The only things that can be relied upon are close personal relationships within the business environment.
Background
Russia is a fragmented society, undergoing a radical period of change and readjustment. The old order has been swept away, leaving a political and economic void. It is, therefore, true to say that things in Russia change on a day-to-day basis and that, in such a disparate country, what is true for one region might be untrue in the next.
Certain universal truths do, however, typify the Russian approach to business and life in general.
Firstly, it is always worth bearing in mind that for centuries (long before the advent of the Soviet system), the state has always been seen as an organ of oppression and repression. Laws and statutes are therefore seen as the 'enemy' and to be avoided and evaded at all costs. Contracts are valid only if supported by a close personal friendship and taxes are left unpaid on both a corporate and personal level.
Secondly, the only things that can be relied upon are close personal relationships within the business environment. Networking and extended interpersonal allegiances are essential to successful business and the importance of resource allocation to ensure the development of good quality relationships should not be underestimated.
Thirdly, the legal status of many Russian companies is very dubious, being incorporated under the old laws of the Soviet Union which no longer have validity. Who actually owns the assets of an organisation? The laws are being rewritten constantly and are, in any case, virtually unenforceable. Thus, most agreements have to be made on a trust basis - a strong element of which has to be clearly identifiable self-interest. The legal basis of any arrangement will probably mean very little once the relationship breaks down.
As a foreigner, you are expected to be on time to all business appointments. However, your Russian counterpart may be late, as this may be a test of your patience. Do not expect an apology from a late Russian, and do not demonstrate any kind of attitude if your business appointments begin one or two hours late. This may also be a test of your patience.
Business structure
Autocracy and centralised decision-making are synonymous with the Soviet system in many people's eyes and this approach can certainly be seen to be manifested within large Russian business organisations. Russian companies tend to be driven by one strong central figure who will make strategic decisions with little or no consultation with anyone other than a handful of close trusted advisors.
Therefore, when dealing with potential clients or joint-venture partners in Russia, it is absolutely essential to make sure that the right person is being dealt with. Western companies who attempt to interface at inappropriate levels within an organisation waste massive amounts of time and resource. Nowhere is the advice, 'Go straight to the top', more pertinent.
Management style
As has been stated, management tends to be centralised and directive. The boss - especially the 'big boss' - is expected to issue direct instructions for subordinates to follow. Little consultation will be expected from people lower down the company hierarchy. Indeed too much consultation from a senior manager could be seen as a sign of weakness and lack of decisiveness.
Middle managers have little power over strategy or input in significant strategic decisions. The most powerful middle managers are the ones who have the most immediate entree to the decision-maker at the top of the organisation. There is little point in wasting time debating with middle managers who do not have an easy access to the top. The most significant reason for delay in reaching a decision in Russia is that the decision has not been put in front of the real decision-maker.
Delegation is usually in terms of managers giving precise instructions to subordinates who are expected to perform their allocated tasks with little or no discussion. Many westerners complain of a lack of initiative from local Russian staff, whilst Russian staff often bemoan the lack of clear, unambiguous advice from expatriate managers.
Some 'hard-line' Russians still view compromise as a sign of weakness, and often refuse to back down. To these individuals, compromising is bad business.
Meetings.
As might be expected in a country where managers are autocratic in style, meetings are often for the purpose of information dissemination, rather than for the open debate of current business issues. Formal meetings are often held to ratify decisions which have been made elsewhere and to give clear instruction on key tasks to be performed.
Formal meetings tend to be very structural and serious. The dour image associated with many Russian negotiators stems from the belief that a formal meeting is a serious affair and should be treated accordingly. Humour is seldom used in such serious situations.
Team functioning
Teams work best together when the relationships amongst the group are close. There remains a general suspicion of strangers in Russian society and any attempt to bring together teams from different strands of an organisation can be problematic. Once a team has been established and is working well together it is probably best to keep the team intact for as long as possible. Move the team wholesale from project to project rather than developing a fresh team for every situation.
Communication
English language levels vary enormously in Russia. Many younger entrepreneurs (especially in the cosmopolitan centres like Moscow and St Petersburg) have a fluent command of, not only English, but often several other European languages. Yet in other more provincial centres it is not unusual to meet business people who have little or no foreign language skills. Always check in advance whether interpretation is needed.
Outside Moscow and St Petersburg most signs are written exclusively in the Cyrillic script and knowledge of this will go a long way on a trip to the more remote areas of Russia.
As with many other cultures (Mediterranean and Middle Eastern for example) much more emphasis is placed upon the spoken than the written word. People believe things when they have heard them from someone with whom they have a trusting relationship. Therefore, it is often much more efficient to hold face-to-face meetings at which issues can be fully explained, rather than sending information in a written format only.
There tends to be very little visual or verbal feedback during meetings in Russia. People listen silently and with little obvious body language being displayed. This does not, however, mean that the listener is disinterested or does not understand - it is merely a cultural characteristic which Russians share with, amongst others, the Finns and the Japanese. Russians will tend to wait and think before responding to a point made to them - do not be impatient.
Dress code
Russians tend to dress as well as their salaries will allow. Men would tend to wear either a dark suit or jacket and trousers with a tie and women mainly wear business suits or blouses and skirts. Men often do not take off their jackets in negotiations.
It is important, for westerners to look smart and appear to be expensively dressed as this enhances credibility. From the safety standpoint, it is probably not advisable to wear very expensive watches or jewellery.
The winters can be extreme (as can the summers) so ensure suitable clothing to meet whatever the prevailing conditions. Be sure to remember a hat, gloves and scarf in winter.
Do not stand with your hands in your pockets. This is considered rude.
Entertaining
It is difficult to know what to expect when invited out to lunch or dinner in Russia. The event could simply be a relationship building exercise where little if any actual business is discussed but on the other hand you can find yourself in very detailed negotiations, with pressure being applied to complete a deal.
Whatever issues are discussed, the meal is very likely to be a fairly lavish and lengthy affair with more than enough food to keep you going for the rest of the day. Try to eat heartily and express your appreciation of the food on offer, as this reflects well on the host.
Russia has always had a reputation for being a hard drinking culture and this has traditionally been true. Many Russians insist that heavy drinking sessions at business dinners are becoming a thing of the past, but you have to expect that a good deal of strong alcohol is likely to be consumed - very often during the elaborate toasting sessions that take place. Favourite drinks are vodka and Russian champagne, although beer and wine are now more common than a few years ago.
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Source: www.worldbusinessculture.com
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