users for distributing Romasheva, Head of the Legal Department of the Ministry and downloading illegal content. At the meeting, further pos- of Culture, on 24 December 2012. Th e focus of the discus- sible cooperation on the development of this Law and other sion was the draft law on piracy prepared by the Ministry matters of mutual interest were discussed. EU-Russia IPR Dialogue Th e Intellectual Property Committee, represented by Chairman Eugene Arievich and Deputy Chairwoman Ekaterina Tilling, took part at the 12th EU-Russia IPR Dialogue held on 13 March 2013 at the Federal Service for Intellectual Property. Within the Dialogue, experts exchanged information and experience on IPR-related issues, on national IP legislation and practices, enforcement problems and on IPR protection within the Customs Union. Th e EU-Russia IPR dialogue is an integral part of the Roadmap for a Common Economic Space, and is currently carried forward within the framework of the EU-Russia Partnership for Modernization.

AEB BUSINESS QUARTERLY • Spring 2013 46

Product Conformity Assessment Committee Meeting with Norbert Anselmann, Head of Enterprise DG, European Commission On 15 March 2013, the AEB Product Conformity Assessment Committee held a meeting with Norbert Anselmann, Head of the Standardization Unit, Euro- pean Commission/Enterprise DG and with representatives of the European Profi les company. Dimitris Bakolas, President of European Profi les, presented a new project funded by the European Union: “Approxi- mation of EU and RF technical regulation and standardization systems”. Committee members and participants at the meeting exchanged views and agreed to work together on this project. Participants at the meeting Real Estate Committee Offi ce and Administration Managers Working Group formed Th e Committee is glad to inform you about the formation of a new Offi ce and Administration Managers Working Group within the Real Estate Committee. Th e aim of the Working Group is to help all AEB members deal with issues relating to offi ce management. Don’t hesitate to join the Working Group and put forward ideas and proposals. Open event “What will infl uence the real estate market in Moscow in 2013 and beyond?” On 18 March 2013, the AEB Real Estate Committee held an open event entitled “What will infl u- ence the real estate market in Moscow in 2013 and beyond?” Th e welcome speeches were made by Christophe Vicic, COO of Jones Lang LaSalle, Chairman of the AEB Real Estate Commit- tee, and Ruslan Kokarev, AEB L-R: Karima Nigmatulina, Acting Director, Research and Design Institute of General Plan of Moscow, Moscow Government; Kirill Makarishev, General COO. Th e event attracted almost Manager, ZAO “Arena Park Management”; Tomas Devonshire-Griffi n, Head of Capital Markets, Regional Director Russia and CIS, Jones Lang 90 participants. Th e AEB kindly LaSalle; Olga Arkhangelskaya, Head of Real Estate Advisory Services, Ernst & Young; Christophe Vicic, COO, Jones Lang LaSalle, Chairman of the AEB Real Estate Committee; Ekaterina Lapidus,Associate, Salans; Ruslan Kokarev, COO AEB; Sergey Trakhtenberg, Partner, Co-head of Russian Real thanks Salans, the platinum spon- Estate/Construction Practice, Salans. sor of the event, for its support. SHES Security& Compliance Sub-Committee Round table on security services outsourcing On 14 March 2013, the SHES Security & Compliance Sub-Committee held a round-table on security services outsourcing. Mikhail Balev, Business Development Executive of MIG Services, and Tim Fisher, Security Director, ZAO Deloitte, presented their views on current trends in the security industry and on existing corporate security practices for companies. Th e event stimulated interactive dialogue and provided the participants with valuable information.

L-R: Oleg Babinov, Head of Eurasia Practice, Risk Advisory; Frank Schauff , AEB CEO; Tim Fisher, Security Director, ZAO “Deloitte” L-R: Mikhail Balev, Business Development Executive, MIG Security Services, Oleg Babinov (above);

AEB BUSINESS QUARTERLY • Spring 2013 47

South Regional Committee Charter for Corporate Social Partnership Principles For the AEB South Regional Commit- Charter united the companies operating Th e event gave everyone the oppor- tee, the new year 2013 began with the in Krasnodar in setting an example of tunity to interact, while listening to traditional AEB Christmas reception, international business standards. Among beautiful music and enjoying the lovely which was held at the restaurant, 8th these companies are (not all of them cuisine. Th e AEB South regional com- Sky, in the Platan-Yuzhniy hotel on 16 AEB members): CLAAS, JSC NIPIgas- mittee would like to express its most January 2013. pererabotka, Philip Morris Kuban, Car- sincere gratitude to the sponsors at the Before the reception, a presentation gill-Yug, VEGAS LEX, Advocates Bureau event: Ernst and Young, Gubskiy Kir- on the Charter for Corporate Social Part- Yug, Gubskiy Kirpichniy Zavod, Kras- pichniy Zavod, Cargill-Yug, Nestle, nership Principles was organized. Th e nodarEXPO (Part of the ITE Group). Bonduel Kuban.

Igor Brener, Cargill, Deputy Chairmen of the AEB Oleg Zharko, Chairman of the AEB South Regional South Regional Committee Committee Participants at the event Taxation Committee Business meeting “Developments of the Russian Tax System in 2012 and prospects for the years 2013-2015” On 19 December 2012, the AEB Taxation Committee organized a business meeting dedicated to developments in the Rus- sian taxation system in 2012, and prospects for the years 2013-2015. Th e event brought together government representatives and tax experts.

Sergey Shatalov, State Secretary and Deputy Minister of Daniel Egorov, Deputy Head of the Federal Tax Service of Finance the RF Audience Among the high-ranking guests were Sergey Shatalov, State discussion of such up-to-the-minute issues as amendments Secretary and Deputy Minister of Finance, Daniel Egorov and to proﬁ ts tax law, transfer pricing, developments in interna- Alexey Overchuk, Deputy Heads of the Federal Tax Service. tional taxation, VAT on bonuses, etc. As in the past, the event provided an excellent platform for

L-R: Alexey Sobchuk, Deloitte; Evgenia Veter, Ernst &Young; Svetlana Stroykova, PwC; Alexey Overchuk, Federal Tax Service of the RF; Frank Schauff , AEB CEO; Sergey Shatalov, State Secretary and Deputy Minister of Finance; Alina Lavrentieva, PwC, AEB Taxation Committee Chairwoman; Dmitry Volvach, Federal Tax Service of the RF; Olga Kirova, Federal Tax Service of the RF.

AEB BUSINESS QUARTERLY • Spring 2013 48

■ Developing appropriate environmental documentation; ■ Monthly digest of Russian EHS legislation – ECOZAKON. MEMBER NEWS ECOTEAM’s staff consists of the leading experts of government institutions such as the State Duma, the Ministry ALPE Consulting of Natural Resources and Environment, the Moscow City SAP Gold Partner Status: Duma, local authorities, etc. All staff members have exten- ALPE consulting is a SAP Channel Partner and achieved the sive experience in environmental and legal consulting. highest status in December 2012, the Gold Partner status. Previously, ALPE consulting was awarded the SAP Quality EGO Translating Award in 2010 and the SAP Initiative of the Year Award in EGO Translating and Cambridge University 2008. ANO DPO ((ANPO CPE) Autonomous Non-Profi t Organ- isation for Continuing Professional Education) EGO Trans- ALPE consulting opens new offi ce in Kazan: lating University has signed a Memorandum of Cooperation On the 1st of January 2013 a new offi ce was opened in with the Representative Offi ce of the Examination Depart- Kazan and it is planned to emply 30 consultants by the year ment of Cambridge University (Cambridge ESOL) and the end. It will provide all SAP consulting services including Representative Offi ce of Cambridge University Press. SAP ERP and SAP BI implementation, support, ABAP pro- Th e Memorandum deals with the international educa- gramming and SAP Basis services. tion programme Cambridge English. Signing of the Memo- randum is associated with further development of the EGO SAP project in Uzbekistan – fi rst of its kind: Translating University block tasked with preparing corpo- ALPE consulting and AKFA Group Holding, one of the lead- rate clients to take professional language exams according ing conglomerate enterprises in Central Asia, have launched to the Cambridge English programme and organising the a SAP implementation. Th e project is the fi rst of its kind in international certifi cation of program participants. automation on such a large scale in the Republic of Uzbeki- “One of our main goals is to improve the quality of cor- stan. It is planned that on the 1st of May 2013 the pilot proj- porate education in the fi eld of professional foreign-language ect at a subsidiary company, a gas heater plant, will launch profi ciency. Today, international certifi cation represents a the full SAP ERP solution including modules in fi nance, tremendous opportunity for our clients – generating a pro- accounting, production, logistics and plant maintenance. fessional assessment of personnel in terms of their linguistic competencies and motivating employees to achieve specifi c SAP implementation at clients Continental and Schaeffl er results. HR Directors use the information yielded during the Group in Russia: assessment to calculate KPI, which is particularly impor- Continental’s Russian representative offi ce had to part with tant for companies targeting international cooperation,” the old IS and start using the corporate standard. Th e says Natalia Alexandrovna Molchanova, President of EGO project was launched in the fall of 2011 and successfully Translating Holding, which encompasses the University. implemented in the fall of 2012 with the planned functional EGO Translating University conducts training in 88 volume consisting of the following modules: CO, MM, SD, languages, across 50 industries. Th e University also off ers FI, PP, WM, QM, and SL. preparatory courses for various professional and general For similar reasons Schaeffl er Group in Russia launched language exams such as: Business Certifi cates (BEC), ILEC, a SAP Roll-Out project in July 2012 and the productive work IFEC, BULATS, Zentrale Oberstufenpruefung (ZOP), Test- in the user part of Schaeffl er’s system is planned for the 1st Daf, DLF, CEFPX, CILS, DELE, DSE, TEUb, TRKI (Test of of April 2013. Russian as a Foreign Language), and many more. Training sessions are also off ered with respect to expatriate adapta- ECOTEAM tion, developing emotional intelligence when working in an ECOTEAM – 15 years in Russia international team, etc. In December, 2012 legal EHS (Environment, Health, and EGO Translating Company conducts its operations under Safety) consulting company ECOTEAM celebrated 15 years a quality management system complying with ISO 9001:2008. of its business in Russia. Being a leading company in this specifi c sector of legal FutureToday consulting ECOTEAM provides support for multinational FutureToday becomes a partner of TMP Worldwide in Russia. corporations working in Russia. Long-term practical experi- FutureToday is the leading Russian employer branding agen- ence helps ECOTEAM provide high quality consulting sup- cy helping the top-tier clients to create and implement state port for companies from diff erent branches of industry such of the art HR programs and communications on the Russian as IKEA, Coca-Cola, Rockwool, Saint-Gobain, etc. market. From creating EVP to drafting an advertising cam- Major services off ering by ECOTEAM: paign to managing the selection process FutureToday off ers ■ Legal support of planning and ongoing activities in com- unique solutions assortment – from full scale end-to-end pliance with Russian EHS legislation; projects to small niche initiatives, depending on the Client’s ■ Defense of the client’s interests in court, in prosecutor's requirements. offi ce, and in the disputes with federal or local authorities; TMP Worldwide Advertising & Communications, LLC ■ Legal EHS audit; is a global, tech-enabled talent acquisition company that

AEB BUSINESS QUARTERLY • Spring 2013 49 leverages software, advertising and creativity to develop and Supermarket with an area of 1,500 sq m will be situated on deploy its clients' employer brands across digital, social and the -1 fl oor. Tsentralny Detsky Magazin on Lubyanka will be mobile outlets. Headquartered in New York City, with offi c- delivered in Q4 2014. es throughout North America, Europe and Asia with affi li- ates around the globe, TMP continues to set the standard for Japanese restaurant chain Toridoll debuts on the Russian measurable and cost-eff ective HR communications. TMP is market recognized among AdAge's Top US Digital Agencies. Toridoll Corporation which is developing several restaurant “Th e agreement with TMP Worldwide will defi nitely chains with traditional Japanese food, opened its fi rst restau- produce a win-win solution: on the one hand TMP World- rant in Russia. Th e fi rst one named Marugame will opened wide clients will receive a professional partner in Russia, on Pyatnitskaya street. Th e leasing agent for the transaction on the other hand FutureToday’s clients will have access is Jones Lang LaSalle. to international expertise of a leading global player,” says According to the terms of the transaction, Marugame FutureToday founding partner Ivan Safronov. restaurant occupies the space of 200 sq m. It was opened in February 2013. goFLUENT Toridoll Corporation has in its portfolio four restaurant goFLUENT expands its operations in Britain and discusses the brands, and each of them specializes in a particular type of importance of English testing in corporate settings food. Apart from Marugame Seimen, the company is devel- Increasing demand for its products globally has prompted oping the chains Toridoll, Nagatahonjoken and Marushoya. goFLUENT, a leading provider of Business English training, to begin a recruiting drive for British-based native English Morgan Stanley Real Estate Investing Acquires Metropolis speakers. Mall in Moscow Skye Kennedy, goFLUENT’s Production manager, A real estate fund managed by Morgan Stanley Real Estate explained: “Th e ongoing recruitment eff orts in the UK dem- Investing (MSREI) announced the acquisition of the onstrate goFLUENT’s commitment to the quality of our live Metropolis Shopping and Entertainment Mall, a 205,000 sq training services. We’re proud to be the only player in the m shopping centre in Moscow, from Capital Partners. Th e market that doesn’t outsource its training to freelance train- agent of this largest-ever transaction in the Russian com- ers. Our clients are assured that trainers giving goFLUENT mercial real estate market was Jones Lang LaSalle. lessons are 100% our own employees.” Developed by Capital Partners, Metropolis opened in In today’s increasingly global economy, companies 2009 and provides 82,000 sq m of fully enclosed retail accom- interested in developing their international business strate- modation and 2,900 parking spaces. It is widely recognized gies must consider the English profi ciency levels of their as Russia's premier retail development with a favorable loca- employees. During the goFLUENT webinar on March 6th tion in the north-west of the city, along the Leningradskiy our training specialist Amy Wood gave an overview of the highway and next to the metro station Voykovskaya. Th e fi eld of English Tests and Profi ciency Frameworks used in shopping centre is part of the institutional quality mixed-use the academic and corporate settings and explored, among complex, Metropolis, which has 311,000 sq m of gross built other topics: area. Apart from the shopping centre, this includes three ■ Why Profi ciency Frameworks are relevant to the corpo- offi ce buildings with a total GLA of approximately 80,000 sq rate setting m. Metropolis is one of the most-visited shopping centres ■ What English language tests aim to measure in Moscow with approximately 55,000 customers per day in ■ Which standardized tests might meet your corporate 2012. Th e complex is fully leased and has a waiting list for needs retailers wanting to rent space. Major tenants include food ■ Th e eff ects of testing on recruitment, career development hypermarket Karusel and a department store. and evaluation. Legrand Jones Lang LaSalle Gallery of Electrical Equipment Legrand – Space elevated into Jones Lang LaSalle appointed an Exclusive Leasing Agent of comfort cult Tsentralny Detsky Magazin on Lubyanka At the end of 2012 the fi rst electric Gallery in Russia has Hals-Development announced the start of brokerage of turned 2 years old. Tsentralny Detsky Magazin on Lubyanka of 35,000 sq m In the Gallery of electrical equipment various oppor- GLA. Jones Lang LaSalle announced the exclusive leasing tunities of home automation systems My Home Legrand agent of the project. Group are demonstrated in action and series of exclusive First anchor tenants of Tsentralny Detsky Magazin on installation equipment – Celiane (Legrand, France) and Lubyanka are Hamleys (IDEAS4RETAIL), Formula Kino Axolute (BTicino, Italy) are presented. Everything in the (KINOMIR-21 Century) and Azbuka Vkusa. IDEAS4RE- house, from lighting to temperature and sound, should serve TAIL will open the fl agship 2-storey Hamleys toy shop. for comfortable living. And an Intelligent Building is smart, With an area of 6,340 sq m Hamleys on Lubyanka is to because it saves without hesitation and without giving up become the biggest toy shop in the world. KINOMIR-21 the comfort. Th e Gallery is focused on the energy-saving Century is to open cinema and restaurants on the area of opportunities of home automation systems. Elevation of 2,517 sq m. Food anchor of the project is Azbuka Vkusa. home comfort into a cult is the main purpose of modern

AEB BUSINESS QUARTERLY • Spring 2013 50 technology in the systems of the Intelligent Building Group Th e Netherlands, Denmark, Finland, Norway, and Sweden. Legrand. Off ering technological solutions in the particular Th e new brand will fuel Marriott’s companywide growth fi eld, the experts of Legrand Group hope that the architects in the region, which is expected to reach 80,000 rooms by and the designers fully share their commitment to wise 2015. usage of electricity. Th e Gallery project combines two directions: the Euro- Pepeliaev Group pean gallery of installation electrical equipment and home Pepeliaev Group’s Siberian offi ce opens in Krasnoyarsk automation systems, and the art gallery. Th us, almost all Leading Russian law fi rm Pepeliaev Group has branched out the gallery space is designed to enjoy the Legrand: beautiful into Siberia, having created in February 2013 a permanent sockets and switches, the play of light, furnishings, original presence in Krasnoyarsk. Opening this new offi ce in Sibe- works of photographers and artists. ria is part of the fi rm’s programme to continue its regional In two years there have been a number of photo exhibi- growth and support its clients. tions at the gallery Legrand, such as Environment, by Dmi- Pepeliaev Group’s Siberian offi ce will provide the full try Muzaleva, Spaces of Alienation, by Tamara Verbovoy, range of legal services, advising on tax, corporate, antimo- Without the Why and Metaphors by Yuri Gavrilenko, and nopoly, land, employment, customs, commercial and intel- an exhibition of photographs by Anton Tereshchenko. lectual property issues, defending business in administrative and criminal law matters, and resolving commercial and tax Marriott International disputes, however complicated they may be. MOXY HOTELS: Marriott's new brand aims for 150 hotels in 10 Pepeliaev Group’s Siberian offi ce will be headed by Egor countries across Europe Lysenko. Egor has a track record of supporting businesses Marriott International announced the launch of MOXY and settling disputes for more than 12 years. Egor is posi- HOTELS, its fi rst entry into three-star hospitality segment tive that “the Siberian offi ce will be able to handle any client in Europe. Designed to capture the rapidly emerging millen- assignment on its own, ranging from legal support at the nial traveler, the new brand combines contemporary stylish onset of investment projects, assistance with the purchase design, approachable service and, most importantly, an of land and real estate, support in developing production aff ordable price. Th e brand will debut in Italy, with the fi rst facilities and importing equipment, to post-investment MOXY HOTEL expected to open in Milan in early 2014. support in terms of tax, corporate and commercial law To grow the brand rapidly, Marriott is working closely both for new and growing businesses, and for major cor- with Inter Hospitality who will be the initial developer and porations.” owner of the fi rst MOXY HOTELS properties. Marriott In Pepeliaev Group’s Siberian offi ce, client matters will has selected Nordic Hospitality to be its fi rst franchisee to be handled by leading lawyers who have expertise in dif- operate the brand. ferent areas of legislation and in-depth knowledge of the region. We will place particular emphasis on providing value for money and supporting fast and stable growth of clients’ businesses. Roca Armani/Roca showroom opened in Tbilisi in November. In 2012 the leading global bathroom brand Roca presented a unique concept, created in collaboration with the Giorgio Armani group, in three metropolises in Russia and Georgia. Th e fi rst Armani/Roca show-room appeared in Moscow (Konzept salon), and then in June the collection exposition was opened in St. Petersburg in bathroom gallery DOM- Laverna.

“MOXY HOTELS is the essence of the next generation traveler, not only Gen X and Y but people with a younger sensibility, for whom contemporary style is paramount,” said Arne Sorenson, President and CEO of Marriott Inter- national. Th e contemporary and stylish 150- to 300-room MOXY HOTELS will cater to today’s budget-minded, savvy travel- lers who thrive on self-service and embrace new technology. Guestrooms will be functional and well-designed, with upscale bath amenities, large ﬂ at screen televisions. Marriott plans to add 150 franchised MOXY HOTELS in Europe over the next 10 years, aiming for locations in Germany, Austria, United Kingdom, Ireland, Belgium, Italy,

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Th e third presentation took place in Gallery Demasi (Tbilisi) on 27 November 2012, marking a turning point for sales in Georgia. Th e concept was shown in the gallery as an APPOINTMENTS isolated island divided into the zones separated by means of a sophisticated system of glass partitions with a metal rim: Beau- ALPE consulting ty, Wellness and Basic needs. Armani/Roca concept has a ALPE consulting strengthens its international business comprehensive line of ceramic products, built-in acrylic bath- development eff orts tub and shower area with integrated hydromassage system. Christopher Ballnath has joined ALPE con- Th e event was opened with the speech of the Gen- sulting as Director of Business Develop- eral Manager of Demasi Malkhaz Sabadze and the General ment, responsible for the acquisition and Manager of Roca in Russia and CIS, Antonio Linares. After support of international clients in Russia Roca representatives were giving a talk on the features of the and the CIS. Prior to joining ALPE consult- new concept and philosophy of the brand, Armani/Roca ing in January 2013, Christopher was the collection was unveiled and guests at the event were able to Co-Founder and Business Development get acquainted with the collection. Director of Pyro Power, a unique Swiss/German Technolo- gy called PYROMEX® in the waste-to-energy business. He Volkswagen Group has 12 years of sales and business development experience Volkswagen Group delivers over nine million vehicles for fi rst in the banking, IT, insurance and waste/energy industry. He time worked as an Associate Director at UBS AG in Switzerland Th e Volkswagen Group recorded a further strong increase and Germany and as an Account Manager for EMC Corpo- in worldwide deliveries for the full year 2012 and exceeded ration and Allianz AG. Christopher holds a B.Sc. in Business the prior-year delivery record. Th e Company delivered 9.07 Administration from the University of Oregon (USA) and (2011: 8.16; +11.2 percent)* million vehicles for the fi rst time an M.Sc. in Finance & Management from Cranfi eld School in a twelve-month period. of Management (UK). Full-year deliveries developed especially well on the American continent, with the number of vehicles handed ART DE LEX over in the North America region in the period to Decem- A new Head of the International Arbitration and Litigation ber growing 26.2 percent to 841,500 (666,800) units. Practice Group Th e Volkswagen Group handed over 1.01 (0.93; +8.2 In Januar y 2013, Artur Zurabyan was percent) million vehicles to customers in the South America appointed Head of the International Arbi- region during the same period. tration and Litigation Practice Group of Th e Group also recorded very satisfactory fi gures in the ART DE LEX Law Firm Asia-Pacifi c region, where deliveries topped the three mil- Artur has a vast experience of providing lion mark for the fi rst time in a twelve-month period, with services in the fi eld of dispute resolution. 3.17 (2.57; +23.3 percent) million vehicles handed over to On numerous occasions he represented customers. clients in diff erent international arbitration proceedings in Deliveries by the Volkswagen Group in the overall Sweden, UK and Russia as part of ad hoc and institutional European market remained stable in spite of the continu- arbitration. ing diffi cult situation in the markets of Southern Europe, Artur also participated in disciplinary procedures of and ran at 3.67 (3.68; -0.3 percent) million vehicles. Th e the international sports federation in Switzerland and rep- Volkswagen Group continued to enjoy strong growth in resented the all-Russian sports federation in the Court of Central and Eastern Europe, where 644,300 (547,800; +17.6 Arbitration for Sport. Artur has extensive experience in percent) vehicles were handed over to customers, of which representing clients in all instances of arbitration courts, 317,700 (229,000; +38.8 percent) were delivered in Russia, including the Supreme Commercial Court of the Russian the region’s largest single market. Federation, on diff erent legal relations, including disputes connected with the recognition and enforcement of foreign arbitration awards in the Russian Federation. Artur graduated from the Faculty of Law of the Lomono- sov Moscow State University with honours. He has a PhD in law. Before moving to ART DE LEX, Artur worked at Non- Profi t Partnership Legal Intelligence Group, where he started as Associate and eventually became Acting Managing Partner. His job duties included management and coordina- tion of the process of legal service rendering to key clients of the company in such fi elds as court and arbitration proceedings (including the international ones), structuring and implementation of joint venture and shareholders' agreements in diff erent jurisdictions.

AEB BUSINESS QUARTERLY • Spring 2013 52

CBRE Tim Millard joins Jones Lang LaSalle, Russia & CIS Leonid Volokh named the Head of the Property Management Jones Lang LaSalle is strengthening the department of CBRE Advisory business with a new strategic Leonid Volokh has been appointed Head of appointment. Tim Millard, ex-Managing the Property Management department, Partner of Cushman & Wakefi eld, Russia & CBRE, Russia. Leonid will be responsible for CIS, joins the company as Regional Director, the overall management and growth of the Head of Advisory Group. entire PM department, adding a retail seg- Tim has been working in the real estate ment to the offi ce and industrial segments market in Russia since 2003. At Cushman & Wakefi eld, that he was in charge of before. Russia & CIS, he set up the company’s Valuation and Devel- Leonid Volokh with his team advise clients on property opment Consultancy and ran the team for fi ve years. In management aspects during the design phase, construction 2006 Tim was named C&W Global Valuation Manager of works, building commissioning, and subsequent provision the Year. As of 2009 he acted as Chief Operating Offi cer in of a full range of property and facilities management ser- C&W Moscow Offi ce, then from 2010 till 2012 as Manag- vices in Moscow and the regions. ing Partner for Russia and CIS. Prior to joining Jones Lang Alexander Polenok, Managing Director, CBRE, Russia, LaSalle, Tim was Managing Director of Senator MC, a lead- comments: “Our company provides wide variety of real ing player in the St Petersburg offi ce realty market. estate solutions in the commercial real estate sector, and Tim is an associate Member of the Royal Institution of property management is one of our strong areas. Leonid has Chartered Surveyors and a founding member of RICS Rus- vast experience in this fi eld, and I am confi dent that with his sia. He has a degree in Land Economics from Fitzwilliam comprehensive knowledge and execution we have all the College, Cambridge University. In 2001-2002 he took an potential to further grow our market share.” MBA at Business School Lausanne, specializing in Corpo- rate Finance. Jones Lang LaSalle In his new role at Jones Lang LaSalle Tim will lead Jones Lang LaSalle appoints new Head of Hotels and Strategic Consulting, Valuations and Hotels & Hospitality Hospitality Russia & CIS Group. David Jenkins Joined from Cushman & Wakefi eld London-Moscow, 04 March 2013 – Jones Lang LaSalle has confi rmed Natalia Tischendorf appointed Head of Corporate Finance for that David Jenkins joined the fi rm as Head Russia & CIS at Jones Lang LaSalle of Hotels & Hospitality, Russia & CIS. David Jones Lang LaSalle announced a new joined Jones Lang LaSalle from Cushman & appointment. Natalia Tischendorf is pro- Wakefi eld Russia where for the last three moted to Head of Corporate Finance for years he has headed their Hospitality department. Russia & CIS. Having joined Jones Lang David Jenkins has outstanding experience, with almost LaSalle seven years ago, she has been work- 25 years spent in the hospitality and hotel industry with a ing as a National Director in the Capital particular focus on Russia. Starting his Moscow career in Markets department where she has success- hotel operations with Starwood, he moved to Interstate fully closed several landmark transactions. Hotels & Resorts in 1997. During his almost 10-year tenure In her new role, as well as providing broad commercial he has occupied a variety of positions in the three Moscow advice, Natalia is focusing on helping local and international Marriott hotels, culminating in a three-year period as Direc- companies raise equity and attract construction and senior tor of Operations for the Marriott Aurora Hotel. In 2006 debt fi nancing, as well as continuing to advise on deal struc- he moved into hospitality consulting, helping to establish turing. the Horwath HTL Moscow offi ce as its country director. Her appointment follows strong growth in Jones Lang In 2008 David joined DTZ to open the company’s Russian LaSalle's Corporate Finance activities over the past 3 years. Hospitality offi ce, subsequently leaving in May 2010 to set With her advisory and debt-raising experience, combined up the hospitality practice at Cushman & Wakefi eld Russia. with her industry knowledge and relationships in the sec- At Jones Lang LaSalle, David is managing the Hotels tor, Jones Lang LaSalle will successfully continue to further & Hospitality Group for Russia & CIS, leading its ongoing grow in the Corporate Finance fi eld. Th is follows a global consulting and investment projects and securing new and theme for Jones Lang LaSalle with a growing focus on the exciting mandates. Th e hotel real estate services of Jones Corporate Finance arena driven by Christian Ulbrich, the Lang LaSalle include feasibility studies, resort development, EMEA CEO. valuations, asset management and operator search, as well as investment sales and debt fi nancing.

AEB BUSINESS QUARTERLY • Spring 2013 53

Atos Russia: 1000 Employees, 4 Locations: Moscow, St.Petersburg, Voronezh, Sochi. NEW MEMBERS Th e Global Delivery Centre in Voronezh, the part of international network of competence and service centres, A-FILM counts more than 600 employees. A-FILM is a Russian-German fi lm production More information: ru.atos.net company with offi ces in Moscow and Berlin. Th e company specializes in distribution of Rus- AVITO.ru sian movies abroad, performs all kinds of ser- AVITO.ru is a leading classifi eds site vices for international fi lmmakers and produces in Russia with more than 30 mil- image fi lms (corporate videos, commercials and Web-TV) lion monthly unique visitors, which makes it one of the for Russian and international customers. Founded in 2004 top-5 Russian websites. Since its inception, millions of by fi lm director and photographer Matthias Aicher, today Russians have used the service to buy and sell goods A-FILM is an offi cial representation offi ce for BAVARIA such as home electronics, clothing, cars and real estate. FILM GROUP in Russia and CIS. Th ousands of Russian businesses use AVITO.ru as a sales channel. AVITO charges professional sellers for hosting a ABBYY Language Services dedicated online store. Consumers can also pay for extras ABBYY Language Services today such as prominence in search results or highlighted ads. ■ off ers a wide range of language servi- AVITO also operates the leading classifi eds site in Morocco, ces to more than 2,000 corporate cli- AVITO.ma and is currently rolling out a site in Egypt. ents around the world, including – 25 companies in the TOP 100 Global Brands and Coca-Cola Hellenic Bottling Co. – 35 Fortune 500 companies; Eurasia ■ develops advanced solutions aiding translation processes; Coca-Cola Hellenic is one of the largest ■ has solid experience in bottlers of products for the Coca-Cola – multilingual software, website and marketing localiza- Company in terms of volume, with sales over 2 billion unit tion into more than 80 diff erent languages and cases. It operates in 28 countries serving a population of more – comprehensive language support for major interna- than 579 million people. In Russia Coca-Cola Hellenic is repre- tional events; sented by Coca-Cola HBC Eurasia and owns 14 plants across ■ provides a world-class team of more than 700 profession- Russia with 13,000 highly qualifi ed employees. Th e company als that includes translators, interpreters, editors, proof- off ers a diverse range of ready-to drink non-alcoholic bever- readers, DTP designers, developers and test engineers ages in the sparkling, juice, water, sport, energy, ice tea and from diff erent countries to work on client projects on a kvas categories. In 2005 the company acquired Russian juice daily basis. producer Multon. Besides, the company handles distribution Our company is part of ABBYY Group, a global leader in of Brown-Forman Corporation premium spirits in Russia. developing optical character recognition technologies and Detailed information on Coca-Cola Hellenic and the language software, including FineReader Optical Character company’s activities in Russia is available on the company’s Recognition Systems and Lingvo Dictionaries. More than 30 website www.coca-colahellenic.ru million people in over 150 countries use ABBYY products. Our core competences include ECUSTOMS ■ comprehensive language support for corporate clients and ECUSTOMS Company ■ cutting-edge language solutions and services. Limited is a customs representative and provides services in the fi eld of customs Atos aff airs on the basis of Certifi cate of registration in Register of Atos is an international information customs representatives number 0430/00 dated 31.01.2013. technology services company with Core assets: customs clearance, logistics, consulting on annual 2011 pro-forma revenue of EUR 8.5 billion and 74,000 customs legislation and assisting in certifi cation. employees in 48 countries. Serving a global client base, it deliv- Regions of activity: Moscow and Moscow region, St. ers hi-tech transactional services, consulting and technology Petersburg, Smolensk, Vladivostok (seaport Vladivostok), services, systems integration and managed services. With its Nakhodka (seaport Vostochny), Sheremetyevo airport. deep technology expertise and industry knowledge, it works Our priorities: quality of services, an integrated approach with clients across the following market sectors: Manufactur- to clearance, full compliance services to the Russian legislation. ing, Retail, Services; Public, Health & Transports; Financial Our advantages: 100% electronic declaration (including Services; Telecoms, Media & Technology; Energy & Utilities. the preliminary declaration), remote declaration through Atos is focused on business technology that powers the E-declaration Centres with possibility of customs clear- progress and helps organizations to create their fi rm of the ance of goods at any customs/logistics terminal in the RF. future. It is the Worldwide Information Technology Partner We promote the development of companies and shoul- for the Olympic and Paralympic Games and is quoted on der all problems of transportation, shipping, customs clear- the Paris Eurolist Market ance and storage processing.

AEB BUSINESS QUARTERLY • Spring 2013 54

FTS Maconomy manufacturing. We combine engagement in global health FTS is an international IT- issues with a holistic approach, focusing on our customers’ consulting company that need for total solutions. off ers ERP, CRM and ECM solutions based on the well-known NNE Pharmaplan headquarters is located in Copenha- products of Microsoft Dynamics (AX, NAV, and CRM), Del- gen. Our company employs 1,700 people at more than 30 tek Maconomy and M-Files. Founded in the Netherlands in locations around the world who are ready to share their 1994, FTS operates through its regional offi ces in Central & expertise in order to create state-of-the-art projects for our Eastern Europe and Russia. Many successful projects proved customers. We have two design offi ces in Russia with 75 FTS as a trustworthy partner that supplies innovative IT solu- engineers in all disciplines necessary for the execution of tions to both local and international customers. FTS services general design functions. ensure fl uent and effi cient workfl ows in customer’s organization through development of modern enterprise information SARTORIAL systems. Th e successful results of each project are guaranteed Sartorial is a multi-brand Menswear by a team of experienced professionals. salon which brings together an impressive range of ready-to-wear Menswear goFLUENT collections of leading European brands. goFLUENT off ers Each collection is meticulously chosen from Menswear distance Business English training combining eLearning, collections of only the highest distinction and consists of telephone lessons and written practice solutions. Each exquisitely made suits, jackets, shirts, jeans, trousers, shoes year, goFLUENT helps over 60,000 business executives in and accessories refl ecting a look of Modern Elegance. more than 5,000 international corporations in making their Sartorial is also the fi nal destination for seekers of sarto- companies more effi cient and profi table when doing busi- rial splendor. Sartorial off ers the largest choice of options ness globally and managing intercultural situations. goFLU- available not only in a tailored suit and shirt, but in a tailored ENT is established in 10 countries and has 560 employees, jacket, coat and shoes as well. Sartorial works with famous including 400 teachers, and the world’s third largest telecom world brands such as Scabal, Raff aele Caruso, Lubiam, company, NTT Communications (NTT Group) owns 30% Gallotti, Moreschi and others, known for painstaking hand- of goFLUENT’s shares. work and unparalleled craftsmanship. Th e fi nal result is goFLUENT contacts: perfect tailoring and an extraordinary fi t. Offi ce 105, build. 2 50а/8, Zemlyanoy Val, Moscow, 109028 Russia TeliaSonera Phone: +7 (495) 937 40 20 TeliaSonera International E-mail: russia@gofl uent.com Carrier owns and operates Web: http://www.gofl uent.com one of the world’s most extensive fi ber backbones. Our mission is to provide exceptional network infrastructure Mamaison Pokrovka Hotel and services, empowering individuals, businesses and Mamaison All-Suites Spa Hotel Pokrovka, societies to execute their most critical activities. By work- the fi rst and the only all-suite design hotel ing close to our customers we make big ideas happen at in Moscow, off ering accommodation only the speed of fi ber. in “deluxe” suites. Mamaison All-Suites Spa We are a part of the TeliaSonera group, Europe’s 5th larg- Hotel Pokrovka, exclusively designed by est operator with more than 180 million subscriptions from Jestico+Whiles, is the fi rst genuine all-suite the Nordics to Nepal. hotel in Moscow featuring spacious and uniquely rooms Discover more at teliasoneraic.com started at 35sqm, an exquisite restaurant, “Numbers”, with creative cuisine and state-of-the-art SPA by legendary French WEG brand Algotherm with full assortment of care programs. Full WEG is a global industrial corporation oper- range of business centre services and the latest technical ating worldwide in the electric engineering, equipment are available 24 hours a day. Our desire to escape power and automation technology areas. from the traditional perception of a hotel as temporary Th e company produces electric motors, generators, trans- accommodation by off ering our guests a feeling of coziness formers, drives and coatings. WEG has operations in around and the comfort to be gained from a luxurious private house. 100 countries, and approximately 27.000 employees. WEG products are present in almost every electrical NNE Pharmaplan engineering interest area: Generation (Generators, trans- NNE Pharmaplan is an formers and switchgear), Transmission (EPC, switchgear, international engineering transformers), Distribution (EPC, transformers), Electric company with 80 years worldwide experience in the phar- products (motors, switchgear, frequency inverters, AC/DC ma and biotech industries. converters, contactors, fuses, circuit breakers and servomo- NNE Pharmaplan covers all segments from biophar- tors, among others), Automation (Hardware and Software), maceuticals and vaccines to medical devices and helps our Integration Engineering with products of diff erent manu- customers develop, establish and improve their product facturers.

AEB BUSINESS QUARTERLY • Spring 2013 ASSOCIATION АССОЦИАЦИЯ OF EUROPEAN BUSINESSES ЕВРОПЕЙСКОГО БИЗНЕСА Russian Federation, Ul. Krasnoproletarskaya 16, bld. 3 Российская Федерация, 127473, Москва, 127473 Moscow, Russian Federation ул. Краснопролетарская, 16, строение 3 Tel.: +7 (495) 234 27 64. Fax: +7 (495) 234 28 07 Тел.: +7 (495) 234 27 64. Факс: +7 (495) 234 28 07 [email protected]. http://www.aebrus.ru [email protected]. http://www.aebrus.ru

AEB MEMBERSHIP APPLICATION FORM / ЗАЯВЛЕНИЕ HA ЧЛЕНСТВО АЕБ Please fill out the Application Form in CAPITAL letters, sign it and fax it: 234 28 07/ Заполните заявление печатными буквами и пришлите по факсу 234 28 07 Calendar year / Календарный год: 2013 (Please check the appropriate box/boxes / Укажите соответствующий год/года)

Name of your AEB Contact / Ваше контактное лицо в АЕБ: ______

1. COMPANY / СВЕДЕНИЯ О КОМПАНИИ Company Name in full, according to company charter. (Individual applicants: please indicate the company for which you work / Название компании в соответствии с уставом. (Для индивидуальных членов – название компании, в которой работает заявитель):

Legal Address (and Postal Address, INN / KPP / ИНН/КПП: if different from Legal Address) / Юридический и фактический адрес, Phone Number / Номер телефона: Fax Number / Номер факса: если он отличается от юридического: Website Address / Страница в интернете:

2. CATEGORY / КАТЕГОРИЯ: THE CATEGORY IS DETERMINED ACCORDING TO THE COMPANY’S WORLD TURNOVER Company’s world-wide turnover Please indicate your AEB Category / AEB Membership Fee / (euro per annum) / Мировой оборот Отметьте категорию Членский взнос в АЕБ компании (евро в год)

SPONSORSHIP / Спонсорство – 10,000 euro/евро

CATEGORY A / Категория А >500 million/миллионов 6,300 euro/евро

CATEGORY B / Категория Б 50–499 million/миллионов 3,800 euro/евро

CATEGORY C / Категория С 1–49 million/миллионов 2,200 euro/евро

CATEGORY D / Категория Д <1 million/миллионов 800 euro/евро

INDIVIDUAL (EU/EFTA citizens only)/ Индивидуальное – 800 euro/евро (только для граждан Евросоюза/ЕАСТ)

Any non-EU / non-EFTA Legal Entities applying to become Associate Members must be endorsed by two Ordinary Members (AEB members that are Legal Entities registered in an EU / EFTA member state or Individual Members – EU/EFTA citizens) in writing/ Заявление любого юридического лица из страны, не входящей в Евросоюз/ЕАСТ, и желающего стать членом АЕБ, должно быть письменно подтверждено двумя членами АЕБ (юридическими лицами, зарегистрированными в Евросоюзе/ЕАСТ, или индивидуальными членами – гражданами Евросоюза/ЕАСТ)

Individual AEB Membership is restricted to EU / EFTA member state citizens, who are not employed by a company registered in an EU / EFTA member state / К рассмотрению принимаются заявления на индивидуальное членство от граждан Евросоюза/ЕАСТ, работающих в компаниях, страна происхождения которых не входит в Евросоюз/ЕАСТ

Please bear in mind that all applications are subject to the AEB Executive Board approval / Все заявления утверждаются Правлением АЕБ

3. CONTACT PERSON / INDIVIDUAL MEMBER / КОНТАКТНОЕ ЛИЦО / ИНДИВИДУАЛЬНЫЙ ЧЛЕН

Title, First Name, Surname / Ф.И.О:

Position in Company / Должность:

E-mail Address / Адрес эл. почты: 4. COUNTRY OF ORIGIN / СТРАНА ПРОИСХОЖДЕНИЯ

А. For a company / Компаниям: Please specify COMPANY’S country of origin / Указать страну происхождения компании1

or B. For an individual applicant / Индивидуальным заявителям: Please specify the country, of which you hold CITIZENSHIP / Указать гражданство

Please note that only EU / EFTA members can serve on the Executive Board and the Council of National Representatives/ Внимание! В Совет национальных представителей и Правление могут быть избраны члены, представляющие страны Евросоюза или ЕАСТ.

Please fill in either A or B below/ Заполните только графу А или В

5. COMPANY DETAILS / ИНФОРМАЦИЯ О КОМПАНИИ

Company present in Russia since: ______/ Компания присутствует на российском рынке с:______г.

Company activities/ Primary / Secondary / Деятельность компании Основная: Второстепенная:

Please do not include this in Company turnover (euro)/ In Russia / Worldwide / the AEB Member Database/ Не Оборот компании (в Евро) в России: в мире: включайте это в справочник АЕБ

Please do not include this in Number of employees/ In Russia / Worldwide / the AEB Member Database/ Не Количество сотрудников в России: в мире: включайте это в справочник АЕБ

Please briefly describe your company’s activities (for inclusion in the AEB Database and in the AEB Newsletter) / Краткое описание деятельности Вашей компании (для включения в базу данных АЕБ и публикаций АЕБ)

6. HOW DID YOU LEARN ABOUT THE AEB / КАК ВЫ УЗНАЛИ ОБ АЕБ?

Personal Contact / Личный контакт Internet / Интернет

Media / СМИ Event / Мероприятие

Advertising Source / Реклама: ______Other / Другой:______

Signature of Authorised Representative of Applicant Signature of Authorised Representative of the AEB / Company / Подпись уполномоченного лица заявителя: Подпись Руководителя АЕБ:

______

______Date/Дата: Date/Дата:

1 Location of a parent company or of the main shareholder/ Местонахождение головной конторы или основного учредителя. AEB BUSINESS QUARTERLY • Spring 2013 Advetising Advertising