Global business service (BS) companies are the newcomers in the economic arena of the Russian capital city. Every morning they open their doors for thousands of well paid Russians and expatriates. Their solid educational background, professional experience, practice of working and communicating internationally, and high demands in consumption make this group of employees quite distinguishable on the labour market and in social life generally. They create a certain social and cultural environment, within which their separate world is operating. They accept values and norms, set by the mother companies, and are determined to support the corporate spirit. They have more in common with their colleagues, working for global firms elsewhere abroad, than with the majority of the local population with relatively low incomes and a very different life style.
The post-socialist countries, Russia among them, still remain in the shadow of the academic debate on globalisation, although more and more international companies include these countries into the orbit of their corporate networks. Setting up offices in the largest cities of Eastern Europe, global BS companies look for the most convenient ways of embeddedness into the local and national economies. As the largest post-socialist city Moscow has acquired many new international functions in the last 15 years and it got strongly involved in global corporate networks. Globalisation and rapid economic restructuring resulted in a booming growth of the BS sector, which had a strong impact on the economic and social profile of the Russian capital city.
The arrival of the global BS companies has initiated three important processes. First, it was followed by the inflow of a transnational elite – professional and managerial workers, which formed a completely new type of community within the city . Second, it created new employment opportunities for a large cohort of highly educated Russian professionals. These two categories are less easy to distinguish, as it would appear at first glance. Thirdly, it stimulated the development of a domestic BS sector providing further job opportunities for expatriates and Russians. As compared to the major world cities, all these developments happened in Moscow compressed in a rather short time – between the late 1980s and late 1990s.
The aim of this paper is to describe some aspects of the social profiles of the work force of global service companies represented in Moscow and to infer the conditions set by the local labour supply for these categories of jobs and the strategies of personnel recruitment used by the companies operating in Moscow. The study is focused on three points: 1) the proportions of expatriates and Russians occupying the top positions in the global BS companies, 2) comparisons of their careers and educational background; 3) differences between the BS sectors.
The paper starts with a theoretical introduction, which contains a review of existing studies on professionals and managers in global business services and their impact on the work force of world cities, some features of the relevant Russian labour market and business environment. The second part presents the results of empirical research aimed at the three points just mentioned. The third part analyses the trends in the transformation of this part of the high-waged labour market in Moscow as compared with the Western global cities.
GLOBAL CITIES AND THE “PROFESSIONAL UPPER CLASS”
Internationalisation of advanced producer services in the global space economy is a fundamental attribute of the changing spatial division of labour within the global cities (Sassen, 1991). Most of the existing literature is focused on the international flows of professionals and new expatriate communities, undeservedly leaving behind the screen the local participants in these new forms of global business.
The “restructuring of labour demand within global centres, shaped by the growth of the advanced producer services” (Sassen, 1988) is accompanied by the emergence of expatriates’ communities, representing the multinational corporate employees. “Professional migration flows”, “new forms of brain drain”, “knowledge management and expatriation”, “transnational professional business elites”, “transnational elite communities” – these notions became quite common in the global city literature of the last years. An emerging transnational elite is also recognized as an essential actor in the Castellian space of flows, where flows of people, along with “flows of capital, flows of information, flows of technology, flows of organizational interaction, flows of images, sounds and symbols” (Castells, 2000, p.418) are considered crucial in the reproduction of the global cities (Beaverstock, 2002).
Beaverstock (2002, p.91), analyzing the expatriation within London headquartered firms explains that “firms expatriated staff for three reasons. First, for staffing (to provide generic expertise and technical skills; balance skill shortages; manage offices/departments). Second, for management development (as a part of an International Career Development Programme, or for graduate and technical training). Third, for organizational development (to disseminate corporate culture and policy; offer clients a ‘seamless’ operational capacity; network, in business and social circles.” He also concludes that “international mobility between firms and different international locations via expatriation was viewed by all the expatriates as being the most important process by which they accumulated specific financial/market/client knowledge or ‘know-how’, and disseminated such knowledge/’know-how’ into different working and cultural environments” (p.92). Quoting Morgan (2001, p.118), Beaverstock emphasizes that globalization forces have created a “new form of social space within which ‘transnational communities’ can emerge”.
The impact of international professional service firms on the local labour markets, where they get established, is rather mentioned within a general discussion on labour markets restructuring, without specifying the cultural component of restructuring. More likely is to meet general studies on the new business environment in countries like China or Russia, where the transformation to the market economy happened relatively recently (Holden, Cooper and Carr, 1998; Dahles and Wels, 2002). Here the role of the local professionals is not clearly defined but the assumption is that the knowledge of the ‘cultural factor’ and specific business environment of a certain country is always an extra bonus for their career in the international companies.
Research on Western global cities revealed that the expansion of the BS sector in the 1970-1990s has made a deep impact on urban labour markets. First of all, it changed professional requirements needed to satisfy the demands of the BS labour market, - like suitable level of education, ability for analytical work and conducting expertise, the skill of working with clients etc.( Lowendahl, 2000, p.20). Second, it produced a market increase in the demand of the high-waged labour and caused “the slow breakdown of traditional class structures and a reinforced gendered division of labour” (Beaverstock 1996; 1991; Leyshon et al, 1989; McDowell and Court, 1994a; Thrift and Leyshon, 1992).
Referring to Thrift and Leyshon (1992) and Thrift et al. (1987), Beaverstock (1996) emphasizes that in the Western global cities (London is a typical example) the new entrants to the labour force are not anymore coming only from upper or upper middle class backgrounds associated with the major public schools and universities, as was the case until the mid-1980s, but that they are recruited from a diverse range of educational and class backgrounds. Another feature of labour market restructuring within professional and managerial occupations has been continuous sex segregation; with a disproportionate share of male workers in the high-status command and control functions and females classified mostly as clerical workers.
The new market economies, like Russia and other post-socialist countries, seem to have certain characteristics, which are different from those that are common in the developed world. Some of them derive from the late and rapid economic restructuring. Under socialism, if foreign companies were present at all, they only had representative offices. As transformation went underway, foreign companies had to build up their commercial activity within a very short period of time, looking for ways to quickly adapt to the Russian economy suitable for the transitional period. Their expansion was accompanied by considerable lack of balance on the national labour market: demand for certain professions increased at a steeper rate than the supply of qualified personnel. Other differences result from the so-called post-Soviet syndrome (underdevelopment of the market system, remaining imprints of the old system in high education, the absence of experience in making international careers in business etc.) A high share of women among the highly educated professionals is also a heritage of the old system, when two incomes in a family was a norm and there existed a developed system of child care as a combination of both traditional (grandparents) and modern (kindergartens) elements.
Dahles and Wels (2002) emphasize that global companies, establishing offices elsewhere, have to adapt to the new cultural environment, and have to understand the business culture and mindset of their local partners and employees. At the same time, however, their activity contributes to a slow transformation of this environment, by introducing the internationally accepted norms and values. But the key features of an established culture still remain untouched, making differences in the operational style of the same company in different countries relatively stable. This thesis was confirmed by the research of Hofstede (1989, 1994), who studied the operational strategy of large international companies in different countries.
The resulting strains in the case of Russia were analysed by Holden, Cooper and Carr (1998). They try to answer the question, if market relations can be compatible ‘with deeply held Russian values and needs about mutual responsibility, egalitarianism and grassroots democracy, all of which foreigners always misunderstand and therefore disesteem’ (p.137-138). They emphasize that the Russian management style carries a strong impact of 1) overall political and economic uncertainties, 2) a marked tendency to assume that accumulation of experience is tantamount to managerial development, 3) a marked tendency to get heavily involved in “operational questions” and not to tackle strategic issues, 4) an assumption that somehow the state will intervene and help resolve some of the financial problems (p.136-137). They also mention as important the Russian tendency to make decisions based on intuition and the emergence of a generational gap between older managers (especially those accustomed to Soviet-style authority) and younger employees, who may be well educated and more open to new (western) ideas. Basically the message of the authors is that Russian and Western managers, operating jointly in Russia, have a lot of misunderstandings, resulting from their roots in a different business environment and the specifics of the Russian management style.
This suggests two contrasting lines of argument concerning personnel recruitment in the globally operated BS sector in Moscow. They can be stated as two contradictory hypotheses:
The empirical analysis of this study cannot provide grounds for definitive choice as we lack the necessary labour market and personnel recruitment decisions data and the international comparative evidence. But we get a glimpse via some qualitative data on the actual composition of personnel in the Moscow offices of global BS companies including their background and career paths.
DATA COLLECTION AND SURVEY METHODS
Data on economic activity in Russian cities and regions remain relatively poor and unreliable. Russian official statistics are changing very slowly and are to a large extent still based on old classifications. BS are not present in the sectoral structure given by the official statistics and are dispersed among various sectors, thus practically being hidden behind the screen. Statistical information on the largest BS companies and their employment structure is also not available.
To collect reliable primary data on the personnel structure within the Moscow offices of the global BS firms, I analyzed the websites of the top-100 global BS companies. The list of these companies was developed by the Loughborough group (http://www.lboro.ac.uk/gawc) and used for similar studies on other cities. The list includes 6 sectors: banking, insurance, accountancy, advertising, legal and management consultancies. As indicated by the authors of the list, the main condition for selecting companies was pursuing a global locational strategy, which means having offices in at least 15 different cities including one or more cities in each of the prime globalization arenas: northern America, Western Europe and Pacific Asia (Beaverstock et al., 1999 and 2000). For those companies which meet this condition, a further selection is done: “starting with rankings showing the top firms in different sectors, firms are selected on the basis of the availability of information on their office network. In addition, since one obvious research interest is comparison across different service sectors, firms are only included in the data in sectors for which at least 10 firms are identified” (Taylor, Catalano and Walker, 2002, pp.2369).
Many of the companies with offices in Russia provide their websites with career descriptions of the top personnel. This information allows tracing the educational and professional background of the expatriates and the high-ranked Russian employees, working for the global top-100, as well as to identify differences between sectors. Two things became clear at first glance. First, companies, specializing in professional services aimed at analysis and advice (lawyers and management consultancies) provide as a rule much more information on their staff than BS of applied character with a higher share of routine operations (advertising, accountancy companies and banks). Second, companies, which are direct branches or subsidiaries of Western mother-companies, tend to give more information about their personnel than those operating as purely Russian legal actors.
Information from the websites was arranged in a data set. Its analysis was followed by telephone and e-mail interviews with officials in the Moscow offices. Websites and interviews made it possible to trace the importance of international careers and educational background of different groups of BS employees.
Although the main attention is paid to the top personnel, in some cases the profile of the support staff is also mentioned as a contrast to the professionals. This difference is especially worth mentioning for the companies, providing packaged services of an applied character, mostly financial ones, because the share of the support staff in this type of firm is quite large.
It is important to remember that because of permanent mergers and break-ups within the BS sector based in Moscow, many of these Moscow offices are only temporarily linked to specific global companies. The data set used in this article refers to August-November 2004. Several of the offices in the dataset turned out to operate in a different guise a couple of months later. Some of them apparently felt strong enough or were forced to become autonomous Russian companies; others just got different global partners. Unfortunately we have no way of knowing the overall volatility of these business structures so far.
MOSCOW'S "NEW PROFESSIONALS" IN THE GLOBAL SERVICE COMPANIES
The expatriates make up a substantial part of the top personnel in the global BS companies’ offices in Moscow. Their presence was especially noticeable at the first stage of global BS firms’ activity in Russia, when the Russian labour market, though rapidly changing, was still slow to restructure and lacked sufficient numbers of professionals with appropriate education and skill (as mentioned by Lowendahl, 2000). But even now expatriates still occupy many of the key positions in the Russian offices, although their involvement strongly varies among the sectors and among companies with a different legal status.
My previous research (Gritsai, 2004) indicated that companies with a different modus operandi have different personnel requirements. Advanced BS (lawyers and management consultancies) generate recommendations, advice and evaluation, for which good education, diplomas and formal training are needed (Coffey, 1996). They are relatively small-scale, both in terms of employees and office space, and have more professionals employed than support personnel. In these companies the share of expatriates is usually quite high (up to 2/3) and they occupy not only managerial but also “professional” positions (like partners, consultants or experts).
Financial services (banks, insurance and accountant companies), as well as advertising, have a more practical profile of activity and have a high share of standardised operations and routine jobs, offering numerous packaged products or sets of services, and employ many people without high skills. Here the Western personnel, if any, is present only among the top executives (top managers and heads of regional offices), supervising the general strategy of a company’s activity. The middle level of management and the routine jobs are executed mostly by the local employees.
The second factor explaining the share of expatriates, is the legal status of a company. There is more chance to meet an expatriate in a firm operating as a direct branch of a Western mother company, than in a Russian subsidiary or network partner. All the global law firms and most of the management consultancies operate in Moscow as purely Western companies; this also partly explains a higher presence of foreign personnel there.
Global accountancies and advertising firms are organized not only as direct regional offices but also as Russian partner companies, joint ventures and subsidiaries, operating as Russian legal actors (Gritsai, 2004). Some of the global accountancies (Ernst&Young, Deloitte Touche, KPMG or Pricewaterhouse Coopers), mostly those registered as foreign legal actors, do have expatriates in their management, while companies, operating as Russian partners of international networks (like Paccoli/Nexia International)- do not. In a similar way within the advertising sector Young&Rubicam, BBDO and J.Walter Thompson do have expats in their management while companies like Maxima Group (partner of Euro RSCG) or Media Arts (partner of FCB) – do not. Recently it became quite common for big advertising agencies, even in purely Russian companies, to employ one or two expatriates, which provide information about Western experience and lobby for the Western clients. In this way Russian agencies try (and quite successfully) to compete with global BS companies.
A similar pattern is common for the global banks. Two-thirds of them have a representative office, run mostly by the expatriates. The remainder are subsidiaries (operating under the name of the main bank but registered as a Russian legal actor), where the top-level personnel are mostly Russians The only global insurance company, present in Russia, Allianz, operates in Russia indirectly, as one of the two major shareholders of the Russian largest insurance company Rosno. Rosno, being legally a Russian company, also has only Russians among the top-managers.
Most of the expatriates, working for the Moscow branches of the global law firms and management consultancies, have got an education in highly reputed universities (Oxford, Berkeley, Princeton, New York, Georgetown and Boston universities and others). For many of them Moscow was not the first destination in their professional career: quite a few had already an experience of working in other world cities. Among the previous places of work London and New York are most frequently mentioned, followed by Frankfurt and Tokyo. For the financial companies (banks and accountants) the experience of working in Central and Eastern Europe or CIS countries seems to be more important than the educational background. Those without an East European experience have, as minimum, passed training courses on Russian language and business culture in one of the world top universities.
Michael B. is a partner in Linklaters Moscow. Education: 1990 - Princeton University, B.A., 1995 - Georgetown University, J.D. Profession: Attorney at Law, Member of the Bar of the State of New York, Solicitor of the Supreme Court of England & Wales. Professional experience: 1995 - 1996 Associate, Project Finance Group, Milbank, Tweed, Hadley & McCloy, New York; 1996 - 1997 Associate, Allen & Overy, New York; 1998 - 1999 Associate, Allen & Overy, Moscow; 2000 - Secondment to the Finance Department of Marconi Plc, London; 2001 - 2003 Associate, Linklaters, Moscow; 2003 - Partner, Linklaters Moscow. (http://www.linklaters.com/locations/cee/english/offices/)
Mikael N. is a partner in McKinsey Moscow. He joined McKinsey in Stockholm in 1990, and prior to moving to Moscow worked in Munich. Mikael has an MSc in Engineering Phisics from the Royal Institute of Technology in Stockholm, and an MBA from INSEAD. Experience: Seiko Instruments, Japan, Summer Intern, '90; Royal Institute of Technology, Sweden, Research Engineer, '89-'90; Daimler-Benz AG, Germany, Summer Intern, '87; Temaresor, Russia, Tour Conductor, '87-'90; Army, Mandatory, '85-'86 . Background: Business/Management, Liberal Arts, Science. (http://www.mckinsey.com/locations/moscow/office/ourpeople/ourleadership/)
Mikael C. is a Co-Managing Partner of Baring Vostok and a member of the Board of Directors of both Baring Vostok and Vostok Capital. He has been working full time in Moscow on the First NIS Regional Fund since its inception in 1994 as co-manager of the fund. He is the Chairman of the Investment Committee of the NIS Fund and currently sits on the Board of Directors of five of the NIS Fund’s portfolio companies. Prior to working on the NIS Fund, Mr. C. worked at the European Bank for Reconstruction and Development (EBRD) and Salomon Brothers Inc. on a variety of direct investments and corporate finance assignments, principally in the oil and gas sector. Mr. C. has an M.Sc. in Finance from the London School of Economics and a BBA from Oklahoma University.( http://www.baringvostok.com/company)
Jean Michel B. is a Senior Partner and a member of the Board of Directors of Baring Vostok Capital Partners. Mr. B. joined Baring Vostok in November 1997 and is a member of the Investment Committee of the NIS Fund. He currently sits on the Board of Directors of four NIS Fund companies and two Sector Capital Fund companies. Prior to joining Baring Vostok, Mr. B. founded and managed two business ventures from 1991-1997 in Moscow in food distribution and electrical materials distribution. Prior to this, Mr. B. worked for six years at Bain & Company in London, Paris and Moscow. Mr. B. has an MBA from Wharton University, an M.Sc. in Systems Engineering from the University of Pennsylvania, and an undergraduate degree in mechanical engineering from the Ecole Nationale Superieure des Arts et Métiers in Paris. (http://www.baringvostok.com/company)
Some global BS firms establish special daughter companies, running all the operations in Central and Eastern Europe. In these cases rotation of the expatriate personnel takes place to a large extent between the East-European offices and there is a big chance to see well-educated East-Europeans among the staff of Moscow offices. For instance, the advertising company J.Walter Thompson has organized a joint venture with another advertisement giant Ark Communications, with four offices – in Moscow, Kiev, Prague and Bratislava. As a result, the top personnel of the Moscow office include two Westerners, two Czechs and two Russians.
The East-Europeans are also more and more recruited by the Russian companies (network partners in a global conglomerate), which in the past were working with Russian personnel only. A good example is the advertising company Media Arts-FCB, which has recently contracted a creative director from Poland to work in their Moscow office.
Maciek N., aged 41, is one of the most experienced people in Polish advertising industry with 15 years in business. He graduated from Warsaw University majoring in Political Sciences, but in his pre-advertising incarnations happened to be radio DJ, TV anchorman and paparazzi among others. Since 1989 Maciek has been working for McCann-Erickson, Ammirati Puris Lintas Warsaw, Euro RSCG Warsaw, FCB Warsaw, and J.Walter Thompson Warsaw, where he worked the last three years. As the creative director he managed to elevate the JWT Warsaw creative department from the last place in the Region (35 countries) creative ranking to the 13th place in the first year and 8th place in the second year, ahead of well established offices like Paris, Frankfurt, Rome or Barcelona. (http://www.mafcb.ru/agency/team/eng.shtml)
It is quite common for many firms (especially lawyers and consultancies) to recruit emigrants from the former Soviet Union, or rather their children, which after getting a higher education in the West return to Russia as Western experts with a good knowledge of Russian language and culture.
Irene, partner, McKinsey- Moscow, Started in 1995. Education: M.B.A., Harvard University Graduate School of Business Administration, '95; B.S., Biochemistry, Brown University, '89; Experience: Goldman Sachs International, '94; Chase Securities International, '92-93; The Chase Manhattan Bank, N.A., Assistant Treasurer, '89-'92. “Having been away from Russia for 15 years, I found it awe-inspiring to return and contribute to the country's transformation - and to be among the builders of McKinsey's Moscow office. When I joined the Moscow office in 1995, it operated partially out of an apartment, had two clients, and was home to a group of associates you could count on one hand. Selling that position as a great career move to a newly minted Harvard M.B.A. like me was no simple feat. I clearly remember two Moscow Partners' pitch to me as I was deciding whether to go into investment banking, pursue a more traditional consulting career in London, or join McKinsey in Moscow. ‘Build the office and the country!’ They said, urging me to go to Russia for the entrepreneurial challenge”. (http://www.mckinsey.com/locations/moscow/office/ourpeople/ourleadership/)
Gennadii, partner, McKinsey-Moscow, started in 1993. Education: M.B.A., Finance, University of Pennsylvania Wharton School, '93; M.S., Electrical Engineering, Stanford University, '88; B.S., Electrical Engineering, Cornell University, '87. Experience: Bell Communications Research, Member of Technical Staff, '88-'91. Background: Business/Management, Engineering. “Born in Zhitomir, Ukraine, Gennady left for the U.S. with his family in the late 1970s. There, he graduated from Cornell and Stanford universities with degrees in Electrical Engineering. After working for defense and telecommunications enterprises, Gennady decided to enter Wharton Business School. "I was getting bored being an engineer and needed a clean break. After spending several months as a summer associate in McKinsey's New York office, Gennady felt that he had finally discovered something that could keep him interested for at least "the next 2 years." That was 8 years ago. Gennady has since moved to Moscow. "I never thought I'd be back in Russia, though I was always fascinated by the country and its people. It is just that when I was leaving the Soviet Union, things were very different. Six years, two children, and many projects later, I know I have made the right decision." (http://www.mckinsey.com/locations/moscow/office/ourpeople/ourleadership/)
In short, expats are vital to the functioning of the Moscow offices of globally operating producer services. This is particularly the case for advanced business services like lawyers and management consultants and for offices that are directly owned by foreign firms. These expats are highly educated professionals some particularly aimed at Eastern Europe as a whole and a considerable number with emigrated Soviet family backgrounds. However, expats have never monopolized these jobs and their predominance seems to diminish somewhat over time. In the last few years a new trend is detected: Moscow is becoming a more and more attractive place for the young Western professionals, encouraged by the possibility of making a quick career and finding here a rapidly developing social and cultural environment, essential for this group of people. Interviews with representatives of the large headhunting agencies show that the number of graduates of the well-known Western business-schools and universities, interested in getting a job in Russia, is growing. They look at Russia as an elevator, able to lift them to a certain level within a twice-shorter period than in any Western office of the same company. The offer of Western specialists, who want to work in Russia, is big enough to make even purely Russian companies recruit staff from abroad. It makes them highly selective in their choices, demanding the knowledge of the Russian language as one of the essential criteria for getting a job (Vasiljeva, 2004).
The Russian professionals, working in BS companies, are rather different from their colleagues-expatriates by age and sex composition, educational background and career path.
Their most distinctive attribute is their young age. Russian professionals working for the global companies are generally much younger than expatriates because 1) it is mostly the young generation of Russians which has adequate computer skills and knowledge of foreign languages, 2) Russian universities formerly did not produce diplomas, necessary for working in global BS, 3) possibilities of getting a Western education until recently were rather limited.
There is a clear difference between sectors, which existed in Russia before the transition and were relatively easily restructured under the market economy (like law or to some extent banking) and those, which had to be built from scratch (like commercial insurance or management consulting). The former had already a certain pool of specialists, which after some extra re-training could fill in positions in new companies. The latter had to recruit personnel from somewhere else. The extreme cases of this contrast are accountants (education in book-keeping existed for years) and advertising (diplomas in communication sciences are still rare).
Especially striking is the situation with specialists for the advertising business, as communication sciences are still barely included in the curriculum of Russian universities. As a result, personnel (mostly low- and medium-ranked staff members) are often recruited directly from universities with different degrees, and develop necessary skills in situ, mainly after short training courses, or just learning by experience. The age of these Russian employees in advertising normally varies from 21 to 35 with only the higher ranked managers being older. In advanced BS (especially lawyers), where getting qualification and academic degrees take years, careers, especially the international ones, start later, and most of the Russian partners or associates of global BS are in their thirties, with only few over 40. This is about 10 years younger than the average ages of expatriates, who work for the same companies and have followed more linear and steady career paths (most of them are in their forties). In financial services, where professional experience counts more than education, the average age of the Russian top-personnel varies between 35 and 45 for accountants and 45-55 for bankers.
The absence (or at least a much lower salience) of a gendered division of labour in the BS sector is another difference between Moscow and large Western cities. Russia traditionally had a high share of females with an academic education, including PhDs. As a result, the current cohort of professionals in most of the BS sector also has a high share of females, including those in the top managerial positions . It is especially pronounced in the professional services like law and management consultancies, as well as in the advertising business. In the financial sector (in banks, insurance companies, partly in accountant firms), like in the West, it is mostly men that occupy the top positions. Women rather occupy positions not requiring high skills, although also here the Russian situation looks pretty peculiar. Many of the low-ranked bank employees are middle-aged women with a high education, many of them graduates of technical higher education and universities, who preferred a less-skilled but better paid job in commercial banking and other financial institutions to a professional career with an uncertain future in their own field (Gritsai, 2003).
The importance of education and/or professional experience for different BS sectors is detected mostly by the attention, paid to these factors in the career descriptions. Here again we see the same difference between “advanced” and “applied” BS.
The global law firms tend to have especially detailed information on education: university background and professional degrees are the first credentials of the company’s quality. Many of the Russians working in these companies (those in leading positions as well as ordinary professionals) have a very high-quality education, with master and PhD diplomas, obtained in the best Western Universities, plus often a record of working for other international companies and organizations. Most of them have a clearly pronounced “accumulative” career curve (professional education, followed by getting practical experience in the same field and steady career growth).
Arthur I., partner, Clifford Chance, Moscow: Moscow State Institute (University) for International Relations, Master of Laws (International Law) 1988-1993; Georgetown University Law Center, Washington DC, Master of Laws (Common Law) 1993-1994; two major international law firms in Moscow, Paris, Washington DC and New York 1994-1996. Joined Clifford Chance Moscow in July 1996.
Ivan M., partner, Clifford Chance, Moscow: Moscow State University Russia, Law Degree 1981-1986 Post graduate studies 1986-1989, University of Vienna, study of Law and Economics with emphasis on commercial law and administrative law 1989-1990; Frankfurt University, Seminar in European Law 1992-1993 Linguarama English School for Business Language London 1994, 1996; Russian State Enterprise 1990-1991 International Foundation for Privatisation and Foreign Investment 1991-1992. Partner since 1997. ( http://www.cliffordchance.com/uk/locations/russia/index.shtml)
Dmitrii D., partner, Linklaters, Moscow: Education: 1989 - 1994 Moscow State University, Faculty of Law, MA (Diploma) Law, 1995 - 1996 University of Oxford, St Johns College, Magister Juris in European and Comparative Law; Professional experience: 1993 - 1994 Trainee, Linklaters Moscow, 1994 - 2000 Associate, Linklaters Moscow, 2000 - Partner, Linklaters Moscow. (http://www.linklaters.com/english/offices/index.html)
Oksana B., partner, Lovells, Moscow: Moscow State Lomonosov University (1992 LLB), University of Regensburg, Germany (1996 Ph.D.), Executive education at Harvard Business School, Boston, USA (2000), at European University, Florence, Italy (1994), and at Columbia Law School, New York, USA (1992), Daimler-Benz Foundation Fellow. Admitted in 1992; 1992-1995 Academic assistant at the University of Regensburg; 1994 Trainee at the European Court of Justice; 1995-2001 Lawyer and international partner in charge of the Moscow office of a major German law firm; joined Lovells as partner in 2002. (http://www.lovells.com/control/HTML/url/region_russia/tableCode/region)
In management consultancies education and professional experience sometimes co-exist in a complicated twist: many of partners and associates, working for the Moscow offices, graduated not in economics, but often in technical and natural sciences elsewhere in Russia or post-Soviet states, then studied in Western business schools (Harvard, Oxford, Cornell and Stanford are most often mentioned) and worked for other international companies or NGOs.
Denis, partner, McKinsey-Moscow, started in 1995. Education: Moscow State Institute of International Relations, '97; M.B.A., INSEAD, '01 ; Experience: Coopers & Lybrand, Research Associate, '94; International Business School, Expert, '91-'92.
Vitaly, Associate Principal, McKinsey-Moscow, started in 1997. Education: Moscow Engineering Physics Institute, '86 Ph.D., Executive M.B.A. Program, University of California at San Diego, '95;. Experience: Institute of Physics, Research Scientist, '86-'92; Polaris Capital Management, New York, Financial Analyst, '95; International Finance Corporation, Senior Project Officer, '95-'96. Background: Oil & gas sector, metals, transportation and logistics, financial industry, consumer goods, and arts.
Dmitrii, Associate, McKinsey-Moscow, started in 1998. Education: M.S. in International Relations, Moscow State Institute of International Relations, '95; M.B.A. in Business, Emory University, '97;. Experience: Coca-Cola Company: Packaging and Pricing Manager, '97, Summer Marketing Associate, '96; AMBIZ, Inc., Sales Representative, '94-'95. Background: Business/Management.
Avetik, Associate, McKinsey- Moscow, Started in 2001. Education: Yerevan State University, '97; M.B.A., University of North Carolina, '01; Post-Graduate Diploma,. Experience: Textima GmbH, Associate Director, '96-'97; Ministry of Industry of Armenia, Director, '97-'99; Solomon Smith Barney, summer associate,'00. Background: Business/Management (http://www.mckinsey.com/locations/moscow/office/ourpeople/)
The professional background of the Russian executives, working for the global banks and insurance companies, is very different from that of the lawyers and consultancies. Experience as a business top manager (not always in the financial sphere) is the most important factor for their career. Some of their careers look very “linear”: the former employees of the Soviet foreign affairs bureaucracy or foreign trade system used their professional knowledge for creating and developing new commercial banks in Russia, which later became Russian partners of the global banking networks.
Juri T., deputy chairman of the board of management, IMB (Bayerische HypoVereinsbank). Education: Moscow Financial Institute (international financial relations), 1976. Experience: Foreign Trade Bank (USSR), 1975-1987; V/O Khimmashexport. Ministry of chemical and oil industries (USSR), 1987-1989; Vneshtorgbank USSR. IMB creation working group, 1989; IMB since 1989.
Dmitrii M., member of the Board of Management, IMB (Bayerische HypoVereinsbank). Education: Moscow State Institute of International Relations, 1986, international economic relations. Experience: Ministry of Foreign Affairs, USSR, embassy referent, secretary-referent, attaché (1988-1992); IMB since 1992.(http://www.imb.ru/)
In some cases twists of the new bankers’ careers include changing speciality, getting professional education abroad (more for the younger generation), working in different large private companies. In this respect a peculiar collection of careers is represented in the insurance giant Rosno. Here the top executives (all of them Russians) have a big variety of diplomas: medicine, technical sciences, management, economics, finance, law and even a military institute. Many of them come from academic institutions and hold academic degrees. Quite a few graduated from Western Universities or business schools. The career paths are very different.
Levan V., Chairman of the Board. Education: Tbilisi state university, diploma in geophysics in 1992, Emory University Business School (Atlanta, USA), 1995; Experience: deputy general director of the E.Schevarnadze’s foundation “Democracy and revival”, 1992-93; top executive in investment companies Sector capital. Creditanstalt Investment Bank and Aton, and in “Systema” holding, 1995-2000; since 2001 in “Rosno”.
Sergei I., deputy General Director. Education: Moscow technical university, 1963. Experience: Moscow technical university, docent and later dean of a faculty, 1964-1994 (is an author of more than 120 academic publications, including books); International insurance company of trade unions, 1994-1995; since 1995 in Rosno.
Fakhraddin Ragim-ogli R., deputy General Director. Education: Azerbaidzhan medical highschool, 1976. Experience: Moscow institute of heart- and vascular surgery, 1987-1999 (is an author of more than 200 academic publication, incl. 2 books); holding “Systema”, consultant of the president, and vice-president of “Systema-Invest”, 1999-2001; since 2001 in Rosno.
Sergei N., deputy General Director. Education: Military Highschool of the Defence Ministry, 1987. Experience: “Gazprombank”, Federal Tax Police.(http://www.rosno.ru)
Practical experience remains the key criteria for personnel recruitment in global accountant firms, while a diploma of a Western University or certification from a Western professional organization are only an extra plus. People, occupying managerial positions here, are mostly over 30 years of age, with a professional experience of 10 years and more and a record of working in related fields (banks, investment companies, venture funds, ministries, tax offices or in other big accountant companies). The top-managers are on average older and often have experience of working abroad, mostly in Eastern Europe and CIS countries.
Alexander D., Partner, Deputy Chairman of the Board in Deloitte Touche CIS. has broad professional experience in university teaching, research, banking activities, and consulting. He joined Deloitte in 1992. Alexander occupied managerial positions in the State Bank of USSR, commercial banks in Switzerland and Russia, and the World Bank.
Tigran A., manager in Deloitte Touche CIS. Education: graduated from the State Academy of Oil and Gas, after that he graduated Moscow Textile Institute at Accounting and Audit Procedures and worked for several years in Platinum Software E.C.E - one of the leading producers of enterprise resource planning and financial management software. Before joining Deloitte Tigran worked for Ernst & Young’s Management Consulting Services Group in Moscow.(http://www.deloitte.com)
Sergey A. has been the Managing Partner at Grant Thornton Trid since its foundation in 1994. He has been fortunate to gain experience from both working in business as well as having advised them. Since the late 80-ties early 90-ties he has been involved in creating and managing a number of joint ventures in Russia.His experience has been gained in all aspects of business from day-to-day operations, budgeting, and strategic planning. Sergey spends substantial time on providing business advice to international companies on their activities in Russia.Sergey is also member of Grant Thornton European Management Group.
Alexander S., Partner at Grant Thornton Trid since its foundation in 1994. He is a graduate of the Faculty of Economy of Moscow State University, and a formerly economic adviser in the Department of Construction of Moscow Government. (http://www.gtrus.com)
There is a certain list of Russian Universities and higher vocational education establishments which the global accountant firms prefer in their recruitment of personnel: Finance Academy, Moscow state University, State Academy of management, Plekhanov Academy of Economics, High School of Economics; State Institute of International Relations, Academy of Oil and Gas. All of them are among the most serious and advanced high schools in Russia in this field. This proves that although education is not the main criteria in the recruitment of Russian personnel for global accountant firms, its quality is an extra plus for potential candidates.
A spectacular case is the global advertising business, which is characterized not only by the young age of their Russian employees but also by the variety of diplomas they hold. The unusual career paths and the “bouquets” of executives with exotic backgrounds – this is quite a common picture for the Moscow offices of the global advertising companies.
This may be illustrated by the advertising agency Media Arts, which is now operating as a representative of the Foote, Cone and Belding (FCB) group in Russia. The agency, established in 1989 by students as a computer graphics studio, very quickly developed into a full-profile advertising agency.
Ilya S., chairman of the Media Arts – FCB, graduated from the Moscow Technological University (he was still a student while creating the graphic studio and becoming its managing director). During these years Ilya worked practically in all positions of the advertising agency: as media planner, copywriter, producer, and account director. He studied advertising, finance, management and other subjects in Russia, France, Belgium, the USA, and Finland.
Oleg V.,General Director, graduated from Kazakh State University in Alma Ata as a television journalist. Later worked as a manager at State TV and Radio Company and as an editor at an international contest “Golos Azii” (Voice of Asia). Oleg was one of the founders of the first commercial channel – “Channel 31” – which he headed from 1993 to 1994. After moving to Moscow in 1994 he headed the project, named “RosMediaMonitoring”. In 1996 thanks to close partnership with Gallup Media (measuring the TV audience with peoplemeters), a new company Gallup AdFact was created on the basis of RMM. Since 2002 Oleg is the head of FCB MA.
Alexei K., executive Vice President, COO, graduated from the Academy of Security of FSS in computer sciences and remained to work there as a teacher. At the same time Alexey helped Ilya S. and Dmitry Ch. To organize a computer graphics studio. The studio developed into an advertising agency (1992), where he filled the position of Executive Director. System education and military upbringing determined his main functions in the agency: Alexey is responsible for finance and business processes. Rapid growth of the agency, the specificity of the Russian market, and the orientation towards the international business guidelines demanded steady self-development and supplementary education. Alexey took advanced training courses in advertising, finance and general management in Finland, Denmark, Belgium, the USA and Russia.
Alexei F., Creative Director, has gained a reputation of a highly creative professional working or to be more exact creating in advertising since 1994 in different agencies - TBWA Dusseldorf, Ogilvy&Mather Moscow, Bates VIAG Saatchi&Saatchi. He has a personal working experience in the positions of editor, producer, and script-writer. Alexei has also spent some time working on German TV. He graduated from two institutes in Russia (in the field of linguistics and publishing) and from one in Germany (marketing and management). Alexei also has attended post-graduate courses in the field of advertising in England.
Natalia A., New Business director, graduated from the commerce department of Malta State University. On her return to Moscow she continued her education at the International Business University. Before she entered the advertising industry, Natalia had managed to work in the International Centre of Business Accounting and Incombank. Her first experience in brand communication, Natalia received at a promotion agency, Market Communication, working with brands of Unilever and SC Johnson. In a year Natalia decided to try her hand at public relations and transferred to TSS… Later she worked in the ADV group as the New Business and PR director, developing skills needed for the advertising industry, and was offered a job at FCB MA. (http://www.mafcb.ru/agency/team/eng.shtml)
DISCUSSION AND CONCLUSIONS
The Russian business environment, with its instability and permanently changing regulations, still remains rather difficult for Western companies. This makes the global top-100 BS firms choose for a big variety of involvement patterns and explains the rather widespread use of Russian personnel with their intimate knowledge of the local market. The share of expatriates in the global BS firms’ Moscow branches is probably not higher than in other large cities and seems to be declining since the early 1990s - in relative terms that is - because of the growing recruitment of local professionals. A possibility of a quick career is also the reason, why Russian students studying abroad prefer to come back instead of looking for a job in the West, as was often the case only ten years ago.
In spite of the changing proportions between expatriates and Russian professionals in the Moscow offices of the global BS firms, differences between the sectors remain stable. Companies, providing services of an analytical character usually have more Western specialists than those offering applied services, even if within them the number and the proportion of Russian professionals grows. The same stable factor is the legal status of a company (foreign or Russian).
It is important to notice that global firms make up only a part of the rapidly expanding BS sector of Moscow. In many fields, including recruitment of the top personnel, Russian companies successfully compete with the global ones. The sudden creation of economic opportunities for professional occupation within the BS sector indeed produced an enormous increase in the demand of such labour and (in Moscow maybe as nowhere else) pushed salaries into an exponential upward curve. This had a dramatic effect on the growth of social polarisation. The gap between the professionals employed in the BS sector and the rest of population, especially those working outside private business, has been widening every year. At the same time, differences in size of salaries, earned in the BS sector in Moscow and in other global cities, seem to be declining, even where they existed before. Global companies largely contribute to social polarization. This trend is one part of the economic restructuring that accompanies the growth of globalized business services as mentioned in the theoretical part of this article (Beaverstock, 1996). It proves to be true for Moscow as well.
The other generalization, proposed by Beaverstock with respect to the changing occupational composition of Western global cities (the breakdown of traditional class structures and reinforced gendered division of labour), can only partly be applied to Moscow for two reasons. First, because still very recently, 15 years ago, in Soviet Russia class structures were measured in a very different way than in the West, and the Soviet (party) elite, which occupied managerial positions, often did not have enough education for the top-level professional jobs. Second, because the history of the BS sector in Russia is considerably shorter than in the West (including banking, which was not commercial). The rise of the middle class in the Russian capital city to a large extent results from the explosive BS development, initiating and not breaking a certain class structure. The second part of the argument, about the continuing and even deepening sex segregation, is not valid for Moscow because of the traditionally high share of well-educated females in appropriate positions on the labour market and the generally high employment of women in economics.
The analysis of the personnel recruitment strategies, used by the global BS companies in Moscow, showed that it is rather the second of the two hypotheses, introduced in the beginning of the article, which proves to be true. Given the character of the Russian business environment, Western companies look for different patterns of involvement into the Russian economy, and the wide use of the well-educated and strongly motivated Russian personnel, familiar with the local “rules of the game” is one of their main strategies. This trend became stronger in the last 10 years after a new generation of Russian professionals with an appropriate educational background entered the Russian labour market. The new phenomenon of Western young professionals, choosing Moscow as a springboard for their careers, counter-acts the main trend but is still not sufficient to change it.
“The new professionals” form one of the most dynamic social groups in Moscow, and its expansion is followed by the introduction of a new lifestyle, plus the creation of a socio-cultural environment, designed for the new Russian yuppies. The interaction between this group and the traditional Russian society within one city, conflicts between them, their mutual adaptation and mutual contribution to the changing socio-economic profile of Moscow is one of the most intriguing topics on the agenda of research on globalizing Moscow. The new Russian professionals may know the local rules of the game but their game and the accompanying lifestyles are not straight derived from Russian traditions. They are part of the complicated re-orientation of Russian society as a whole.
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Edited and posted on the web on 24th February 2005