What Makes a Good Manager in an Emerging Market Economy of Russia?

Written by Ivan S. Repenko

The role of a manager in an organization is somewhat different in Russia

and in the other countries, owing to distinctive features of Russian traditions,

habits, and mentality. Our managers really need to satisfy some requirements of

Russia’s economy that grows today and actually has boomed during Vladimir

Putin’s presidency. Russia has a diversified economy, but the most important

sector of our economy is the sale of raw materials and primary goods such as oil,

gas, timber, and gold, which have swelled government coffers by almost $1 trillion

in the past 8 years. Our GDP grew 8.1%, led by non-tradable services and goods

for the domestic market, as opposed to oil or mineral extraction and exports;

foreign direct investment reached $41 billion in 2007 and could rise to $51 billion

in 2010; total unemployment rate was reduced by 1%. Overall, Russia has made

huge strides not only in economic terms but also in terms of economic freedom.

It became obvious when in 2002 USA recognized Russia as having market

economy: “President Bush told President Vladimir V. Putin by telephone today

[June 7] that the United States would begin regarding Russia as a market

economy.”1 Market economy implies that producers and customers get to decide at

their own discretion what to produce and what to buy without government

intervention that, as a matter of fact, is observed in Russia today. Russia is the

world's fourth-biggest power market; its power industry is investor-enticing

because it is one of the world's fastest-growing markets. But yet Russia’s market

economy still remains emerging in comparison with USA, Australia, Japan, and so

on, which means that our economy has “low-to-middle per capita income.”2

Nevertheless, one of the world's largest global investment banks, The Goldman

Sachs Group, Inc., accentuated that Russia is “not really emerging market

investing. It is too inter-connected with the developed world”.3 From this we can

infer that even though our market economy is still emerging by some estimate, it

1 U.S. Decides to Recognize Russia as Market Economy. By SABRINA TAVERNISE. Published: June 7, 2002 (http://query.nytimes.com/gst/fullpage.html?res=9D03E7D9173DF934A35755C0A9649C8B63) 2 The Long View: How adventurous are emerging markets? Published: October 20 2006 18:48 | Last updated: October 20 2006 18:48 (http://www.ft.com/cms/s/0/be77e600-605f-11db-a7160000779e2340.html?nclick_check=1)3 The Long View: How adventurous are emerging markets? Published: October 20 2006 18:48 | Last updated: October 20 2006 18:48 (http://www.ft.com/cms/s/0/be77e600-605f-11db-a7160000779e2340.html?nclick_check=1)

approximate to the developed countries. But there are some factors that restrain

and hamper us. President V. Putin emphasized that “we face new and even more

complicated economic policy issues today. The Russian economy’s biggest

problem today is that it is extremely ineffective. Labor productivity in Russia

remains very low. We have the same labor costs as in the most developed countries

but the return is several times lower.”4 Thereby, our nation has a vast potential, but

in virtue of some factors the current use of the nation’s human resource is

inefficient. As a comparison, “labor productivity in Russia is five times lower than

in the United States and four times lower than in Germany.”5 So in our essay we

would like to discuss the role of manager in raising worker productivity in Russia,

and suggest several solutions.

Managing human recourses of organization is not an easy task, and a good

manager must do everything so that the people, who work in organization, can

individually and collectively contribute to the achievement of the objectives of the

business as much as possible. In Russian reality the majority of enterprises face the

problem of ineffective functioning; the main reason for that is not personnel of

organization, but management. The staff is not guilty of its unproductiveness,

laziness, and indifference to the organization. All blames rest on the managers’

shoulders that can’t join the organization so that it functions as a single whole.

Most of managers are more indifferent to the organization than the staff, and

therein lays a problem. So what they need to do is to change their priorities. First

of all, manager has to clearly recognize what are the major obstacles in good work

of the whole organization, what hamper the progress, and to break down these

barriers. The possible reasons of unproductive work in Russia’s organization can

be obsolete equipments, which discourage personnel from doing qualitative work.

And this problem is acute because for the most cases organizations just don’t have

money to upgrade their equipment, which finally lead to unproductiveness.

4 Statements on Major Issues. Speech at Expanded Meeting of the State Council on Russia’s Development Strategy through to 2020. February 8, 2008. The Kremlin, Moscow (http://www.kremlin.ru/eng/speeches/2008/02/08/1137_type82912type82913_159643.shtml) 5 Risks facing the Russian economy. Economics. 19.05.07 12:19 (http://www.warandpeace.ru/en/analysis/view/11478/)

Moreover, most of managers don’t want to run risks and take responsibility since

they are not fully confident in that the money won’t spend in vain. And this fact is

really sad. But if a manager really wants to change the situation, he/she shouldn’t

spare anything so that to achieve outstanding results; and he/she must start with

himself/herself. A good manager should clearly know where he heads his

organization today and where does he want to be in the future. And although in

Russia the future usually is uncertain, for a good manager it should become clear

where, how, and which he and his organization must be, i.e. to define its goals.

However, as it can be in Russia, a manager can dispose all of the newest and

necessary equipment, has plain aims of organization, and know where it’s heading

now, but organization doesn’t function well. People are lazy and indifferent to their

work. But why is it so? In this case manager is guilty again. So, the first thing that

he must do is to awake personnel’s interest in their work, he must inspire them. A

good manager must “inspire confidence and support the people who are needed to

achieve organizational goals”.6 Hereby, a good manager must be a leader. As the

saying goes, effective leaders also manage, effective managers also lead. And now

Russia is just the one that needs good manager-leaders. Our country has a great

potential, as it was said earlier, but there are really few people who can lead and

direct it into right course. It is essential for manager to create a good team and

focus on people: inspire and motivate them, act as a couch, facilitator, and servant,

and create the vision of the future.

To sum up the proceedings, it is necessary to note that a good manager in

Russia should keep an eye on the future and clearly determine the organizational

goals. If a manager wants to change the existing situation, he, first of all, should to

introspect. A good self-examination is a key toward success. After that a manager

should fasten its eyes on the personnel of organization because people are the

major motive force of any organization. And so that to raise labor productivity a

good manager should join the team, inspire, motivate, and lead the people, because

in Russia, due to our mentality, everyone wants to live rich and earns big wages,

6 Leadership. 2nd ASIA-PACIFIC Edition. Andrew J. Dubrin, Carol Dalglish, Peter Miller. (p. 3)

but there are few people who want to work hard. That’s why a good Russian

manager has to know how to organize people, how lead them toward their mutual

organizational goals, so that to increase labor productivity. If every manager of

every organization in Russia realizes that people are the core elements of any

enterprise, we think Russia will be the greatest country in the world.