Table of contents

1.  Background to the Russian people  1

2.  Cultural Dimensions of Business in Russia  2

2.1.  Entertaining  2

2.2.  Dining  2

2.3.  Drinking and smoking  3

2.4.  Corporate Culture  3

2.5.  Hofstede’s cultural dimensions for Russians  4

2.5.1.  Power Distance  4

2.5.2.  Uncertainty Avoidance  4

2.5.3.  Individualism - Collectivism  5

2.5.4.  Masculinity - Femininity  5

2.6.  Trompenaar’s Framework  5

2.6.1.  Getting along with People  5

2.6.2.  Living in Time  6

2.6.3.  Living with Nature  6

3.  Russian communication principles  7

3.1.  Meeting and respectfully addressing Russians  7

3.2.  General communication guidelines  7

3.2.1.  Good topics of conversation  8

3.2.2.  Topics to avoid  8

3.3.  Types of non- verbal communication  8

3.3.1.  Kinetics and proxemics  8

3.3.2.  Paralinguistics  9

3.4.  Communication technology  9

3.4.1.  Telephones  9

3.4.2.  Presentations  9

3.4.3.  Written communication  10

4.  Negotiating with Russians  10

4.1.  Pre-negotiating preparation  10

4.2.  The basic concept of a negotiation  11

4.3.  The Russian style of negotiation  12

4.4.  Negotiation tactics and persuasion  12

4.5.  Protocol  13

4.5.1.  Credentials  13

4.5.2.  Guideline for business dress  13

  General dress code  13

  Women’s business dress code  13

4.5.3.  Gift giving  14

  Appropriate business gifts  14

  A list of appreciated gifts  14

4.5.4.  Ceremonies  15

4.6.  Communicative context  15

4.7.  Type and significance of goals  15

4.8.  The role of relationships and trust  15

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4.9.  The value of time in Russia  16

4.10.  Agreements through written documentation  16

5.  Developing Multicultural Teams  17

5.1.  Leading, motivating and managing teams in a Russian context  17

5.2.  Leadership in Russia: Origin and values  17

5.3.  The establishment of credibility  17

5.4.  Effective personnel development for Russian employees  18

5.5.  Motivation  18

6.  Selection of Expatriates  19

6.1.  Factors to Consider  19

6.2.  Selection Attributes  19

7.  Managing Social Ethical Issues:  20

7.1.  The Issues  20

7.2.  Managing the Issues  21

8.  Conclusion  22

9.  Appendices  iii

10.  References  iv

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"Communism was based on everyone being the same. Being different was a threat.

Right now, Russian society is going through the painful process of reforming itself, and ridding itself of old ways of thinking. Although differences are officially allowed by the authorities great animosity still exists towards anything or anybody that is not average."

1. Background to the Russian people

The Czarist and Communist regimes have suppressed people’s desire to work individually under personal initiative. During the restructuring period (perestroika), the Soviet Communist value system was redefined, but the pace of the restructuring has been very slow. Western values of individualism and profit maximisation are adapted to gradually, however many Russians, especially older Russians, have difficulty in adapting to a Western outlook on life. The older generation is generally pessimistic and does not have faith in a better future life, whereas younger urban Russians are more open to a Western lifestyle. 2

Currently, Russia is going through a profound period of change to replace the values of Communism with those of democracy and a free- market economy. Visitors to Russia may find that many Russians are still unfamiliar with, or misinformed about, concepts that form the basis of Western business culture. It may be necessary to explain and persuade Russian counterparts to accept ideas such as motivation, fair play, individual accountability and reward, profit and l oss, turnover, proprietary rights, good will, or public relations. However, these terms should only be used with tact and caution. 3

One consideration to keep in mind is the widespread ‘assumption’ by Westerners that Russia is a very ‘European’ country. Discussions with several Russians have indicated that there is an affinity with Asia, and this should be kept in mind when assuming that Russia will converge to act more like North Americans or Europeans over time.

^{1 Cited in: Intermark Residential Real Estate, retrieved from the World Wide Web 25.11.2002,} http://www.intermark.ru/moscow/cross_cultural.htm.

^{2 Bosrock, M.: Put Your Best Foot Forward: Russia, retrieved 28.01.2000 from the Wall Street Journal website,} http://public.wsj.com/careers/resources/documents/cwc-russia.htm.

³ Let’s make a deal, retrieved from the World Wide Web 25.11.2002, http://www.executiveplanet.com/business-culture/92778510093.html.

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Russians themselves often distinguish between Russia as a country and Moscow and Saint Petersburg as the most technologically and economically advanced cities in Russia. These two cities are relatively modern, meeting Western standards, and have experienced large-scale foreign direct investment in the past decade. 4

2. Cultural Dimensions of Business in Russia

2.1. Entertaining

Being invited to a Russian home is considered a tremendous honour. Even more honourable is to be invited to a Russian summer home. In either case, visitors must be prepared to stay late-often into the early hours of the morning if not overnight. ⁵ Guests may be required to remove their shoes before entering a Russian home and instead wear a pair of slippers offered to them by the hosts. ⁶ Obviously, this last requirement is the result of the climate of Russia. As in other northern countries of harsh climate (Canada and Norway in our experience), removal of shoes stems from the amount of snow, slush, and /or mud and dirt on the footwear. For similar reasons, it is considered rude to wear or carry an overcoat within a restaurant or entertainment venue of any kind. The custom is to leave overcoats, umbrellas, etc. in a cloakroom before entering.

2.2. Dining

Within Russia, obtaining reservations at restaurants can be a quite a challenge. In some of the more informal restaurants, customers may be required to share a table with other patrons. However, they are not required to make conversation with the strangers seated next to them; it is socially acceptable to simply proceed as if seated at a priva te table. 7

Protocol: As at the bargaining table, the centre seats are reserved for the most senior officials. Westerners should be seated on the opposite side of the table from their Russian counterparts. The oldest or most honoured guest is usually served first and guests should begin eating only when the host invites them to begin. Note that Russians use the continental style of holding

⁴ Information obtained through a telephone interview with Daniel Bleckert, a MBA student at Swinburne University, Melbourne, who worked for 4 months with Roland Berger Strategy Consultants, a German Consulting firm, in Moscow.

⁵ Prosperous Entertaining, retrieved from the World Wide Web 25.11.2002,

http://www.executiveplanet.com/business-culture/92777626890.html .

⁶ Ibid.

⁷ Ibid.

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utensils, with the fork held in the left hand, tines down, and the knife in the right hand at all times. Hands are expected to remain visible above the table, with wrists resting on the table . 8

When dining in a home, Russians will often put more food on the table than can be eaten to indicate an abundance of food (whether there is or not). Refusing second helpings is cons idered rude and an insult to the cook. As a result, one ploy for visitors to use is to leave a little bit of food on their plate to indicate that they cannot possibly eat another bite. 9

2.3. Drinking and smoking

Russia is a drinking culture. Refusing to drink i s unacceptable unless there is a plausible excuse (i.e. - health or religious reasons). For the uninitiated, it is best advised to know when it is time to stop, since every time one drains their glass they may be urged to have a “refill.” ¹⁰ In addition to this, not all water in Russia is purified as well as in the West. Visitors must be wary of not only the water they drink, but of less obvious problems as well, such as when requesting ice cubes in beverages - these cubes may have come from unpurified water.

During entertaining, ‘toasts’ are frequent and no one drinks until the first toast has been offered. After a toast, most Russians clink their glasses together, as in Westernised societies. However, in Russia it is not appropriate to do so if drinking something non-alcoholic. 11

Just as Russia is a drinking country, it is also very much a smoking country. Bearing this in mind, "non-smoking" sections may be difficult to find. Also, constant smoking during a meal is an accepted practice that Westerners will have to get used too. 12

2.4. Corporate Culture

Punctuality in meetings is appreciated. However, often business meetings will continue long beyond their stated time limit and this should be planned for. Smart travellers will obtain an ‘open-ended’ plane ticket to allow for this possibility.

^{8 Bosrock, M.: Put Your Best Foot Forward: Russia, retrieved 28.01.2000 from the Wall Street Journal website,} http://public.wsj.com/careers/resources/documents/cwc-russia.htm.

9 Prosperous Entertaining, retrieved from the World Wide Web 25.11.2002,

http://www.executiveplanet.com/business-culture/92777626890.html .

^{10 Bosrock, M.: Put Your Best Foot Forward: Russia, retrieved 28.01.2000 from the Wall Street Journal website,} http://public.wsj.com/careers/resources/documents/cwc-russia.htm.

¹¹ Prosperous Entertaining, retrieved from the World Wide Web 25.11.2002,

http://www.executiveplanet.com/business-culture/92777626890.html .

¹² Ibid.

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Interestingly, the word ‘No’ is generally not the final word on an issue - i.e., this implies that there will still be room to bargain even after a ‘No’ answer is provided to a question. ¹³ This is most interesting when contrasted with the typical Asian style of doing business. In order to be sensitive to the other party’s feelings, Asians will often provide a very indirect response to any question, which can sometimes be confusing to the uninitiated Westerner. Although our focus within this paper is for Westerners doing business in Russia, this contrast is obviously beneficial information to know for anyone doing business across borders

Although Russians usually negotiate technical issues very competently, their inexperience with capitalism means they do not necessarily understand all Western business practices and objectives. ¹⁴ Visiting businessmen should take care to ensure clear and accurate explanation of their demands to avoid confusion or animosity from Russian counterparties.

2.5. Hofstede’s cultural dimensions for Russians

2.5.1. Power Distance

Power Distance within Russia is definitely high. Although the state no longer dominates business as it used to, Russian business culture has a deeply entrenched hierarchy. Superiors have authority over their subordinates and are ultimately responsible for the final decision. ¹⁵ . As a result, Russian officials expect to do business with only the highest-ranking Western executives. For visiting Westerners, it is essential to deal with the key decision- makers, rather than “gate-keepers” or other go-betweens often sent to meet with new visitors. Consequently, planning ahead to ensure the correct contacts well in advance of a trip is essential.

2.5.2. Uncertainty Avoidance

Russians in general can be categorised as being very risk averse. Given the fact that the old Russian system has been centrally planned and laws were often vague or indiscriminately enforced, it is not surprising that Russians tend to avoid uncertainty when it comes to business deals even when they realise that a more risky negotiation might generate better outcomes. 16

^{13 Bosrock, M.: Put Your Best Foot Forward: Russia, retrieved 28.01.2000 from the Wall Street Journal website,} http://public.wsj.com/careers/resources/documents/cwc-russia.htm.

¹⁴ Ibid.

¹⁵ Let’s Make a Deal!, Retrieved from the World Wide Web 20.11.2002 from World Class Online MBA from Cambridge Online Learning.

¹⁶ Moran, R. & Stripp, W.: Dynamics of successful international business negotiations, 1991, Houston: Gulf Publishing. This has been corroborated by the telephone interview with Daniel Bleckert, a MBA student at

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