Pursuing new opportunities created by turbulent times in the global econ-omy, Russian companies make am-

bitious goals for themselves: continuous growth, becoming a market leader, per-formance and efficiency improvement, ex-panding up to global presence. One of the key success factors to realize these ambi-tions is to find out how to get more from the current resources.

According to a McKinsey study, labor ef-ficiency in Russia in 2009 was just 26 per-cent compared with the U.S. So, where are the hidden triggers to improve Russian em-

ployees’ performance?Hay Group has been running employee

effectiveness surveys in Russia since 2005 and for 35 years globally in diverse indus-tries. Aggregated data for 2006 to 2010 highlights that Russian employees (the norm is based on data collected from over 40 companies in a wide variety of industries and includes data from about 42,000 em-ployees who work in Russia in these com-panies) are less engaged (66 percent/75 percent) than employees of high perform-ing companies (the HPC norm is a “stretch” benchmark that comprises the employee

survey results of top global companies that have achieved outstanding ROA, ROI, ROE relative to industry peers and also have above average employee engagement and enablement scores. The norm includes re-sponses from 1.1 million employees), while they are almost equal on enablement (70 percent/69.5 percent).

So, why do we have this gap? One of the reasons is that top managers in Russia still underestimate the “intangible assets” that their work force possesses.

For example, 72 percent of Russian em-ployees believe they give their best efforts

in doing their jobs (vs. 85 percent in HPC, a 13-point gap); 61 percent of employees working in Russia (vs. 76 percent HPC) say that they are motivated to put in additional effort and to go the extra mile to achieve success; while only 49 percent think that their companies actually motivate them to do so (vs. 65 percent in HP companies). In other words employees admit that they have capacity to do more for their employ-ers, but companies do not motivate them to run this extra mile.

The World’s Most Admired companies (WMAC) continue to focus on engage-ment even in tough times. Why? Engage-ment drives growth. But engagement is only a part of the story. The missing piece is “en-ablement” — removing the barriers to per-formance so engagement translates into re-sults.

How to raise engagement and enable-ment of Russian employees, i.e. to do more with the same resource?

The research from Hay Group suggests that regular communication and clarity on what is expected from employees and how the job they do is related to larger goals is critical.

In 2012, the World’s Most Admired Com-panies did a much better job in business strategy communication throughout all lev-els of organization than their peer group. In Russia, the gap between desired and exist-ing level of clarity employees is 20 percent!

Talking about pay is not less important. But pay does not equal motivation. Our studies show that world leading companies do not pay their employees more than other

companies do. What do they do differently? Eighty-two percent of the world’s most suc-cessful companies reinforce their reward strategy in communications with their em-ployees on compensation policies; provide reward philosophy and total reward state-ments. These companies’ employees know what they are paid for and why.

Only 41 percent of Russian employees see the link between their performance and pay, and 33 percent of employees in Rus-sia do not think that their good performance will be rewarded.

“Our people are our greatest asset” may sound like a platitude, but for WMAC it is core to their success. They consistently work hard to ensure the right talent is in place, by attracting, developing and retain-ing best people.

In Russia, less than half of employ-ees (44 percent) believe that their compa-nies are able to retain their best talents. The negative difference in number of employees who would like to stay in the company more than five years in Russia vs. HPC is 13 per-cent. Employee retention is therefore now more important than ever.

So, how do you make the current staff more effective? Quite simply: Combine managing pay levels and headcounts with managing the return on investment. Effec-tive performance management delivered by line managers, focus on clarity and com-munication around pay, strategy and per-formance and the right people for the right roles are becoming the most important pieces of the employee effectiveness puz-zle in Russia.

Russian Companies’ Secret Weapon: Taking the Next Step in Boosting Performance

TOP 10 HR TRENDS 2012

The MT Conferences section did not involve the reporting or the editorial staff of The Moscow Times.

10 v Tuesday, April 24, 2012 The Moscow TimesM T C O N F E R E N C E S

By Anna VyalovaSenior ConsultantHay Group Russia

By Elena KiyushinaConsultant

Hay Group Russia

By Ella ShatovaConsultant

Hay Group Russia

In January 2012, applications opened for quotas to hire foreign employ-ees in 2013. In 2010, a Health and So-

cial Development Ministry decree intro-duced a computerized system for pro-cessing regional proposals for determin-ing foreign worker requirements. This sys-tem underwent regional testing for two years and has been revised. As of Jan. 1, 2012, a new version has been put into op-eration nationwide. The system is called Automatic Data Complex Migration Quo-tas (“ADC Migration Quotas”).

Details of the system can be accessed at www.migrakvota.gov.ru. Its intention is to simplify the procedure for employers filing applications to hire foreign workers with regional authorities.

ADC Migration Quotas has three types of users: employers, regional executive authorities and federal executive author-ities (the Health and Social Development Ministry, Federal Labor and Employment

Service, Federal Migration Service, Eco-nomic Development Ministry, Regional Development Ministry and Foreign Min-istry).

From the beginning of 2012, the quota procedure has been revised as follows:

• printed quota application forms for all regions are now generated only through the Health and Social Development Minis-try website (www.migrakvota.gov.ru);

• if an organization has branches or separate divisions in several regions, it must register and generate a quota appli-cation form in each region separately;

• information in respect of the re-gional authorities responsible for quo-tas, including the name of the relevant au-thority, telephone numbers, and names of officials can now be found at www.mi-grakvota.gov.ru;

• previous applications can now be used to generate new quota applications;

• title sub-descriptions (e.g., deputy, vice, etc.) can now be used in quota ap-plications;

• application progress can be tracked;• quota applications for the current

year can be adjusted downward (provided that the quota previously applied for is not used in the current year); and

• the quota adjustment has been re-vised. Now, in order to change the title, citizenship or number of positions for for-eign citizens in a quota, in addition to an application showing the changed posi-tions, an application to reduce the quota by the respective number of positions must also be filed.

The use of ADC Migration Quotas is free of charge for employers. Employers can file applications without leaving the office, or they can visit the authority if they do not have Internet access (many regions have fully equipped offices for filing ap-plications).

Online filing should save employers considerable time. The system provides assistance (including codes for profes-sions, economic activities, states of origin of foreign employees, etc.), the ability to contact the relevant authority and system developers if any questions arise and has a generally user-friendly interface.

Making an application through ADC Mi-gration Quotas does not exempt an em-ployer from the need to submit a pa-per application to the relevant author-ity. Two copies of the application should be printed directly from the system and duly certified (see information on certifi-cation process below). The only inconve-nience with filing the hard copy of the ap-plication printed using the ADC Migration Quota system is that it must be filed with an extract from the Unified State Register of Legal Entities or the Unified State Reg-ister of Individual Entrepreneurs, and ob-taining the extract can take several days. The extract must have been issued no ear-lier than June 2011.

To begin using the system, an em-ployer must firstly register using the rele-vant form. Registration is done once and the information entered is automatically used when generating applications. Af-ter registration is successfully completed, the system will automatically generate a user name and password on the following terms, which should be retained by the employer:

“user name” — INN (taxpayer identifica-tion number)

“password” — generated by the systemThe next stage of using the system is

generating an application form to hire for-eign workers in the next year, or an appli-cation to revise the quota for the current year. The region where the foreign em-ployees are to be hired must be submit-ted. The system provides a function for

verifying whether the application has been completed correctly and an employer will be allowed to revise the application before it is sent to the authority.

The end result of all of the above is the final application, which must be saved, printed, signed by the employer, stamped with the company’s seal, and submit-ted to the relevant authority. The authority has the right to demand a letter substan-tiating the need to hire the number of for-eign workers requested in the application and the address(es) where the employees will reside.

The application process can be tracked at any time through the user’s account by clicking on “Application Status.” Informa-tion on the status of any application gen-erated in the system received from the rel-evant authority will be displayed next to such application. The application status will change as it is processed, as follows: “confirmation of signed original,” “under consideration by interdepartmental com-mission,” “rejected by interdepartmental commission,” etc. The last stage for filing using the system is the forwarding of the application for consideration by the rele-vant authority.

An employer’s application will be con-sidered by an interdepartmental commis-sion to determine whether an employer has committed migration offenses, paid its salaries, etc. An application is ap-proved by the regional interdepartmental commission and included in the regional proposal forwarded to the Health and So-cial Development Ministry.

Any organization planning to hire for-eign workers from countries with visa or visa-free entry in 2013 must apply for a quota by May 1, 2012. Applications to re-vise 2012 quotas are accepted in addition to the main application for 2013.

The regional interdepartmental com-

mission may reduce all or part of an em-ployer’s application on a number of grounds. Firstly, the ability to meet re-quirements for workers using regional la-bor resources, including by training or re-training unemployed citizens, or hiring workers from other regions. Secondly, should the employer have outstanding vi-olations of the relevant procedure for hir-ing and use of foreign employees commit-ted with respect to quotas in previous or the current year. Outstanding unpaid sala-ries is also a material factor, as well as la-bor law violations found by the state labor inspectorate.

Should an employer disagree with the interdepartmental commission’s decision, the employer may appeal the decision in accordance with the procedure provided under the law of the Russian Federation. After the relevant session of the interde-partmental commission, the relevant au-thority must notify the employer of the re-sults of its application. If the applica-tion is approved, such notification should be given within a month, while if it is par-tially or entirely rejected, such notification should be given within 10 days.

In accordance with Federal Law No 115-FZ on the Legal Status of Foreign Citizens in the Russian Federation of dated July 25, 2002, the Russian government has the right to set annual limits on foreign workers in various sectors of the economy for economic agents operating in one or more regions, or nationwide.

Once an employer’s jobs have been included in the information on jobs for which foreign workers will be hired in the current year (usually one month after the application is filed with the authority), the employer may file the documents required to obtain a work permit for the foreign worker with the territorial authority of the Federal Migration Service.

Hiring Foreign Employees in 2013 — Changes to Quota Application Procedure

By Anna SviridovaAssociate

Salans

Currently HR professionals in many companies face the challenge of improving employee efficiency,

and one of the recent trends is enhanc-ing employee commitment not only to re-sults but to the process as well. We all know that professionals who are passion-ate about their work generate the high-est profit for a company since they are en-gaged in corporate life and do care about their performance results. But are mod-

ern-day employees willing to work for a purpose and be purpose-driven? Or is that left in the Soviet past, and nowadays is money the only motivation for employ-ees to go to work? In March 2012, we car-ried out a federal study that revealed that modern-day employees feel zest for work, but they want fair compensation for the work they do.

To begin with, we should specify what employees mean by “work for a purpose.” More than a half of the respondents de-fine it as love for their job; for 20 per-cent it means putting more effort in at-taining better job performance, for 7 per-cent it is love for the company. While only 8 percent consider it to be irrational fa-naticism, and just as little as 6 percent define it as a low-paid job. The respon-dents dispel the myth that work for a pur-pose is an equivalent to a low-paid job: It turns out that good compensation does not discourage enthusiastic approach to job performance, and it is true for most cases. 60 percent admit that they work for a purpose, yet they are paid a good sal-ary. 22 percent are motivated by finan-cial compensation and do not care about commitment to purpose: They work just for money. And only 18 percent work for a purpose while their salary is low, thus supporting the fact that nowadays a pur-pose may be still more precious than

money. In addition, women care about the purpose they work for more than men do: Women find more enjoyment in their work and concentrate less on well-being.

Different regions of Russia also evi-dence an interesting trend: the North-Western Federal District turns out to be the most “money-oriented” since it is the region that has the largest number of em-ployees who are not willing to work for a

purpose at all. Surprisingly, most of the employees who are purpose-motivated and, at the same time, low-paid, reside in the Central Federal District, while the ma-jority of employees who are both purpose-motivated and well-paid live in Tatarstan.

Besides the geographical factors the employees’ age also affects their will-ingness to work for a purpose. In spite of “ideological tempering” of the So-viet times, the 40 to 50 years age group has the lowest number of purpose-moti-vated employees: apparently, having lived through perestroika few people still be-lieve in such ephemeral things. And spe-

cialists under the age of 25 show the larg-est number of purpose-motivated em-ployees: young people are easier to get involved, and they are ready to lower their salary expectations in order to gain ex-perience and be engaged in challenging projects.

For sure, modern business wants these people: They are committed to their job and to the company, they are self-moti-

vated and deeply involved in the process. But they need continuous encourage-ment, and this responsibility falls on both HR department and the general manager along with the immediate supervisor, who create a team environment. According to employees, it is a line manager who en-courages most of them.

The least contribution of HR special-ists to this motivation process is seen by employees in Tatarstan and the Central Federal District, while the most is in the Northwest Federal District. And there em-ployees feel the lowest purpose-driven motivation. It is interesting that more

than half of the respondents believe that the companies they work for do not care about purpose-driven motivation at all. To make the purpose-driven motivation pro-gram effective, managers should prove it with their own examples, and also choose appropriate motivation tools. The ma-jor factor that encourages employees to work for a purpose is formed by challeng-ing goals and projects which are particu-larly required to “drive enthusiasm” of Y-generation employees: They do need an “idea-driven” team as well as a creative and pleasant working environment. Mid-dle-aged people note that they are highly motivated by a good salary: It is not until they are well-paid that they are willing to work for a purpose.

In order to build an “idea-driven” team, it is very important to identify such em-ployees as early as at the stage of recruit-ment and competently “sell” a company and its ideas to a would-be employee. Obviously, when having and develop-ing idea-driven employees in the team, one should keep in mind the related risks — ideas change, for example, and it may be difficult for an idea-driven person to adopt new ones. But competent manage-ment may control and raise efficiency, and idea-driven motivation may become a real lifesaver for a company during tough eco-nomic times.

Tuesday, April 24, 2012 The Moscow Times v 11M T C O N F E R E N C E S

As of January 2011, when the new law on mediation came into force, employment disputes in Russia,

as well as commercial and family law dis-putes, can be resolved using mediators.

Mediation is an out-of-court dispute resolution tool and is popular in many countries outside Russia, including Aus-tralia, the United States and Britain. This is because it facilitates effective, afford-able, flexible and quick solutions, espe-cially essential in sensitive employment disputes.

Mediation has existed in Russia for years but was never previously legally regulated. Mediators, including profes-sional ones, assisted in resolving many commercial disputes. However, mediation was almost never used for resolving em-ployment disputes.

The new law on mediation is a great achievement, although further steps will be required to make it work properly and become popular. The current version of the law is far from being perfect and has

already been much criticized. However, mediation is attractive for businesses, courts and even legal advisers, so it is ex-pected soon to become a reliable, work-able tool.

Mediation differs from traditional litiga-tion dramatically. It is an alternative dis-pute resolution method where the parties in conflict find an amicable solution as-sisted by an independent, unbiased me-diator. The principal difference is that the mediator is not a judge; he issues no rul-ing. The decision involves the parties themselves arriving at a mutually accept-able solution. The mediation process is voluntary, and the parties are free to with-draw at any time. The mediator’s role is not to judge or comment on the parties’ legal positions but to help them to identify their interests and to compromise, ideally finding a win-win solution. The final stage of successful mediation is executing a mediation agreement outlining the solu-tion the parties have found.

Because this process is fully confiden-

tial, it allows both parties to save face and even remain partners. Current practice in the West and in Russia suggests that the parties reach a resolution in the major-ity of cases where both parties are willing to initiate mediation to resolve a dispute. Because the process is voluntary and the agreement reached is mutually accept-able, execution of the mediation agree-ment normally is not an issue; however, the law is silent as to how it could be en-forced if the need arises. This is an impor-tant uncertainty, which holds mediation back in Russia.

Another key issue is that the mediation process is fully confidential, which is very important for sensitive disputes, such as with key managers, where commercial se-crets and other sensitive information are involved. Because court proceedings are public and decisions are published, stan-dard litigation could damage a company’s reputation.

Under the law, a mediator can be pro-fessional or non-professional, and the

parties may select one or more mediators. Almost anyone (with rare exceptions) may act as a non-professional mediator.

Mediation can be used at any time be-fore a dispute reaches court and even once the court proceedings are initiated. Importantly, court proceedings will be suspended to allow mediation, but only if a professional mediator is used.

Generally, mediation should not take more than two months, but in exceptional cases this can extend to six months.

We recommend including a mediation clause in employment agreements with all employees. Such a provision would re-quire the parties to go through media-tion before they file a court case. This will not fully eliminate the risk of litigation or of complaints being filed with the labor in-spectorates or the prosecutor’s office be-cause the mediation process can be re-jected at any time. However, the chances of avoiding litigation — the main aim, af-ter all — are much higher if the mediation clause is included from the outset.

Mediation of Employment Disputes in Russia

Building the Team of the Future: Do Employees Need a Purpose to Work For?

By Julia BorozdnaHead of Employment and Migration Law Practice

Pepeliaev Group Law Firm

By Natalia FridrikovaGeneral Manager

Beagle Recruitment Company

In our personal lives, whether it is our friends or spouse or kids, we all know that relationships are an art. Some

people are better at it than others, and we all have good and bad days. But in a

multibillion-dollar business, recruiting and retaining the right people with the right skills to meet the needs of an or-ganization has to be a science. At Pep-siCo, talent management is deeply em-bedded in the way we do and understand business.

All great strategies come from defining the right answers for the right questions, and talent management is not any dif-ferent. Any successful business should be constantly assessing: What should be the key talent and capability priori-ties for the greatest business value? How should we define and assess talent and potential within the company? How can we drive performance, engagement and commitment to the organization? How can we effectively attract critical talent groups?

Realizing there is no such thing as a single silver bullet, we believe there are integrated talent management sys-tems that can effectively support busi-ness leaders to further develop their tal-ent agenda. At the same time, it can cre-ate a common language and architecture for the entire business. Without trying to

be prescriptive or too academic, these are some of the tools and processes we believe make difference:

• Projecting future talent demand through detailed modeling. Driven by in-puts from the different business strate-gic plans, multi-scenario outputs reveal quantity and quality gaps and help in-crease transparency for talent manage-ment resources globally.

• Talent segmentations and develop-ment prioritization. Ensures we custom-ize the right solutions for enterprise high value, continuity and opportunity talent.

• Role classification. Segments cor-porate functions versus operational roles and prioritizes among critical, develop-mental and other roles. Comparing tal-ent and roles might highlight relevant op-portunities.

• Talent playbook. Establishes harmo-nious boundaries (guardrails, tools us-age and consistent criteria) and develop-ment expectations for enterprise talent.

• Succession and people planning. Provides a centralized process to intro-duce global transparency and eliminate unnecessary duplicity in planning.

While all the above are prerequisites for success, companies must ensure the right culture is underpinning their sys-tems. These might come across as sim-ple and fairly straightforward statements but, at the same time, they are the most powerful component of the talent man-agement success formula and quite of-ten the missing link leading to failure:

• An art but also a science. Talent management must be handled much more as a science not just an art.

• A collective sense of ownership. Tal-ent management must be owned by ev-eryone, driven by the CEO, but owned by everyone.

• Courageous leadership and bold moves. Talent management requires courage, makes people move before it is too late and does not rely only on home-grown talent.

• Embracing diversity. When manag-ing and developing talent, pay particular attention to leveraging and integrating diversity in a broad sense (race, gender, generation, thinking, background, expe-rience, capability, culture, etc.)

— Leveraging the full potential of your

talent to drive change. Good talent man-agement can help slowly shift a compa-ny’s dominant logic from yesterday’s to tomorrow’s needs.

• Balancing the short and the long term. Great talent management requires not only addressing immediate short-ages but also taking a long-term per-spective. Five• to 10-year development plans are a powerful base for critical tal-ent.

At PepsiCo, we believe an integrated and advanced talent management sys-tem is a definitive competitive advan-tage. In the battle to attract and retain top talent in Russia, PepsiCo has some real unique attributes compared to West-ern or Russian rivals. At the end of the day, the marriage of the most advanced talent management systems and tools and a fascinating business is the most powerful of the combinations. Thanks to the acquisition of Wimm-Bill-Dann, we are by far Russia’s largest food and bev-erage player, offering Russia’s top young talent a virtually unlimited horizon of op-portunities across different categories, countries and functions.

Investing in the Science of People

By Sergio EzamaEast Europe Human Resources Senior

Vice PresidentPepsiCo, Europe

Competent management may control and raise efficiency, and idea-driven motivation may become a real lifesaver for a company.