What Is the Business Culture of Russia?
The Business Gift
Gifts are an important part of the business culture in Russia. The agency “Деловойпротокол” reports that a businessman needs to give around two hundred presents a year to his partners, colleagues, and employees – and that doesn’t include corporate souvenirs.
Men should give presents to superiors and colleagues on their birthdays, to female coworkers and subordinates on International Women’s Day – “ВосьмоеМарта” (March 8), to male coworkers and subordinates on the Day of the Defender of the Motherland – “ДеньзащитникаОтечества” (February 23). The last is somewhat analogous to Veterans’ Day or Remembrance Day. It is also treated as a counterpart to International Women’s Day and is thus typically an all-male celebration.
If someone gives you a gift at the office, you don’t have to open it immediately. If you give a gift to somebody at the office, you should simply put it a nice-looking and unwrapped box. The office security might want to check it, and they will probably damage any wrapping paper. If somebody gives you a birthday gift at home, you should immediately unwrap it and thank the giver.
Finally, when business negotiations end and everybody has exchanged gifts, always accept an invitation to dinner, no matter how tired you are. The Russians consider toasting to be a trust-building exercise, and you should, therefore, be present for that.
An Unfamiliar Business Culture
Since Russia has existed, there has been a belief system in place which boils down to “I’ll help you and you’ll have to help me.” The problem is that the Soviet system perverted what was supposed to be a kind of mutual support system. During the Soviet time there was plenty of rationing and what was thought to be fair distribution. This was widely complemented by gaining privileged access to both goods and services. These goods and services were traded using personal contacts and a wide network of distribution channels.
After the Iron Curtain fell, called in Russian “Железныйзанавес,” the way that people did business changed once again. Instead of personal relationships, there was a kind of informal way to do business. This was the set of unwritten rules that so many Russians operated under when they were looking to make deals and run their businesses.
Because the Russians have gone out of their way to make sure they don’t have a lot of concrete business rules, there have been even more kinds of ways to do business popping up. This includes a grim kind of barter system. This system has a truly dark side that has people who are in the business world gathering and trading compromising information about one another. Called “компромат,” this is such a common practice these days that a business person that doesn’t partake is considered weak and bad at their jobs. This has basically become a business sector in Russia in its own right.
Cards on the Table
There are certain rules for negotiating with Russian businessmen, and they include the following:
Don’t rush straight into the negotiations, for the Russians consider that rude. They view small talk as an important warm-up that will allow them to assess you and to demonstrate their hospitality. They will therefore ask you about your travels and hotel before getting down to business.
Russians know and believe the proverb, “Don’t change horses in midstream” – “Конейнапереправенеменяют.” In other words, don’t change your negotiating team unless you absolutely have to.
Russians follow a strict hierarchy. Even if everybody on the Russian team is an expert, they won’t speak unless invited to do so by their leader. Your team will get better results if you have a leader of similar stature to do the talking.
Russians tend to discuss the general principles and goals of a project before getting down to the details. Given that fact, you should begin your proposal with an overview of how your company can benefit theirs before discussing items like the exact schedule.
Russian negotiators often favor the tactic of “maximal initial demands with minimal concessions.” They often see compromise as a sign of weakness. Save any concessions for the end of the last meeting.
The stereotype of the secretive and mistrustful Russian does have its basis in historical fact. During a business negotiation, however, any apparent secrecy may just indicate that the Russian team underestimated the amount of details they needed to present. If you need said details, ask.
Don’t give up after an initial rejection. If a proposal has resulted in an angry refusal, change the subject or ask for a time-out to allow heads to cool. Avoid expressions like “Our offer is more than generous,” or “We are giving you a fair price,” because the Russians will view that as insulting.
Land of the Unwritten Laws and Rules
One reason why Russia is often seen as kind of a wild west when it comes to business is because the occupants of the country simply do not like all the rules and regulations that the West usually imposes on doing business. Corporate governance and transparency are things that Russian firms find frustrating. They also often believe the rules do not allow the businesses to operate as well as they might otherwise be able to operate.
The Russian government and business finds that every rule and law has an exception, as long as people can find it. Russians like to say that there is a kind of “inner mutiny” in their personalities that comes from decades of forced behavior. Now that the communist regimes have come to an end, people like the fact that there are ways to get around all the rules that most countries consider sacrosanct.
While companies in the United States tend to spend quite a bit of time pouring over all the laws that are on the books, Russia deals in more of an “unwritten rule” type of governance. The problem with this approach is that while Russians might understand some of these unwritten rules, people who are trying to do business with Russian businesses run into a lattice work of problems because they don’t understand what these unwritten rules are all about. This is also why Russian businesses have such poor reputations around the rest of the world. Companies from outside Russia have a hard time trusting those inside Russia.
Russian Business Culture
Managing Personal Relationships in Business
With the wide spread practices in the Russian business world that has people relying more on relationships and unwritten rules, the Russian business world is quite a bit different than what you are used to seeing in the United States. Because trust has become such a big part of the Russian business practices, people need to forge personal relationships with those they are going to work with.
This is an interesting juxtaposition for people who deal with Russians. There is an inherent lack of trust between people from outside Russia because there are rules that can be broken that other people would never know about. There are also rules other people don’t understand to stick to that Russians are going to hold up as sacrosanct. And then, of course, there is the fact that even Russians tend to look for compromising information about the people they are doing business with in order to get themselves a better deal.
At the same time, the Russians want to make sure they know as much as possible about the people they are doing business with. This isn’t even because they want to dig up dirt. They really do feel as though they should know the person they are working with personally. They want to know who they are married to, or that they are not married at all. They also want to know who their friends are and want to befriend those people.
The Russian Management Styles
The decision-making process and overall business culture can vary widely depending on the region and the sector. Most Russian businesses are run by a single strong figure and their closest advisors. Big corporations and public-sector institutions tend to make decisions slowly, simply because there are more layers of bureaucracy to contend with.
Russians, especially older Russians, fear punishment if something goes wrong. During Stalin’s purges of the mid-20th century, shifting responsibility onto someone else became a survival tactic. The Soviet system stated, “Инициативанаказуема” (“Initiative is there to be punished.”) Consequently, older managers who worked during the Soviet regime tend to be a lot more cautious and wary than younger ones. They generally take longer to make decisions or take risks than their younger compatriots. By contrast, smaller private companies run by young entrepreneurs tend to make decisions quickly.
Regardless of size, a company’s decision-making power will rest with the man at the top – and it nearly always is a man. You should therefore not waste time demanding explanations or decisions from junior or middle managers; they really can’t help you. Get as close to the top as possible; at least talk to someone who can arrange a meeting with the company director.
Getting the desired results from a Russian manager will often depend on your ability to forge a connection with him. Expect to attend a number of lunches and dinners while he gets to know you.
Managers Do Their Own Work
When it comes to the management level of the business world, you will find that the Russians have carried over their personalities from the Cold War. The Communist Party leadership would rarely delegate to their subordinates. This was because they didn’t want to run the risk of losing any of their collected power.
While power isn’t the same as it was back then, Russian managers still tend to not want to let the people that work under them know their plans all that often. Instead of having a team of employees work through issues to help a company succeed, there is still a very strict hierarchy where the leader at the top is the only one who can really make the decisions.
Some companies are very strict about this to the point where even small decisions that should be made by lower level employees have to be run up the chain. This feeling of guarding one’s job to the bitter end isn’t just in the larger firms. There are plenty of Russians in smaller firms that will not pass on information as a kind of way of making sure that the information they have will help them keep their jobs. At times, this can lead to a firm being vapor locked and unable to move forward on anything until the boss is present and weighing in on decisions one situation at a time.
Are Russians Hard Workers?
Typical Russian Work Day
Russian work culture, a reflection of the Soviet era, is much more autocratic than collaborative. One authority figure delegates the task to management and other employees without much fuss. Employees are commissioned to complete tasks and carry them out without questions and concerns.
Even with the strict culture, Russians like to ensure clear and thorough communication. So they prefer face-to-face meetings rather than written communication, which is used abundantly in American corporations. Interestingly, Russians rely on spoken words alone, so much so that they don’t tend to use non-verbal communication, like gesticulations. It is common to see Russian employees in a meeting sitting immobile, their mouths doing the talking without help from other body parts.
Their traditional values for establishing relationships and suspicion for strangers shows in their team structure. A team working on a project can expect to continue working together on other projects.
The Russian workday is usually from 9:00 a.m. to 6:00 p.m. Companies often hold early meetings around 8:00 a.m. and work overtime. Some businesses don’t start work until 10:00 a.m. Because hours vary, be sure to check the typical hours for a company you plan to visit.
Russian workers usually take lunch between 1 and 2 p.m. while some go later in the afternoon. The lunch meal always includes a hot soup which is a huge part of Russian food culture. Many people avoid dry food for lunch because “dry food causes stomach ulcers.” Work colleagues might even recommend that you eat soup instead of some dry food.
On average, Russians work more hours than Americans because they work more full-time hours and very often they work overtime which is rarely paid, and a very small percentage of the population work part-time.
A Rep for Being Hard Workers
Russians have long had the reputation of being hard workers. This was amplified by the birth of the Soviet Union, which took the approach that everyone had to work and work hard. People who truly embraced what the Soviet Union was all about were willing to spend days, weeks and months living in tents in order to work 12 hours a day and build the things that made the Soviet Union as strong as it was.
When Russia went from being the Soviet Union to just Russia, there were still plenty of people who were willing to work very hard. In order to help their country during the late 1990’s, more than 14,000 employees of the country’s largest energy company worked without taking a salary. These people worked for free because they knew the alternative would leave hundreds of thousands without power.
At the same time, there is a kind of dual personality within most Russians. They will have bursts of quite a bit of activity and then they won’t want to go to work at all. There is also a kind of inherent distrust throughout the country when it comes to entrepreneurs. At the same time, once these people have established themselves as successful businessmen, they will then be trusted and could even eventually earn the kind of loyalty that the energy company was able to get from their hard workers. This is one of the other reasons the Russians are not often trusted outside their country. They are hard to understand on a personal and professional level.
The Obstacles of Building Business in Russia
A Difficult Economy for Businesses
While Russia did have a kind of renaissance in the 1990’s when it came to the business environment in the country, it has fallen on hard times lately. This is largely because the Russian government under Putin has seized quite a bit of power when it comes to even private businesses.
One part of the business world that has been able to have success in Russia is their oil concerns. Over the last few years, oil exports have gone up by 55 percent, though there are plenty of experts who believe the country is relying on oil far too much. If there is ever a real drop in the oil prices the government could run into some serious problems. The kind of problems that would make it difficult to feed its people.
When it comes to paying workers these days, wages in Russia are rising but there is quite a gap between the haves and the have nots. Recent studies show that 15 percent of the Russian population is able to take in about 57 percent of the profits. This has led to more than 40 percent of the Russian people living below the national poverty line. Experts say that this is something that is only going to get worse as the years go on.
People talk about the fact that Russians cannot come up with savings accounts because they just don’t have anything to save. This is one of the reasons crime it still so prevalent all over the country.
A Country of Thinly-Veiled Corruption
Over the last few centuries, there is one aspect of the Russian economy that has remained consistent. Corruption is a part of life when you live in Moscow and the larger cities of the country especially. There is corruption that comes from the civil servants and corruption that comes for law enforcement. The top level of civil servants has always been considered quite powerful because they are able to change the rules when it comes who gets what and how much.
While it’s usually pretty hard to tell when someone is being corrupt, it’s so prevalent in Russia that there have been some ways in which people are able to come up with scientific numbers. According to INDEM, which is the Russian “Information Science for Democracy” foundation, says that the Russian citizens pay an annual amount of $2.8 billion (US) in bribes. It is also understood that as long as Russia tends not to pay its civil servants a wage that they can really live on, there is always going to be a high level of corruption in its government.
One of the most glaring examples of the rampant corruption in the Russian government came when a top soft drink manufacturer wanted to build a new plant. The company could not get approval of the plant because it was constantly failing fire safety checks. When the firm agreed to shell out the money in order to build a brand new fire station, the plant construction was finally approved.
Economic Woes Have Inspired a Bolder Approach to Finances
There were a number of economic downturns through the 1990s, such as severe hyperinflation at the start of the decade. Add that to the end of the pyramid financial schemes and the personal losses from the market crash of 1998 and it’s easy to see why societies everywhere have altered their perceptions of privacy and modesty. Where some cultures have maintained their respect for privacy over personal finances, other societies have grown more bold and inquisitive.
That new outlook may be most apparent in Russian society, where any topic is fair game. Those past economic misfortunes inspired many Russians to take a keener interest in the world of finance. From banking and interest rates to topics of investing, there is little mystery left to Russians about their economy.
As a result of that hunger for knowledge, Russians are insatiably curious about everything. They’re particularly interested in the costs of goods and services, as well as the salaries in various career fields. While it may seem rude to inquire about such matters in western societies, that’s not the case with Russians. The average Russian won’t be too shy or timid to ask how much you paid for your new car or how much you make a year. Even in asking about the details of your mortgage, there’s no offense intended. Your average Russian conversationalist is just curious. In speaking with him or her, you should be prepared to field a number of direct and personal questions, but don’t ask about their own income. Even though Russians like to ask foreigners about their salary, often they won’t be willing to discuss their own finances.