Russian companies battle against talent squeeze
The growth of the economy and a decreasing population are making it harder for companies in Russia to fill vacancies. Talent shortages in the Russian workplace are now a reality and are likely to increase in coming years, prompting local companies and those firms with operations in Russia to invest further in recruitment and retention policies. Employees are demanding long-term benefits and career opportunities, and companies will need to respond accordingly.
Bridging the talent gap in Russia, a report by the Economist Intelligence Unit and Neumann International, surveyed 193 senior executives of companies of varying sizes and from a wide range of industries based in western, central and eastern Europe. Respondents, all of whom operate in Russia or have knowledge of the market, were questioned about their attitudes towards talent management in Russia, including current and future challenges. The research was carried out in July 2008.
According to the survey, the costs of acquiring and retaining talent in Russia are on the rise and will lead to companies battling it out for the best candidates. As a result, executive boards will devote an increasing amount of time to talent management issues and the role of Russian HR departments is changing rapidly to meet the demands of the market—they are playing a more strategic role when it comes to talent management, rather than simply providing administrative functions, according to nearly two-thirds of those surveyed (61%).
The rising costs of finding, retaining and remunerating staff is a major challenge for human resource departments in Russia today, with just under one-half of survey respondents expecting to see associated costs increase in the next three years. The demand for experienced managers, for example, is increasing, often outstripping supply, and this situation is likely to be exacerbated by Russia’s declining population.
This reflects the increasing pressure that businesses—and not only those based in Russia—are under to address talent gaps in the workplace. In the survey, companies agree that the biggest hurdle facing HR departments is the search for skilled employees. When asked what factors are contributing to a shortage of managerial talent in Russia, nearly two-thirds of respondents (61%) said a lack of exposure to customer-focused culture is a challenge, while 55% said that competition for talent in Russia is increasing.
The surveyed respondents identified a competitive salary scheme as the most important factor for nurturing talent alongside financial incentives, such as regular salary reviews and bonus scheme. According to Kurt Marx, principal at Neumann International: "Retention of key talent is the most important aspect of human resources policies in Russian companies and money plays a crucial role. Most candidates still make their decisions predominantly based on the salary offered."
Some companies are looking to recruit from overseas to combat the shortage of skilled employees in Russia. In our survey, 26% of respondents expect the proportion of senior executives they recruit from outside Russia to increase, while 49% expect this number to remain the same and 16% say this will decrease. Firms in the energy and natural resources sector are most likely to hire employees from abroad (75%) compared to 23% of those in financial services and 24% of those in IT.
The survey found that general management and sales and marketing are some of the hardest positions to fill. Just under half of those surveyed said their business finds it hard to attract talented employees for general management positions, while 39% believe there is a lack of skilled employees for sales and marketing. The ability to think strategically will also be a skill very much in demand, with 38% saying strategy and business development is a difficult role to fill. The findings are similar for those companies based exclusively in Russia.
The survey further shows that language and cultural issues are the main barriers when recruiting employees from abroad to work in Russian organisations. While some Russian companies are actively looking overseas in their search for talented employees, language barriers remain a problem. The survey panel cited language barriers (36%) and cultural understanding (31%) as the two factors most likely to hinder the recruitment of employees from overseas.
Sales and marketing experience, the ability to manage change and strategic thinking are becoming increasingly sought after skills, particularly as companies are expanding through acquisitions and joint ventures—both at home and abroad. This is prompting companies to invest further in workplace training and personal development. Financial rewards such as bonus schemes remain attractive and many companies are recognising the need to introduce competitive salary schemes—a failure to address this could lead to many firms losing out in the battle for the best candidates.
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For further information, please contact:
Kurt Marx
Principal
Peter Forro
Senior Consultant
Mosenka Park Towers
19 Taganskaya Str.
109147 Moscow, Russia
T. +7 495 258 59 34