Studies Eastern European Markets
Eastern European Markets
September, 2006

Heidi Kivelä
Northern Dimension Research Centre
Publication 33

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In the end, it is time to get back to the beginning and to think about the research problem. The focus of this research report has been identifying training needs related to business competence in Finnish companies operating in the Leningrad Region, Russia. In addition, following sub-problems have been set:

• What is viewed as business competence in the companies?
• For which reasons do training needs occur?
• What is the current situation in the training market in St. Petersburg like?
• What are training practices in the companies like?
• What challenges do the companies face with recruitment?

According to research findings, several interviewees consider business competence as competence related to operating in the market or business environment in question. In addition, competence in leadership and management, as well as technology and products are important elements of business competence.

The companies involved have business competence related training needs in the following fields: knowledge of sales, market and clients; managerial skills; legislation and accounting; internal cooperation within the company, and languages. According to the interviewees, some of the major reasons behind the training needs are the rapid development of the market and the growth of the company. Surprisingly, also the Russian educational system itself is seen as a background factor for training needs. The training market in St. Petersburg is saturated, when it comes to short trainings that are open for everyone. There is a serious shortage of qualified trainers, which Å| on the other hand gives freelancers a good position.

When it comes to training practices within the companies, there are huge differences between the companies: the size or even the existence of a training budget, frequency of training employees and selection criteria for choosing a training organization seem to be greatly company-specific issues. However, what seems to be in common for many companies is the most popular form of training: in-house training programs.

Recruiting new employees has become difficult, while companies are struggling in order to survive in the very competitive labor market. Skilled specialists are aware of the value of their competence, ask for sky-high salaries and companies have no other choice but pay. In order to increase the number of qualified workforce in the market, some companies have established cooperation programs with universities and other educational organizations.

In conclusion, some additional remarks are made and the data and findings are examined from different perspectives. First, it is interesting to examine the link between business competence and training needs – how they match to each other when the focus is on the empirical data. For most parts they do match, but some exceptions exist.

However, when discussing training needs this topic was basically neglected. What is the reason for that? Does everyone already have perfect knowledge of technology and products, and training is not needed anymore? Or is it considered as a factor that cannot really be trained, but needs to be learnt in some other way (through experience, for example)?

Besides technology and products, also business competence concerning operating on the market in general was highly stressed by a huge number of interviewees. Still, no one really spoke about it as a training need, at least in the same way. It seems to remain as a mystery, how one should acquire competence on operating in the Russian market. The interviewees did not seem to consider training as the primary way of doing that, and even extensive experience had not been enough for some of them. Supposedly the next step is that one should be born with certain competence.

Second, in order to evaluate the training needs in terms of the geographic location chosen for this research project, training needs related to legislation or accounting are the only factors among the training needs mentioned by the interviewees that could be considered as especially typical for companies operating in Russia. Legislation and accounting regulations are experiencing changes considerably often there, so it is natural to have training needs related to these topics. Otherwise the training needs identified are more or less universal: managers in any parts of the world may have training needs in management and leadership skills, for example. However, from this perspective it seems a bit controversial that the most important business competence according to the majority of interviewees was competence related to operating in the market....

Third, if the data is examined from the perspective of the nationality of the interviewees, only a few differences may be identified. The most outstanding difference concerns the views on the importance of market related competence as a part of business competence. However, even if this kind of a view was shared by several interviewees, almost all of them were Finns, who often made comparisons between operating in the Finnish market and the Russian market. It is worth considering, whether all the people who are working in a foreign country do comparisons at every turn, or only the ones located in Russia. Most likely all of them do, but probably depending on the level of difference that they have experienced between the market in their home and host countries. While Finns who are working in Russia stress so strongly the importance of the competence in operating in the market, it can be assumed that they find the local business environment relatively different from Finland.

But on the other hand, why did not the Russian interviewees speak about business competence related to operating in the market? Do not they find it important? Most likely they do, but as Russians they are probably in a way “blind” for the fact that they are operating in some specific market, and thereby might use some other expressions for describing their views. For Finns it is more obvious while they do operate in a foreign market, and are aware of that – probably all the time. For example, some Finnish interviewees stated that it is important to know the business environment and the history of the country in order to realize what the background of the employees is like, and how they should be led. However, a Russian manager would most likely simply emphasize the importance of leadership skills in general.

Another training need that was mentioned only by Finns was distant leadership – how to develop a way to manage one’s subordinates, whose location is not the same as one’s own.

For example one of the Finnish interviewees was having problems with managing people located in St. Petersburg from the Finnish side. In this case it is of course more than natural that only Finns mentioned this particular issue. However, what is worth noticing here is that these interviewees stated that it was their problem to find a way to manage the operations and lead the people from another location, instead of suggesting that their subordinates would need to be somehow trained for this purpose.

Fourth, after focusing on what the interviewees really said, it is worth checking what they did not say. The four stages of training employees are 1) assessing the training needs, 2) planning the training, 3) carrying out the training and 4) evaluating the training (Foot & Hook, 1999). In the companies involved it seems that mostly the three first stages have been taken care of – at least to some extent. The interviewees have identified some training needs (stage 1), and Recruitment they have planned and carried out training programs (stages 2 and 3). However, an interesting note is that in the interviews training results were totally ignored by the interviewees.

Mostly they sidestepped the question, or alternatively chose to answer by speaking about some completely different matter. Why did that happen, then? Did the interviewees know about the results of training, but chose not to share them in the interview? This seems unlikely. It can be assumed that if any manager had noticed, for example, 20% increase in sales after finishing a training program with the sales team, the manager would have no doubt shared that with the interviewer – probably feeling proud for that result. Or is it so that the interviewees just have not thought about the whole matter at all? Maybe they are just happy after arranging an exclusive training program for the personnel. While being (too) satisfied with the training program itself, they forget to think about the next step. Or is it truly so that the interviewees simply do not know the results of training? It is possible that they actually do not know how to explore the impact that training has had on the employees. It might be seen as too difficult, and thereby no resources are spent on that. However, even in this case it would be possible to create a subjective overview on the matter, as few interviewees did.

Fifth, when planning and arranging training programs for Finnish companies operating
in Russia, what should be taken into account? Findings from the interviews suggest that
offering tailored training would be a good choice. First, the training needs and preferred
training methods seem to vary a lot depending on the company in question. Second,
considerably many interviewees have had negative experiences of sending employees to open seminars. Third, according to the experts that have told about their views on the training market in St. Petersburg; when it comes to open seminars, the market is full. For these reasons it is logical to assume that offering tailored training for Finnish companies in the Leningrad Region is more than reasonable.

According to the management studies that the author has explored, attempts to apply Western concepts without any adjusting for the business environment in Russia, will most likely fail.

This is a major factor that training organizations, that are thinking about entering the Russian market, need to keep in mind. Before offering business training in Russia one needs to understand the basics of Russian history and political development, to analyze the Russian audience and to adapt the presentation based on the specifics of the Russian market (Varner & Varner, 1994). In addition, the trainers need to show respect for the managers’ past experiences and circumstances (May et al, 2005). Some interviewees involved in this research project have referred to this particular issue directly as well. However, also the fact that competence related to operating in the market was emphasized strongly by the interviewees supports the statement, that training should always be adjusted according to the specifics of each business environment.

A more general, but still highly important suggestion for training organizations is to decrease the gap between theoretical instruction and practice (Iitti & Stenberg, 1999). The information received from trainings has been often considered as too superficial and generalized (Lindström, 1996). The importance of practical training is high also because the Russian educational system itself lies greatly on theoretical instruction.

And finally, in order to suggest some future research topics, the author would find it interesting to study the business competence and related training needs in Russian companies.

Now the selected companies were all, at least partially, Finnish. Second, the overall role of HR as a function in companies in Russia would be another possible way to expand the scope. The author’s final, a bit different suggestion compared to previous ones, is to focus on business competence itself, and conduct a discourse analysis of it. After all, the concept desperately needs to be clarified, while everyone is using it but no one knows how to define it.

To put in a nutshell, managers of Finnish companies operating in the Leningrad Region seem to be quite well aware of the competencies and competence gaps regarding the employees.

Almost all of these managers have already started to act accordingly, and training programs have been established. Some managers are also thinking about the future, and strategic plans have been made regarding the competencies that will be needed in the future. The companies are growing: new offices are being established to Russia and new investments are on their way. The Russian market is absolutely booming at the moment.

Despite all the question marks over the future, such as the big one concerning the poor availability of qualified work force, the actors in the market remain extremely positive and confident. The views of the interviewees may well be summarized to the following statement, made by Interviewee C:
“…Russia in our business is hopefully the future Eldorado.”

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NORDI, Northern Dimension Research Center
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