Since 1998, the Russian
investment climate, regarding the facilities offered
to investors, has improved significantly. Could
you indicate to our readers how attractive Russia
currently is for the international investment community?
Over the last couple of years several features characterized
the Russian economy. First of all, it is obvious
that the Russian economy has been growing during
the last two-three years. At the moment, It is not
really a question whether this growth will go on
or not, as it will certainly continue for another
three or four years. Even if the current signs of
stagnation in the world economy persist we can still
talk about continuous growth in Russia within the
next several years.
We can talk about reasons and factors for such growth
and it is obvious that despite many current negative
trends in the world economies Russia has particular
advantages in terms of its economy. So, we should
now talk about how to make this growth even more
sustainable. I think that, due to a very deep decline
of the Soviet economy the last 10-15 years, the
Russian economy now starts from almost scratch and
that creates new factors for growth. Many people
these days speak about the depletion of fixed assets
and they call it a major problem for the next couple
of years. However, we still think that despite the
fact that the fixed assets are depleted, they are
still not in such a poor condition that they could
create a serious obstacle to the economic development.
In my opinion the main driving force behind continued
economic growth in Russia is the further improvement
of the management quality in Russian businesses.
And over the last couple of years we have seen a
considerable improvement in the quality of Russian
business management. Among all the general management
issues I would like to make a special emphasis on
the improved corporate governance in this country.
Nowadays, we see more and more companies in which
corporate governance has been improved and functions
of ownership and management separated. The share
of such businesses with improved, advanced corporate
governance structures is on the increase at the
moment.
Within this development, your Association plays
an important role. Could you indicate to our readers
the main objectives of your organization?
Generally speaking our association is not aiming
at improving management structures at any particular
businesses or any particular enterprises. We are
trying to notice the trends that indicate what is
happening in Russian business and then we develop
our own ideas on how to help the development of
the overall business environment in this country.
The Association was established over two years ago.
It was then that people in this country realized
that the country badly needed high quality managers.
Many managers did not have a special management
education but would rather have technical, mathematics,
or any other academic background. At that time our
initial goal was to understand the requirements
and what was happening in the management profession
as such, so to understand trends and to promote
and to propagate in this country the international
best management practices. One of the goals for
the association is to ensure that Russian managers
speak a common language with their international
colleagues. Another important task for the association
was to try to articulate and serve the Russian managers'
interest and to develop the sense of being a part
of a professional environment of this country.
Moreover, there is the issue of corporate communications
and proper corporate behavior within the Russian
business environment and companies. In this regard
we study very thoroughly best practices and good
experience of major companies, and we generalize,
analyze and promote such best practices and examples.
When you look at America, corporate governance
and managerial practices have been on the headlines
of every newspaper. You indicated that over the
last ten years a lot has been improved in Russia
when it comes to the corporate governance. What
do you specifically look at? And what are the standards
that you have been setting to yourself?
The goals for corporate governance improvement and
development in Russia and in the USA are quite different.
Those corporate scandals that we saw in America
in the last years are not the consequence of bad
corporate governance but rather signs of wrong motivation
for the senior executives, who tried to falsify
their books in order to get better bonuses or stock
options.
In Russia, first of all, executive managers of a
company should know the strategic goals of their
company and should follow them. These executives
must have all the means to assess the impact of
their managerial decisions on the companies and
they have to be able to communicate efficiently
within their companies. They have to be able to
assess potential risks efficiently while communicating
with other companies. In Russia, we should be looking
at more initial stages of corporate governance development
than America.
In 1997, former president Yeltsin introduced
the initiative of training 25.000 young businessmen
to new marketing and corporate governance techniques.
Has it paid off, and where can practices be improved?
We have not seen any significant results of this
training. However, I can remember quite a few initiatives
at that time aimed at training those managers. But
as such initiatives are launched, it would be wiser
if they were aimed at restructuring the whole system
of business education in Russia, rather than training
particular people that need this education. I firmly
believe that good education of any particular individual
is first of all the concern of that individual or
the company that he or she is working for.
Moreover, the government should look more at the
system of education rather than at helping single
individuals. |
One of the activities
of the association is the introduction and promotion
of a certification of business education systems,
both educational establishments as internal trainings,
the so-called corporate universities. In other words,
we are trying to identify those companies that are
mostly concerned with the training of their staff
and their managers efficiently, and those who have
practical facilities for doing so. Another area
for us to look at is the external training of companies
and training providers, and naturally more formal
business education, such as MBA and business schools.
This way the association is acting as an intermediary
between the business schools, who provide training
to the companies, and the businesses who actually
consume the services of such business education
establishments. We believe that the success of business
schools should not be measured by their advertisement
in the media, but rather by their quality as well
as the demand from the businesses that use their
services.
You also work closely with the Investors Protection
Association and together you are conducting a survey
on independent directors in Russia. Could you shed
some light on the survey?
We have conducted a number of conferences and
seminars regarding the improvement of corporate
governance in Russia. Our cooperation with institutions,
such as the IPA, is aimed at promoting the corporate
governance code in this country. Together with our
partners, we try to promote the important idea of
the separation of ownership and management functions
within businesses.
Regarding the independent directors, our approach
is slightly different to that of IPA. We think that
it is important to make right arrangements for a
board of directors, i.e. to define whose interests
the independent director should represent and who
pays them . We think it important that either a
government body or a non-governmental professional
organization, which is better, should certify the
profession of an independent director and set proper
standards for independent directors. So far such
system is not operating in Russia and we can see
only signs of such a system appearing.
You indicated in one of your answers that Russia
is not America, and America is not Russia. Of course
for managers and directors when they come to a new
country to invest, local knowledge is of great importance.
What would your advice be for investors coming to
Russia, to help plan their business trips?
My first recommendation to investors
coming to Russia is to look at the people who are
managing the company they are planning to invest
in, and also to look at the professional successes
of such people over the last couple of years. But
that recommendation is only pertinent after those
investors have assessed that these investments would
fit their own strategy. I would like to emphasize
again that these different parties, namely investors
and local businesses, do speak a common language.
It is also very important for the investor to correctly
assess the market in which they are trying to enter.
This is one of the major problems in this country,
because the marketing agencies that study the market
are still very weak at the moment.
Now, as my colleague has indicated to you, our
readers are the international business community.
With this in mind, would you indicate to our readers
what your own professional background is?
First of all, I would like to point out that I do
not have a professional business education; however,
I was lucky to evolve together with my country.
The practical managerial experience that I acquired
by working in different management systems in the
last ten years has been extremely useful. Of course,
working very closely with executives from international
companies, and my personal contacts with managers
from other countries, has also helped me to understand
and adopt managerial best practices. In the late
1980's these companies were in the export - import
business; in the early 1990's they were wholesale
distribution businesses of the major international
companies working then in Russia; in the middle
of the 1990's they were aviation companies working
with aviation engines and aircrafts; and in the
late 1990's they were metallurgical and finance
management companies within the metallurgical sector.
So for me, this was very positive experience.
Taking this experience into account, what is
your vision for Russia, and how do you see your
Association developing further?
First of all, I would like to look at Russia's future
for the next decade rather than for one or two years
to come. The more people that think strategically,
and make long terms plans in this country, the better
Russia will develop.
The Association and I firmly believe that it is
the business managers who are one of the most efficient
assets and driving forces for the economic progress
in this country. The mission of the Association
is to unite these people under one professional
community, to help them learn to communicate efficiently
within the community, and to help them to see the
common goals that will help to further develop the
country. At present, the political stability and
good economic conditions in Russia allow us to look
positively at Russia's future.
Bearing in mind that these reports will be read
by the international business community and potential
investors, who are willing to come to Russia, what
would be your final message to them?
I would like to point out to the international business
community that it is very important in Russia to
look at successful experiences and successful people
first, whilst assessing the business opportunities
in Russia. |
