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1 GEN Y AND THE WORLD OF WORK GEN Y AND THE WORLD OF WORK A report into the workplace needs, attitudes and aspirations of Gen Y Russia RUSSIA

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1 GEN Y AND THE WORLD OF WORK

GEN Y AND THE WORLD OF WORKA report into the workplace needs, attitudes and aspirations of Gen Y Russia

RUSSIA

3GEN Y AND THE WORLD OF WORK2 GEN Y AND THE WORLD OF WORK

CONTENTS FOREWORD

In 1939, Winston Churchill famously described Russia as “a riddle wrapped in a mystery inside an enigma”. Russia, the largest country in the world, spans 11 time zones and is a land of extremes. Lake Baikal in Siberia is the deepest lake in the world and holds roughly one fifth of the world’s fresh water. Mount Elbrus, near Russia’s border with Georgia, is Europe’s largest mountain. Russia also has a rich array of natural resources at its disposal. It is the second largest producer of dry natural gas in the world and the third largest oil producer.1

The country has undergone dramatic political and economic change over the last few decades and that continues to the present day. Emerging from years of communist rule, Mikhail Gorbachev sought to reform and restructure the Soviet economy in the mid 1980s through ‘glasnost’ and ‘perestroika’, allowing more transparency, certain economic freedoms and the expansion of trade that was not state-controlled—the Komsomol economy. Just as the economy accelerated, in 1991 the former Soviet Union fell apart. By then many state assets had fallen into private ownership and whilst individual and political freedoms were increasing, so was the country’s debt burden. Vladimir Putin succeeded Yeltsin as President with an initial agenda of law and order. Over time, with increased state control of both the media, energy resources and the Duma through Putin’s United Russia party, the country has become an authoritarian ‘sovereign democracy’ that has reduced the pace of democratisation. Following the debt default in 1998, the Russian economy recovered with growth rates reaching nearly eight per cent on average between 2003 and 2007.2 Oil and gas revenues were central to this—they now account for more than 50 per cent of the federal budget revenues3 and 75 per cent of all Russian exports. Sensibly, the government built up substantial financial reserves4 and won popular support by increasing benefits, subsidising state sector employment, paying unpaid wages and bringing prosperity to ordinary citizens.5 However, balancing the budget will not be easy going forward. In 2005 the government was able to do this at an oil price of US$20 a barrel. In 2013 it needed a price of US$103.

Given the low level of state debt, the government will be able to borrow more, but that could lead to higher inflation and a drop in living standards for many Russians—something that could trigger social unrest and a degree of political instability.

It is in this context that Gen Y Russia—those born between 1983 and 1995—have grown up. They have lived through turbulent times, but with an availability of technology and new social freedoms that were not available to their parents they should have an opportunity to prosper. Instability, though, is never far away. Much, of course, will depend upon how the rest of the world responds to the crisis in Ukraine and how Russian foreign policy is acted out in the Crimea.

Several key areas are explored in this report based on answers given by 1,000 Russian 18–30-year-olds about their attitudes to issues surrounding their work and careers. We wanted to know what attracts them to a potential employer and what makes them stay in a job. We asked what they look for in an ideal boss and what they regard as markers of success in their careers. We explored their attitudes to changing jobs and starting their own businesses. Further, we asked about their use of social media that is transforming the way people communicate at work and in their leisure time.

Our findings show that Russia is a different place to the other economies that we have explored so far in this series. Young Russians prioritise personal wealth creation, personal development and entrepreneurial opportunities more highly than other countries surveyed. This also makes sense in the context of the shift in the political situation and the economic change experienced in recent years. Yet in other ways they are similar to their counterparts elsewhere in the world. This report offers insight and practical support for the HR community, managers and business leaders as they seek to understand and motivate this critical segment of the Russian labour market.

James Cullens Group HR Director Hays

FOREWORD 3

SUMMARY OF OUR RESEARCH 4

1. GEN Y RUSSIA AND THE WORLD OF WORK 6

2. LEADERSHIP 10

3. ENTREPRENEURSHIP 12

4. ATTRACT 16

5. RETAIN 20

6. TECHNOLOGY AND SOCIAL MEDIA AT WORK 24

ABOUT HAYS 26

SELECT BIBLIOGRAPHY 27

5GEN Y AND THE WORLD OF WORK4 GEN Y AND THE WORLD OF WORK

ABOUT OUR SURVEY

For our eighth Hays report on the needs and aspirations of Gen Y worldwide, we asked young people in Russia to tell us how they see their future at work. 

A total of 1,000 members of Gen Y Russia took part in our survey. A large proportion—38 per cent—are working in at least their second full time job, compared to a cross-country average of 19 per cent. Only 17 per cent are students, and 11 per cent are working part time.

The research explores what young Russian people look for in the world of work, what kind of career they aspire to, the rewards they expect and what gives them job satisfaction. It throws light on the kind of working environment they seek and the qualities they look for in their bosses. Finally the research reveals some insights into the way Gen Y Russia relate to social media and technology. The findings are invaluable for HR departments and organisations seeking to recruit, motivate and retain Gen Y Russia.

SUMMARY OF OUR RESEARCH

GENDER SPLIT

AGE SPLIT

REGIONAL REPRESENTATION

4.0%

18 19 20 21 22 23 24 25 26 27 28 29 30

3.8%

8.1%11.8%

7.0% 7.0% 7.5% 7.8% 8.8% 9.7%

4.5%8.1%

11.9%

YEARS IN WORK

15%

0–12 months

11%

13–24 months

10%

25–36 months

44%

Over 3 years

7%

Not started working since

completing full time

education

13%

Still in full time

education

CURRENT WORKING STATUS

17%

Student/in full time education

12%

Working full time—in first full time job

(35 hours per week or more)

11%

Working part time (up to 35 hours per week)

13%

Unemployed and looking

for work

Working full time—not first

full time job (35 hours per week or more)

38%

1%

Intern

8%

Other

PROFILE OF RESPONDENTSA total of 1,000 Russian 18–30-year-olds answered our survey. 50 per cent of our sample are working full time, a higher proportion than the 41 per cent average of other countries surveyed to date. 44 per cent have been in work for over three years. Respondents come from a number of sectors—ranging from consulting, banking and manufacturing through to sales roles—where the highest number of respondents work. Only 17 per cent are still in full time education, which is somewhat lower than the cross-country average of 27 per cent, while just over 11 per cent are working part time.

Female49%

Male51%

Centra

l Fed

eral D

istric

t

Northw

ester

n Fed

eral D

istric

t

Sout

hern

Federa

l Dist

rict

Volga R

egion

Federa

l Dist

rict

Ural Fe

deral D

istric

t

Siberi

an Fe

deral D

istric

t

Far E

ast F

edera

l Dist

rict

16.9%

25.8%

9.5%

20.5%

8.6%14.0%

4.7%

7GEN Y AND THE WORLD OF WORK6 GEN Y AND THE WORLD OF WORK

Despite some of the increased personal freedoms the Russian people have experienced over recent decades, the state has become increasingly authoritarian in many areas of life. It is clear from our survey that younger people want to exert more control over their own destiny, develop their skills and capabilities and build financial independence.

PLEASE TELL ME WHAT TO DO

Russian history has seen many authoritarian leaders who have thrived on control and compliance. Having a leader who tells people what to do is very much a feature of life in Russia today. A desire for this lives on strongly with Gen Y Russia, although there is a slight difference by age split within our sample. A very high proportion of our sample, 58 per cent, see their ideal boss as someone who allocates work and tells them what to do. Women, slightly more than men, value this, as do 25–30-year-olds more than their 18–24-year-old counterparts. This is significantly different from their global peers and a distinguishing feature of this population.

The younger generation in Russia live in a world very different from the austerity and state control of their own parents’ youth. Personal and social freedom exist to a much greater degree than even a couple of decades ago. One- party communist rule has been replaced with a form of ‘sovereign democracy’ with the same man holding either the role of President and Prime Minister continuously since 2000, with every possibility that he will remain in office until 2024. State capitalism exists alongside some commitment to free markets. The country is reliant on natural resources and the economy is in desperate need of diversification and reform. The population is in decline, increasing the burden on the younger generation as they move into management and leadership roles. The country is perhaps at an inflection point where much change is needed, making it an interesting time to be a member of Gen Y Russia.

1. GEN Y RUSSIA AND THE WORLD OF WORK

I’LL RUN MY OWN BUSINESS

Our survey shows that in addition to the 11 per cent of our Gen Y Russia sample who are already self-employed, a further 76 per cent are interested in running their own business or see this as their main career objective. The only countries with higher interest amongst Gen Y in an entrepreneurial future are Brazil and China. When set against the backdrop of Russian communism, collectivism and state enterprise, it is perhaps not surprising that such an entrepreneurial spirit is now more prevalent as people look to exploit the opportunities offered by the free market economy and sectors outside oil and gas. Names such as Khordokovsky and Abramovich are well known in business, but there are other less well known but successful entrepreneurs from the Russian digital world such as Vyacheslav Mirilashvili, Pavel Durov and Lev Leviev, the founders

of the Russian version of Facebook called Vkontakte.ru, and Maxim Nogotkov, founder of Svyaznoy Bank, a mobile devices retailer and consumer banking services provider.

So important is the need to continue to boost entrepreneurial activity in Russia that the Skolkovo Moscow School of Management has partnered with the Moscow Innovation Development Centre to deliver entrepreneurship training to Moscow city officials who are responsible for overseeing innovation in the capital.6

HUNGRY TO LEARN AND DEVELOP

For 64 per cent of Gen Y Russia, training and development is one of the most important factors when choosing an employer. When asked what they want from their careers, 57 per cent see

acquiring knowledge and expertise as an important priority. These are powerful needs in combination. Our sample also see opportunities for self-development as critical to their future and one of the building blocks of a successful career. If it advances their career, helps them receive more recognition or would help them to earn more money, 99 per cent of the sample are prepared to undertake study for professional qualifications or are already studying for them. Organisations that can offer such opportunities will be well placed to attract and retain Gen Y Russia.

COUNTING THE CASH

As with their Chinese counterparts, by far the most important indicator of career success for Gen Y Russia is creating personal wealth. It is also what they most want from their work, coming marginally ahead of doing interesting work. This

GEN Y RUSSIA’SIDEAL BOSS:

51%LEADER

24%ADVISOR

58%DIRECTOR/ALLOCATOR

OF WORK

25%CONFIDANT/

DISCUSS PRIVATE &WORK MATTERS

FRIEND

11%PEER

21%COACH/MENTOR

7%MOST IMPORTANTFACTORS IN THEWORKING ENVIRONMENT:

72% 41% 40%

35% 34%

INTERESTINGWORK

AUTONOMY INYOUR WORK

FLEXIBLEBENEFITS

FLEXIBLEHOURS

MODERN/PLEASANTWORKING SPACE

9GEN Y AND THE WORLD OF WORK8 GEN Y AND THE WORLD OF WORK

is not surprising given the emergence of a middle class and the polarisation of wealth seen in the early to mid 90s where the rich got richer and the poor became poorer. In fact, this figure is higher than any country surveyed to date. Gen Y Russia seem to expect a degree of dislocation along the road to prosperity. They are prepared to study for professional qualifications, particularly if it will help them progress and bring in more money.

SATISFACTION

Financial reward comes top when defining what brings Gen Y Russia satisfaction from their work—it is the top factor for 65 per cent of our sample. Although money is clearly a very important driver for them, so is the content of what they are engaged in. Varied and interesting work is the second most popular option, chosen by 52 per cent of our sample.

Perhaps this is not surprising given the importance they ascribe to learning, access to training and personal development. What is also key for Gen Y Russia is to feel valued and appreciated for their contribution at work—this was the third most commonly chosen satisfaction driver.

WORKING ENVIRONMENT

Gen Y Russia know what they want at work. For 72 per cent of our population, being engaged in interesting work comes top. Flexible hours and a pleasant working environment are also important. Other factors will be important when looking for a new employer, such as finding a fair boss, having a clearly defined career path and seeing evidence of the ability to progress quickly. The latter is far more important for more of our sample (40 per cent see this as key) than their international peers (27 per cent).

MOBILE

It is estimated that 20 per cent of Russians are active social media users. Those who are connected spend more time online on social networks than in any other country in the world. Given their level of connectivity, it is perhaps not surprising then that only 36 per cent of Gen Y Russia see technology as blurring the lines between work and social life, compared to 64 per cent of their global peers. Our sample also see great benefit in instant messaging. Although 60 per cent of them forecast mobile phone calls to be the most common form of work communication over the next five years, 56 per cent see instant messaging as almost as prevalent. This is far higher than their global peers at 33 per cent.

1. GEN Y RUSSIA AND THE WORLD OF WORK

TRAINING AND DEVELOPMENT

64%

DEFINED CAREER PATH

38%

ABILITY TO PROGRESS QUICKLY

40%

BENEFITS OFFERED

32%

TOP FOUR FACTORS WHEN DECIDING ON A POTENTIAL EMPLOYER:

48%

EMAIL

60%

MOBILE PHONE(CALL)

56%

INSTANT MESSENGER

HOW GEN Y RUSSIA EXPECT TO COMMUNICATE AT WORK 5 YEARS FROM NOW:

REWARDS & BENEFITS FIVE MOST ATTRACTIVE REWARDS AND BENEFITS:

68%

BASESALARY

28%

LEVEL OFHOLIDAY

ALLOWANCE

28%

FLEXIBLE WORKING—

WORK FLEXIBLE HOURS

64%

POTENTIALTO EARNBONUS

24%

FLEXIBLE WORKING—

WORK AT HOME

11GEN Y AND THE WORLD OF WORK10 GEN Y AND THE WORLD OF WORK

A new generation has started to find a new voice as they move out of poverty and into relative prosperity. We asked Russian 18–30-year-olds what they want from a leader and the results highlighted some significant differences.

GEN Y RUSSIA WANT WORK TO BE ALLOCATED

When asked about the qualities of their ideal boss, Gen Y Russia have a very traditional, hierarchical view of what they want. The majority, 58 per cent of our sample, see the role of an ideal leader as being primarily that of an allocator of work and 51 per cent see a boss as a leader. It appears that there is a strong desire from this generation to be given clear instruction on what to do, in sharp contrast with their international peers. Although this view is universally strongly held by Gen Y Russia, there is a slight difference of view when age and gender are taken into consideration. Women are more likely to see a boss as an

allocator of work (63 per cent) than men (52 per cent) and 25–30-year-olds are more likely to want an allocator of work (62 per cent) than 18–24-year-olds (54 per cent).

FAIR AND EQUITABLE

Fairness is important too. Perhaps this is not surprising. In the not too distant past your connections and whom you knew were particularly important in influencing your career and prospects generally—so life in the Soviet system wasn’t always seen as fair. Now 52 per cent of our sample rate fairness as the most important quality for a boss to have, followed closely by the ability to motivate people (50 per cent) and being expert (46 per cent). Interestingly, Gen Y Russia do not look for a boss to be a coach or mentor, with only seven per cent describing their ideal boss in this way. This is in sharp contrast to the cross-country average where this is more highly valued (44 per cent).

IMPLICATIONS FOR HR

Gen Y Russia have limited interest in a boss being a friend or even someone to discuss private matters with. There is a clear focus from our sample on wanting to be given firm direction and a clear steer on what to do and by when. The downside of this is that people may feel less inclined to show personal initiative if an organisation’s overriding culture is one of control and compliance where people only do what they are told to do.

Leadership and management development programmes will need to ensure an appropriate balance between a focused direction and control, and encouraging people to take responsibility and show initiative. Also key for organisations is building a business culture of fairness and transparency, which of course is a much wider issue for Russia too.

Russia has experienced very different leaders and leadership styles in the last hundred years, from Czarist times, through revolution, communism and one-party rule to the ‘sovereign democracy’ of today. As with China, for long periods of time conformity and compliance rather than independence of thought and deed have helped an individual’s career path in Russia. But times are changing.

2. LEADERSHIP

Greater public spending has increased the cost of labour from 40 per cent to closer to 50 per cent of the country’s GDP, whilst productivity has remained at less than half of the level of the EU.7 Russia needs to improve its productivity and diversify into new areas and away from its heavy reliance on natural resources if the economy is to prosper. Key to this is the need to embrace new technologies and working practices, as well as strengthening the country’s overall leadership and management capability. The latter point is one area that will be critical in addressing these challenges because Russia currently lags behind many advanced and emerging economies in terms of its management skills.8 This is not surprising given the relatively swift transition from communism to a free market economy and the scale of liberalisation and privatisation within certain sectors.

The 2007 management capability research highlights a sharp contrast— a relatively large number of well-managed companies exist, but there is significantly lower management capability in higher-value-added industries, which is problematic for diversifying and improving the economy.9 A number of factors underpin these differences, such as a lack of competition and barriers to entry and/or exit in certain sectors.

There are also fewer managers working locally that have benefited from high quality tertiary management education. In fact as yet there isn’t a Russian business school in the Financial Times ranking of top 100 MBA programmes globally, whereas the other BRICS countries all have at least one institution listed. 10

MOST IMPORTANTQUALITIES IN AWORKPLACE LEADER:5

KNOWLEDGEABLE/EXPERT

46%

CONFIDENT

30%

ABLE TOMOTIVATE

OTHERS

50%

FAIR

52%

DECISIVE

24%GEN Y RUSSIA’SIDEAL BOSS:

51%LEADER

24%ADVISOR

58%DIRECTOR/ALLOCATOR

OF WORK

25%CONFIDANT/

DISCUSS PRIVATE &WORK MATTERS

FRIEND

11%PEER

21%COACH/MENTOR

7%

13GEN Y AND THE WORLD OF WORK12 GEN Y AND THE WORLD OF WORK

With oil and gas making up almost two thirds of all exports, a lot of available capital and labour are consumed by this sector. In fact, only c. 20 per cent of exports are made up of higher technology products and only c. ten per cent of the workforce employed in manufacturing are not directly related to oil and gas. Since the 1990s, Russia’s exports have become much more concentrated in this natural resources area, partly due to rising commodity prices, and therefore the country’s exports outside this sector are less competitive overall.12 Russia needs to diversify its economy and build the skills and management expertise to support new enterprises in new sectors.

According to the EY G20 Entrepreneurship Barometer 2013, entrepreneurial businesses create well over half of all employment in most G20 economies. Providing the right conditions to foster the development and growth of new businesses, such as access to funding, education and training, and building a positive tax and regulatory environment with business friendly policies and incentives, should therefore be a key priority for governments and particularly for an economy like Russia’s.

Russia is currently in the third quartile of the EY G20 Entrepreneurship rankings, suggesting there is much more to do. It is rated far lower for innovation—the

World Economic Forum ranked Russia 71st out of 142 countries on this dimension, in part due to outcomes rather than potential to do better. Improving access to funding, along with education and training, are two key areas for focus.

Russia needs to foster a more open and supportive climate for business. Many entrepreneurs have fallen foul of the law or the authorities and a climate of corruption and bribery as part of everyday business life. One estimate in 2012 states that nearly three million entrepreneurs have been imprisoned unjustly.13 However, in 2013 was the news that the government had declared an amnesty for businessmen convicted of economic crimes—of Russia’s current prison population it is estimated that nearly 15 per cent have been convicted for business-related activities.14

ENTREPRENEURIAL SPIRIT

The good news is that the entrepreneurial spirit is alive and well, with 11 per cent of our Gen Y Russia sample already self-employed, and a further 76 per cent considering having their own business in the future or seeing this as their main career objective. Out of the countries we have surveyed so far, only two index higher in this regard—Brazil and China at 77 per cent and 85 per cent respectively. For this level of interest to feed through into the wider Russian economy, a fairer and more transparent business climate needs to emerge more quickly in order to give investors the confidence to invest and trust in the rule of law.

By 2008 Russia had the 11th largest economy in the world, witnessing dramatic growth since 1999. Between 2003 and 2007 economic growth averaged nearly eight per cent.11 During the global economic crisis the country went into deep recession, with growth of -7.8 per cent in 2009. It recovered slowly to 3.4 per cent in 2012, but dropped to 1.4 per cent in the first half of 2013 due to lower export demand and softening commodity prices. Now, more than ever, Russia needs entrepreneurs to fire up its economy.

3. ENTREPRENEURSHIP

In part, the need for more transparency and help for new businesses is being addressed on a number of fronts. The Agency for Strategic Initiatives, set up by the Russian government in 2011, has been tasked with improving legal and regulatory conditions for SMEs. In another step forward in the public sector in Moscow, officials responsible for innovation are being trained by a partnership between the Moscow Innovation Development Centre and Skolkovo Moscow School of Management.

The Skolkovo Foundation, a government-backed initiative, was set up in 2010 as a not-for-profit body to promote innovation and entrepreneurship and to develop and commercialise advanced technologies. This body gave a grant of US$780,000 in 2012 to a company called Workle—a service that people can use to start their own internet-based business careers. Workle offers jobseekers the opportunity to select an occupation that interests them as well as access to remote training and an online workplace. In 2013, Workle announced that it had raised US$3.5 million in its second round of funding from Klever Internet Investment, the technology branch of a major Russian private investor.

Russia is not an easy place to do business. It now has high labour costs coupled with poor institutions, which make it potentially a very uncompetitive market for private enterprise. The Transparency International Corruption Perception Index 2013 lists Russia as 127th out of the 177 countries monitored, putting it equal with Azerbaijan, Comoros, Gambia, Lebanon, Madagascar, Mali, Nicaragua and Pakistan.15 This doesn’t sit comfortably with its economic and political aspirations. Bureaucracy has burgeoned in recent years. During the 2000s the number of state employees increased significantly, with a quarter of the workforce employed in the public sector and 35–40 per cent of people dependent upon the state in some way. Some estimates suggest that state companies control about half of the economy. These companies are protected from direct competition and are able to award significant contracts to private companies owned by friends and relatives of their managers.16 There is even recognition from the Ministry of the Interior that the average cost of a bribe had increased from US$292 in 2008 to over US$7,670 by 2011.17 To grow and flourish, Russia needs to address this and focus on developing stronger institutions independent of state control, increasing competition and reducing bureaucracy and corruption.

9 OUT OF 10ARE INTERESTED IN SOME FORM OF INTERNATIONAL TRAVEL WITH WORK

ENTREPRENEURIAL INTENTIONS:

57%

19%

13%

11%ARE SELF EMPLOYED/HAVE THEIR OWN BUSINESS

ARE NOT INTERESTED IN HAVING THEIR OWN BUSINESS

AGREE THAT HAVING THEIR OWN BUSINESS IS THEIR MAIN CAREER OBJECTIVE

WOULD CONSIDER HAVING THEIR OWN BUSINESS IN THE FUTURE

15GEN Y AND THE WORLD OF WORK14 GEN Y AND THE WORLD OF WORK

PERSONAL DEVELOPMENT

There is a huge appetite amongst Gen Y Russia for more access to personal development if it will enhance their careers, with 99 per cent of our sample saying either they are willing to study further, or are already doing so. 46 per cent would study further to progress at work, whereas 37 per cent would do it purely to earn more money. This is higher than the average of other countries surveyed, which sits at 24 per cent.

HAVING AN INTERNATIONAL DIMENSION

Gen Y Russia are keen to have some kind of international exposure to what they do at work, with 93 per cent interested in this compared to 77 per cent of their global peers. A significant proportion, 37 per cent, prefer to reside in Russia and travel on business trips and a further 17 per cent are happy to work on international projects but without the need to go abroad. Only seven per cent have a purely domestic work focus. The Russians, together with the Chinese, are the most keen to develop a broader perspective and travel abroad or be involved in international work compared to Gen Y in all the other countries surveyed.

IMPLICATIONS FOR HR

HR departments should look to channel the entrepreneurial aspirations of Gen Y Russia positively for their organisations. Those expressing a desire to run their own show also have a strong need for personal development. Combining the two and offering creative project work, say in exploring new product development or new service offerings, perhaps with an international dimension, is one possibility for some businesses. Importantly, Gen Y Russia have expressed very limited interest in Corporate Social Responsibility (CSR) initiatives, so whereas for Gen Y in other countries, linking up entrepreneurial opportunities with CSR initiatives outside an organisation is a positive draw, it won’t necessarily be so here.

3. ENTREPRENEURSHIP

:

Russia currently spends only one per cent of its national income on Research & Development (R&D).18 Whilst this level of spend is broadly similar to other emerging markets, what is unusual is the high proportion—nearly 75 per cent—that comes from state-funded institutions as opposed to the commercial sector itself. Coupled with relatively weak incentives to invest, this has a direct and negative impact on the amount of innovation in the country.

There is strong evidence for the necessity of entrepreneurship in countries throughout the world. Immigrants to the US and their children founded 40 per cent of Fortune 500 firms. They also started 28 per cent of all new businesses in the US in 2011 despite representing just 13 per cent of the US population. Across the EU in 2012, entrepreneurs supplied 67 per cent of all jobs. In China this was higher still at 75 per cent. In the US, start-ups and firms less than five years old accounted for nearly all net job creation over the past three years.19

17GEN Y AND THE WORLD OF WORK16 GEN Y AND THE WORLD OF WORK

acquiring knowledge and expertise is a key aspect of what Gen Y Russia want from their career, chosen by 57 per cent of our sample. Organisations will need to demonstrate that they have a strong training function and that progression on merit is possible quickly and is the norm.

As part of developing themselves and building their experience base, being engaged in work with an international flavour is important for Gen Y Russia—whether that happens to be working on projects run from Russia or those involving business travel overseas. Only seven per cent of our sample want to stick to domestic work with no travel at all.

REWARD IS IMPORTANT

When it comes to rewards, base salary and the potential to earn a bonus are the key decision factors for Gen Y Russia when choosing a new employer. For 68 per cent of our sample, base salary is key, closely followed by the potential to earn a bonus for 64 per cent. The latter is more popular than in any of the other countries surveyed. Flexibility on hours and the ability to work at home, along with access to private healthcare are of much less interest to this group.

A sub-par secondary level education system has, over a period of time, failed to supply the skills that employers today are looking for.21 As a consequence, there simply are not enough specialists available across industries and functions, which in turn increases demand and puts further pressure on wages. Finding new and creative ways to attract talent has never been more important for businesses in Russia.

TWO MAIN MEASURES OF CAREER SUCCESS

Gen Y Russia are very clear in how they judge success and what they want from their careers—a combination of building personal wealth and the chance to be engaged in interesting work. These two elements are stronger drivers than all of the other countries surveyed to date, suggesting that a focus on these will be critical to bringing the best talent on board for organisations.

PERSONAL DEVELOPMENT IN THE FAST LANE

For 64 per cent of Gen Y Russia, access to good quality training and development is the most significant factor when deciding to join a prospective employer. This is far above their international peers who average 41 per cent. Furthermore,

Attracting talent is a key challenge for any Russian business, but the competition is fierce. According to the European Bank for Reconstruction and Development (EBRD), 45 per cent of expanding firms in Russia think that skills shortages place constraints on their growth.20 There has been significant pressure on wages in high-skill industries.

4. ATTRACT

Such has been the pace of change in Russia that within Gen Y Russia there is a sub-group known as ‘Generation Elusive’ who were born between the end of the Brezhnev era and the start of perestroika.22 Now in their mid-twenties to mid-thirties, they witnessed the end of the totalitarian state and with it disappeared access to welfare, education, healthcare and any certainty of wages from the state.

CAREER SUCCESS INDICATORS:

54%

ACHIEVING JOB SATISFACTION/ENJOYING MY

WORK

66%

CREATING PERSONAL

WEALTH/BEING WELL PAID

40%

ACHIEVING A WORK/LIFE

BALANCE

29%

OBTAINING A RANGE OF

EXPERIENCES

25%

ACHIEVING PROFESSIONAL RECOGNITION

25%

ATTAINING ALEADERSHIP

POSITION

TRAINING AND DEVELOPMENT

64%

DEFINED CAREER PATH

38%

ABILITY TO PROGRESS QUICKLY

40%

BENEFITS OFFERED

32%

TOP FOUR FACTORS WHEN DECIDING ON A POTENTIAL EMPLOYER:

19GEN Y AND THE WORLD OF WORK18 GEN Y AND THE WORLD OF WORK 17GEN Y AND THE WORLD OF WORK

IMPLICATIONS FOR HR

Having a clear and strong employee value proposition has never been more important. HR departments can help to address the obvious hygiene factors such as positioning base pay appropriately, ensuring that the overall reward schemes are as attractive as is feasible, as well as putting in place market competitive benefits where affordable.

Aside from these points, other key attraction factors are access to training and development, having clearly defined career paths and offering quick career progression. Building personal development opportunities that combine overseas travel, training with participation in internationally mixed cohorts or particular project work or short-term secondments, will all play well to the needs and aspirations of this generation. Being able to evidence all of these areas to candidates prior to interview, in person and across social media channels will be important if businesses are to attract the best talent.

4. ATTRACT

Migration is one solution that governments around the world typically are able to use to address labour issues and bridge skills gaps. Currently, migrants make up about 8.5 per cent of the total Russian population,23 which is high compared to other emerging economies. Many relatively unskilled people have come into Russia from former Soviet countries in the hope of a better life, but found it difficult to secure work or obtain a ‘propiska’ or equivalent permission to reside in the capital. More advanced economies will actively seek out certain high-skill occupations or industry sectors by using special visas or points systems to select people and access talent. Russia takes a rather different, more restrictive approach that does not particularly encourage high-skilled workers. For those not from former Soviet countries, language is of course a significant barrier, particularly for professionals. What may be perceived as a fairly authoritarian government could also be a negative point for many.

21GEN Y AND THE WORLD OF WORK20 GEN Y AND THE WORLD OF WORK

Russia is facing tough demographic challenges. The Russian population is declining with birth rates falling and mortality rates increasing. It is a hard place to attract talent to. There are obvious barriers that make it a tough place to live for foreigners, such as the language, as well as a combination of the climate, the level of infrastructure and personal safety issues. Even mobility within Russia can be difficult to manage, so in this context, developing and retaining local talent is critical.

THE WAR FOR TALENT

Gen Y Russia have emerged into a very different workplace from that which their parents knew under the communist system. As the last of this generation were born in 1995, there were still relatively few Western style shops, restaurants and cars on the roads in Moscow. There were protests on the streets against the ‘snickerisation’ of Russia. In the space of a year or two, that had started to

change quite dramatically. A middle class had begun to emerge and the large multinational corporations (MNCs) had started a war for talent, hiring people across the former Soviet Union for their sales forces and factories. Mistakes were made as Western companies’ demand for skills inflated base pay rates and encouraged people to take a very short-termist view of the world. Some companies even applied Moscow pay scales universally across the former Soviet

Union, causing further pay inflation in places as far afield as Uzbekistan and Georgia. People moved jobs regularly because it became the norm and there was a very obvious reward for doing so—they could increase their compensation very quickly for relatively little effort. Against this backdrop, it has never been more important for companies in Russia to develop a longer-term retention strategy that goes beyond just the monetary.

Our research suggests that reward is still at the heart of talent retention in Russia and that people are still fairly mobile when it comes to considering their employment prospects.

WINNING LOYALTY

One in three of our Gen Y Russia sample think they should stay for up to two years with their first employer. Six per cent of them, similar to Gen Y China, would move after just six months, but the majority, 55 per cent, are undecided on how long to remain there. 77 per cent expect to have up to six employers throughout their career against our global average of 76 per cent.

Job security is also on Gen Y Russia’s minds. Whilst 32 per cent believe this is still possible across all areas of the job market, for 35 per cent of them it is seen as not achievable. 20 per cent believe that job security is possible in the public sector, but this drops to just 13 per cent for the private sector.

Given the high proportion of Gen Y Russia who are not sure how long to stay with their first employer, this provides a great opportunity to influence them and keep them engaged and retained. Organisations need to look closely at their employee value proposition and tweak it to address issues relevant to their workforce.

IT’S ALL ABOUT REWARD

Money is clearly the most important motivator for this group. 73 per cent want personal wealth most from their work. It goes without saying that failing to address this will lead to difficulties in attraction and retention. However, after reward, the other drivers for Gen Y Russia are being engaged in interesting work (71 per cent) and acquiring knowledge and expertise (57 per cent).

There are factors that are of little interest to Gen Y Russia too. They get less satisfaction from helping others (12 per cent), solving problems (14 per cent), or actually feeling that they have made a positive contribution at work (21 per cent). On this latter point they are the lowest across our global sample. This seems at odds with the high need that they have for personal achievement and perhaps reflects a very individualistic approach to doing what brings in personal reward.

WORKING ENVIRONMENT

Gen Y Russia have some different needs to their global peers. Firstly, they have the lowest interest expressed of all countries in having any social life around work at 15 per cent compared to the global average of 31 per cent. Working in teams is also more commonly favoured than the global average. For 40 per cent of them, having a modern and pleasant working space or office is important, and alongside Gen Y China on 43 per cent, they are the top two countries in our global sample on this factor. Somewhat important to them is the possibility to have flexible hours, for 41 per cent. However this is below the global

Retaining talent in Russia is a key challenge for any organisation. Whilst money is a key motivator for many people, there are other factors at play too and understanding these is important for business leaders and HR professionals if they want to retain talent.

5. RETAIN

HOW MANY EMPLOYERS GEN Y RUSSIA EXPECT

TO HAVE IN THEIR CAREER:

10+

9.3%

4—6

38.1%

1—3

39.4%

7—9

13.2%WHAT GEN Y RUSSIA WANT MOST FROM THEIR WORK:

INTERESTING WORK

71%

JOB SECURITY

22%

PERSONAL WEALTH

73%

HELPING OTHERS

14%

ACQUIRE KNOWLEDGE AND EXPERTISE

57%

VARIETY

17%

23GEN Y AND THE WORLD OF WORK22 GEN Y AND THE WORLD OF WORK

average of 43 per cent so it is less of a driver. Having pleasant office surroundings rather than the ability to work at home is what Gen Y Russia appear to be looking for.

IMPLICATIONS FOR HR

This presents quite a stark and relatively materialistic picture when it comes to motivating and retaining Gen Y Russia. Provided they are getting trained and developed and provided they can see that they are achieving, a focus on really competitive reward packages will go a long way to keeping staff. Couple this with interesting work and a culture of making personal success transparent and companies should be able to engage and retain many more of them. Add in a decent working office environment and in theory that will retain a large number of our sample. Our data also suggests that bosses who allocate work, tell people what to do, but reward results fairly, will meet with Gen Y Russia’s workplace needs and aspirations. That doesn’t mean it isn’t worth trying to build a more collegiate and inclusive culture, with managers who can coach and mentor people, but regardless, reward and personal success do appear to be key to this group.

5. RETAIN

A shrinking population dependent upon the state with c. 142 million people, Russia has the eighth largest population in the world. However, these numbers are declining due to lower life expectancy, higher mortality rates and lower birth rates. The birth rate is currently 12.11 births per 1,000 people but the death rate is higher at 13.97. Between 1993 and 2008 the population dropped from 148.6 million to 142 million. Despite the state’s efforts in 2005 to increase the birth rate with a natalist programme, followed by an increase in maternity benefits in 2006, the population is still shrinking with an estimated drop to 125 million by 2025.

In 2006 for every ten people of working age, there were six pensioners. The pension number will rise to eight by 2025 which exacerbates the dependency problem.24 Added to the fact that at least a quarter of the labour force are employed by the state and some 35–40 per cent dependent upon the state in some way, this means that structural weakness is increasing.

25GEN Y AND THE WORLD OF WORK24 GEN Y AND THE WORLD OF WORK

employers to check their social footprint. Gen Y Russia are a very connected demographic, but at this point in time, some

social media channels are not perhaps as important in recruitment in Russia as they appear to be in other geographies.

IMPLICATIONS FOR HR

Gen Y Russia are a connected generation who spend a lot of time online. Given their focus on mobile and instant messaging usage, these channels could be important for organisations to look at closely in terms of engaging with customers, clients and employees from this demographic.

Although Gen Y Russia are used to using social media at work, they don’t see it as a key recruitment channel to help them find a new job and they don’t see it as a particularly useful work tool. Facebook and VKontakte are still primarily social channels rather than having a work purpose. LinkedIn and Twitter appear to be lower priorities for them to engage with too.

Organisations that want to attract the best talent should try to bring the use of these channels selectively into their working culture where appropriate. Company websites are not where this generation hang out. Developing a Facebook presence with plenty of content on reward, training, development and career paths as well as giving an insight into the type of work that people can expect to do may well open up a new source of candidates, but it requires time and resources to do this well.

One area for companies to monitor will be the amount of time that people spend connected to work email in their personal time. For some it will be fine, but for others it may become detrimental to how effectively they can operate.

Given the nature and level of governmental control in certain areas of everyday life in Russia, this relative freedom is perhaps surprising, particularly when compared to the Chinese approach to the internet and social media in general. However, it may have come about more by accident than design. From his early years in office, Vladimir Putin focused on exercising state control over the print and television media. In sharp contrast to China, nothing was put in place to monitor the internet once it emerged as a tool of social influence and information dissemination. In part this was due to low levels of local mobile phone and internet penetration at that time,27 coupled with an inability to monitor usage. Within a decade, Russia has become the largest internet market in Europe with the highest internet penetration and engagement of its BRICs counterparts.

Gen Y Russia have adapted well to the use of social media and technology and don’t appear to see it as intrusive as Gen Y in other countries do.

A CONNECTED GENERATION

36 per cent of our sample think that technology is blurring the line between work and social life. They are by far the lowest of all their global peers in this regard with the global average at 64 per cent. Less than one in five (19 per cent) of Gen Y Russia see social media as distracting at work compared to the global average of 41 per cent. However, 2 out of 5 find it hard to resist looking at work emails whilst on

holiday and 43 per cent of Gen Y Russia find it hard to switch off from work at weekends due to constant connectivity—whereas this appears to be easier to do for all of their peers apart from Gen Y China. Although they are less intensive in their use of social media than Gen Y China, this Russian generation will be found online much of the time.

COMMUNICATION AT WORK

When it comes to communication at work, Gen Y Russia are different from their global peers in their outlook and expectations. Email is rated lowest of our entire global sample with only 48 per cent seeing this as the most common means of communication compared to the global average of 63 per cent. Texting too is very low. However, Gen Y Russia and China are the two stand-out nations when it comes to the use of instant messenger. Both, at 56 per cent, top their peers by some way in seeing this as having a strong future, with the global average at 33 per cent.

Still the most popular method of communication for 60 per cent is the mobile phone call. Again, this is true in China, along with Russia, Poland and Sweden and all four are above the global average that sits at 53 per cent.

SOCIAL MEDIA TO FIND A JOB

Gen Y Russia are fairly traditional when it comes to recruitment. The majority think that having a short CV is the most critical factor to take care of when looking for a job. Having a LinkedIn profile and a personal Facebook page are not yet seen as important for recruitment by this generation. Clearly, the domestic channel, VKontakte, is a more commonly used tool for connecting with people in the local market.

Whilst they assign relatively low importance to social media as a recruitment tool, 68 per cent of our sample do expect

Despite the fact that as recently as 2011, Russia didn’t feature in the top 50 countries for internet availability,25 both internet and social media usage in Russia have exploded in recent years. There are now more than 62 million internet users in the country and the number of daily users has risen from 3.2 million in 2003 to 57 million in ten years.26 Whilst global social media channels such as Facebook and Twitter are actively used, local ones such as VKontakte and Odnoklassniki are more popular. VKontakte is the second largest social network service in Europe after Facebook with an estimated 239 million accounts as of January 2014. Twitter is popular too with Russia ranked 14th in the world.

6. TECHNOLOGY AND SOCIAL MEDIA AT WORK

1. US Energy Information Administration (2014) ‘Russia Country Analysis’, http://www.eia.gov/countries/country-data.cfm?fips=RS

2. Sharma, R. (2012) ‘Breakout Nations: In Pursuit of the Next Economic Miracles’, p. 87

3. US EIA passim4. Belka, M. (2012) ‘Russia and the World: 2012-2020’, National

Bank of Poland, http://acig.ru/gaidar/files/belka.pdf5. EBRD (2013) ‘Transition Report—Russia’, http://www.

ebrd.com/downloads/research/transition/tr13.pdf6. Boyde, E. (2013) ‘Opportunities multiply for Russia’s entrepreneurs’,

Financial Times, http://www.ft.com/cms/s/2/949c0aa2-4886-11e3-8237-00144feabdc0.html#axzz2xuuVA9uq, November

7. The Economist (2014) ‘Briefing—Putin’s Russia’, p.19, February8. Bloom, N. & Van Reenen, J. (2007) ‘Measuring and explaining

management practices across firms and countries’, Quarterly Journal of Economics, Vol. 122, No 4, pp. 1351–1408

9. EBRD (2013) ‘MOI survey, The Management Dimension’, European Bank for Reconstruction and Development, Ch. 5, Chart 5.3

10. Financial Times (2013) ‘Global MBA Rankings’, http://rankings.ft.com/businessschoolrankings/global-mba-ranking-2013

11. Sharma, R. passim12. EBRD (2013) ‘Transition Report—Herfindahl index’, Ch. 2, http://

www.ebrd.com/downloads/research/transition/tr13.pdf13. Kesby R. (2012) ‘Why Russia locks up so many

entrepreneurs’, July, BBC News Magazine14. Boyde (2013) passim15. Transparency International (2014) ‘Corruption Perceptions Index 2013’,

http://cpi.transparency.org/cpi2013/results/#sthash.KwwIlEz3.dpuf16. The Economist (2014) ‘Briefing—Putin’s Russia, p.20, February 117. Cited in Judah, B. (2013) ‘Fragile Empire. How Russia Fell in and out of

Love with Vladimir Putin’, Yale University Press, pp. 105, 178 and 22118. EBRD (2013) ‘Transition Report: Innovation in Russia’, Ch. 7, http://

www.ebrd.com/downloads/research/transition/tr13.pdf19. Ernst & Young, (2013) ‘The EY Entrepreneurship

Barometer 2013’, Ernst & Young

20. EBRD (2013) ‘Transition Report—Russia’, Ch. 6, http://www.ebrd.com/downloads/research/transition/tr13.pdf

21. Hays (2013) ‘The Hays Global Skills Index—Russia’22. Judah, B. (2013) ‘Fragile Empire. How Russia Fell in and out

of Love with Vladimir Putin’, Yale University Press, p. 10723. EBRD (2013) passim24. Pirani, S. (2010) ‘Change in Putin’s Russia: Power,

Money and People’, Pluto Press, p134 ff.25. Internet World Stats (2011) ‘Top 50 countries with the highest internet

penetration rate’, http://www.internetworldstats.com/top25.htm26. Kritsch, A. (2014) ‘The State of Social Media in Russia’, Hootsuite,

http://blog.hootsuite.com/social-media-in-russia/27. Pirani, S. (2010) ‘Change in Putin’s Russia: Power,

Money and People’, Pluto Press, p.21328. EBRD (2013) ‘Transition Report’, Ch. 2, http://www.ebrd.

com/downloads/research/transition/tr13.pdf

REFERENCES

In the 1950s the Soviet Academy of Sciences founded a special community in the heart of Siberia. Akademgorodok, literally ‘small academic town’, in Novosibirsk was dedicated to scientific advancement for the state and a dozen research centres were opened. Novosibirsk State University was founded in 1958 to provide a talent pool of scientists to work in the research centres. When the Soviet Union was broken up, this left many scientists displaced and facing a world of delayed wages and little or no investment. Whilst some of them left Russia, others started their own enterprises in the local market. Building on the Akademgorodok heritage, in 2010, the ‘Silicon Taiga’ technology park was opened to support innovation in high technology areas including telecoms, nano-technology, bio-engineering and laser technologies.28 Since it opened it has attracted a number of Western technology companies as clients.

The Cyrillic alphabet was an important factor in the development of the Runet. Yandex became the largest Russian search engine and VKontakte and Odnoklassniki the main social networking sites in local language for young people and old alike. These channels flourished in part due to the lack of state interest and intervention. Online businesses could operate without the need for political connection that was a very different reality to that of bricks and mortar organisations. Blogging also took off with Livejournal becoming one of the mainstream platforms.

Only one per cent of the population used the internet in 1999 but by 2010 this had jumped to an estimated 43 per cent of households. There is of course great regional variation within the country given the spread of the population. The central region, including Moscow, is home to 29 per cent of internet users and the Volga region, including Sochi, comes next with 16 per cent.

With state television no longer the dominant channel for people to access local and world news, Russia has become a different place.

40% CAN’T RESIST LOOKINGAT WORK EMAILS WHENON HOLIDAY

43% FIND IT HARD TO SWITCH-OFF FROM WORK AT WEEKENDS DUE TO CONSTANT CONNECTIVITY

33% AGREE THAT EMPLOYERS ARE WITHIN THEIR RIGHTS TO CHECK THE FACEBOOK PAGES OF FUTURE EMPLOYEES

44% THINK THAT EMPLOYERS SHOULD TRUST THEIR EMPLOYEES TO USE PERSONAL SOCIAL MEDIA AT WORK

40% CAN’T RESIST LOOKINGAT WORK EMAILS WHENON HOLIDAY

43% FIND IT HARD TO SWITCH-OFF FROM WORK AT WEEKENDS DUE TO CONSTANT CONNECTIVITY

33% AGREE THAT EMPLOYERS ARE WITHIN THEIR RIGHTS TO CHECK THE FACEBOOK PAGES OF FUTURE EMPLOYEES

44% THINK THAT EMPLOYERS SHOULD TRUST THEIR EMPLOYEES TO USE PERSONAL SOCIAL MEDIA AT WORK

40% CAN’T RESIST LOOKINGAT WORK EMAILS WHENON HOLIDAY

43% FIND IT HARD TO SWITCH-OFF FROM WORK AT WEEKENDS DUE TO CONSTANT CONNECTIVITY

33% AGREE THAT EMPLOYERS ARE WITHIN THEIR RIGHTS TO CHECK THE FACEBOOK PAGES OF FUTURE EMPLOYEES

44% THINK THAT EMPLOYERS SHOULD TRUST THEIR EMPLOYEES TO USE PERSONAL SOCIAL MEDIA AT WORK

40% CAN’T RESIST LOOKINGAT WORK EMAILS WHENON HOLIDAY

43% FIND IT HARD TO SWITCH-OFF FROM WORK AT WEEKENDS DUE TO CONSTANT CONNECTIVITY

33% AGREE THAT EMPLOYERS ARE WITHIN THEIR RIGHTS TO CHECK THE FACEBOOK PAGES OF FUTURE EMPLOYEES

44% THINK THAT EMPLOYERS SHOULD TRUST THEIR EMPLOYEES TO USE PERSONAL SOCIAL MEDIA AT WORK

27GEN Y AND THE WORLD OF WORK26 GEN Y AND THE WORLD OF WORK

ABOUT HAYS SELECT BIBLIOGRAPHY

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For more information, visit hays.com

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