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Part I
Macro talent management in emerging markets
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1
Macro talent management in Russia
Addressing entangled challenges in managing talent on the country level
Virpi Outila, Vlad Vaiman and Nigel Holden
Introduction
It is difficult to dispute nowadays that talent management (TM) has become an issue that reaches well beyond individual organizations and their HRM systems and processes (Vaiman & Collings, 2014). The recognition that TM is especially challenging both as a concept and an everyday business practice in the international arena has begotten a new branch of the subject, namely macro talent management (MTM). The aim of MTM is to create a new conceptual as well as practical tool with two aims: first, to examine policies, programs, and practices that are developed by a specific country’s governmental and nongovernmental organizations; and second, to enhance the quality of talent in that country for promoting that country’s prosperity and competitiveness in the global marketplace.
In this chapter, we examine the policies and practices Russia has created to attract, develop, and retain its human talent, and how it has succeeded in these endeavours so far. We partly follow the MTM framework developed by Khilji, Tarique, and Schuler (2015) as the structure of the chapter, but with a slight deviation of discussing MTM processes in connection with macro environmental factors. First, we look at Russia’s institutional context that created the environment for TM, including various governmental policies, education, immigration, demographics and mobility, diaspora and returnees, labour market, and national culture. We proceed by going through the outcomes of MTM including Russia’s ranking in international assessments in terms of productivity, innovativeness, and competitiveness. We conclude by providing some implications and suggestions for Russian policymakers and the business community.
Recent research has emphasized the challenges in implementing TM in Russia (Holden & Vaiman, 2013) and the lack of interest among Russian companies towards TM (Latukha, 2015). Therefore, we find it important to begin our discussion with a compressed, but discerning, overview of the complex nature of Russia’s TM context with reference to pertinent historical, cultural, and institutional factors. In general, the cultural and institutional factors are bound up with the historic and political background of a given country and, as such, tend either to facilitate or to hinder TM activities within organizations in whatever jurisdiction they operate. In the case of Russia, we disregard these factors at our peril. For, as we shall see, they have given rise to an MTM environment that is decidedly peculiar.
Russia’s cultural and institutional heritage
From the point of view of this chapter we wish to emphasize the intertwined linkage of culture and institutional behaviour. This means that we can discuss Russia’s institutional characteristics as influenced by cultural norms that have in fact been shaped over many centuries. To a degree that may mystify outsiders, the Russian government worldview is strongly influenced by the country’s history, of which a key feature has been wariness, predating the Russian Revolution of 1917, of the West (Marshall, 2015, p. 73). Mindful of these things, we will cover in this section various themes that help us to position MTM in Russia. These discuss talent depletion, distrust of the talented, management education, the Skolkovo initiative (Russia’s response to Silicon Valley), and the dirigiste aspects in Russian institutional life.
A highly relevant starting point to our overview is a short article in The Times of London from 13 March 2017 on talent depletion in Russia (The Times, 2017). Its Moscow correspondent wrote: ‘The Kremlin has been accused of using scare tactics and disinformation to stem the exodus of highly qualified professionals to Europe and the United States.’ Pro-government media claimed that ‘thousands of Russians’ had returned home after hostile treatment, discrimination, and even ‘demonization’ in those countries. According to one informant quoted in the article, ‘The authorities are forced to tell lies to scare Russians about “terrible life” in the West.’ A headhunting company, Agentsvo Kontakt, was nevertheless reported as saying that ‘more than 40% of senior managers wanted to emigrate to the West.’
This reportage tells us a good deal about cultural and institutional influences on TM in Russia. First, it reveals real fears in Russian governing circles of losing some of the country’s best brains. Second, the attitude and behaviour of the Kremlin bear striking similarities to the Soviet treatment of citizens who had defected or were thinking of doing so: intimidate them, misinform them about the West, and make crude appeals to patriotism. Third, and this is not necessarily an obvious point, the article in The Times forewarns us that an informed discussion of MTM in Russia must take account of the prevailing thinking in the country’s most powerful institution, the Kremlin, alias ‘the hidden heart of the Russian state’ (Merridale, 2013, p. 9).
But there is also a subtext. Russia’s real worry is almost certainly more to do with the emigration of exceptional scientists, especially with military-related expertise – a wide catchment in Russia – than the loss of talented entrepreneurs in an era which, with some justification, has been called ‘the New Cold War’ (Marshall, 2015, p. 23). There is nothing unusual in this state of affairs insofar as there has never been in Russia – in Tsarist times, in the communist era, or today in the Putin regime – an awareness that the innovative skills of entrepreneurs can contribute to Russia’s economic power. For those in charge of Russia, it is only the levers of the Kremlin in the hands of a ruler with nearly unlimited powers – currently President Vladimir Putin – that can effect that through the time-honoured means of centralizing the economy in the guise of modernizing it (Economist, 2016). Besides, Russian greatness, and it is Putin’s quest to restore it, has only and narrowly been conceived of in terms of military might. The demonstrable fact that entrepreneurs in other countries – think of Bill Gates, Steve Jobs, Lakshmi Mittal, or Zhang Ruimin – can empower a national economy and raise a nation’s prestige would appear to be unthinkable in modern Russia.
From these comments, it follows that in Russia the notions of talent and related practices are not only decidedly context specific and tradition dependent, but also not readily harmonizable with those notions developed within Western business contexts. For their part, Holden and Vaiman (2013) have suggested that TM in Russia can be appreciated in terms of local contextual factors such as a long-standing public mistrust of institutions, the persistence of Soviet mental software, the limited tradition of empowerment, and entrenched bossdom. Each of these factors comes with a good deal of historical and cultural baggage in its own right. Moreover, they all fall outside Western experience, remaining out of reach of mainstream TM schemata.
Another way of approaching the problem is to suggest that these and other TM-related constraints stem from institutional shortcomings following lack of the market and structural reforms in the country and its insufficient connectivity with the global economy through knowledge, business, and expertise exchange. What is surely incontestable here is that since the collapse of the Soviet Union in 1991, Western-funded attempts, amounting to billions of euros and dollars to introduce market-economy reforms and democratization, have had only a limited impact on institutional transformation.
For example, the EU’s TACIS (Technical Aid to the Commonwealth of Independent States) program, launched in December 1991, disbursed about €7 billion between then and 2007 to help introduce market-economy reforms, democratization, and rule of law into the former USSR. The program engaged hundreds of EU universities, business schools, consultancies, and training organizations. But, in 2006, the EU’s Court of Auditors pronounced the results of the initiative to be ‘poor’ (European Court of Auditors, 2006). Russia, with its ‘ancestral suspicion’ of the West, was simply never going to be a fertile environment for large-scale reform emanating from countries, whose real aim could only be to expose Russian backwardness and undermine its economy (Economist, 1993). This episode not only highlights the complexity of the challenge of transferring market-economy know-how, but also how European goodwill was transmogrified into a threat to Russia.
However, to its credit, the Russian government has itself ‘committed billions of dollars with the goal of developing a knowledge-based economy to enhance participation in the global arena, whilst simultaneously diversifying away from energy and natural resources’ (McCarthy et al., 2014). But still Russia does not seem able to stimulate innovation. Consider the otherwise laudable initiative concerning the creation in 2009 of Russia’s own Silicon Valley with 4,000 hectares of land in Skolkovo, west of Moscow. Launched with 1,000 start-ups, the venture ‘has endured an excruciating incubation … it is hard to think of a single Russian brand that has broken through internationally.’ Its underperformance was attributed to allegations of corruption, unsolved taxation issues, and foreign reluctance to invest (Guardian, 2015). And, it goes without saying, Russia is no California.
These sorry scenarios show how seemingly incapable Russia is of turning its back on the previous autocratic era, and so it finds itself observing ‘free market pieties with Soviet practicalities’ (Hanson, 2011). Indeed, it may not be in the least outlandish to suggest that the creation of an entrepreneur-friendly business environment – with or even without the incorporation and adaptation of Western ideas and practices – that releases, nurtures, and values talent and creativity is far less important to the Russian government than preserving entrenched bossdom à la soviétique underpinned with due deference to the Kremlin.
The result is that the economy is overcentralized, based on arrays of patron-client relationships, and averse to the twin dangers of individualism and independent institutions. It is patently the case that the Russian leadership is deeply suspicious of market forces which it cannot control (and probably not understand). It much prefers ‘strategic industries’ which it can control through its carefully selected placement. As it happens, strategic industries can be a highly accommodating category, which can for reasons of state security be made to embrace all industries and all aspects of the national economy with Team Putin very much in charge. That of course was precisely how it was in communist times. In short, Russia is not ready to entrust the fate of its economy to talent, competence, and enterprise.
So, it is then that the Russia of today is a very uncertain environment in which talent, as understood in the modern management sense, can be identified, let alone flourish. This brings significant risks for Russia. As Natalia Zubarevich, an economist and geographer at Moscow State University, has starkly pointed out, Russia may be heading for ‘a slow economic and intellectual implosion’ (Economist, 2016). What does that portend in TM terms? Not merely the long-term haemorrhaging of talent as a consequence of the already troubling brain drain, but persistent talent suppression at home. These actions already happened on a mammoth scale in the Soviet period. They are unfortunately being perpetuated in Russia’s post-communist incarnation.
The term TM itself exists in the Russian language, having entered as a literal translation and is being perpetuated in journals such as the Russian-language version of Harvard Business Review. The translation of the term into Russian becomes ‘management of talents’, because a literal translation would imply the management of one particular talent. Furthermore, the Western concept of TM specifically embraces talent as an organizational resource; the Russian word does not really extend into this usage. Hence, it is alien to official Russian thinking to view talented people in any walk of life as a resource, implying a welcome potential for change and renewal. When it comes to economic transformation,...
