Cultural Dimensions of Business in Russia

Table of contents

1. Background to the Russian people

2. Cultural Dimensions of Business in Russia
2.1. Entertaining
2.2. Dining
2.3. Drinking and smoking
2.4. Corporate Culture
2.5. Hofstede’s cultural dimensions for Russians
2.5.1. Power Distance
2.5.2. Uncertainty Avoidance
2.5.3. Individualism – Collectivism
2.5.4. Masculinity – Femininity
2.6. Trompenaar’s Framework
2.6.1. Getting along with People
2.6.2. Living in Time
2.6.3. Living with Nature

3. Russian communication principles
3.1. Meeting and respectfully addressing Russians
3.2. General communication guidelines
3.2.1. Good topics of conversation
3.2.2. Topics to avoid
3.3. Types of non-verbal communication
3.3.1. Kinetics and proxemics
3.3.2. Paralinguistics
3.4. Communication technology
3.4.1. Telephones
3.4.2. Presentations
3.4.3. Written communication

4. Negotiating with Russians
4.1. Pre-negotiating preparation
4.2. The basic concept of a negotiation
4.3. The Russian style of negotiation
4.4. Negotiation tactics and persuasion
4.5. Protocol
4.5.1. Credentials
4.5.2. Guideline for business dress General dress code Women’s business dress code
4.5.3. Gift giving Appropriate business gifts
A list of appreciated gifts
4.5.4. Ceremonies
4.6. Communicative context
4.7. Type and significance of goals
4.8. The role of relationships and trust
4.9. The value of time in Russia
4.10. Agreements through written documentation

5. Developing Multicultural Teams
5.1. Leading, motivating and managing teams in a Russian context
5.2. Leadership in Russia: Origin and values
5.3. The establishment of credibility
5.4. Effective personnel development for Russian employees
5.5. Motivation

6. Selection of Expatriates
6.1. Factors to Consider
6.2. Selection Attributes

7. Managing Social & Ethical Issues:
7.1. The Issues
7.2. Managing the Issues

8. Conclusion

9. Appendices

10. References

"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."

Marina Tyanhelkova, International Republican Institute^[1]

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 loss, 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.

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 private 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 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 considered 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 is 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.

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]

2.5.3. Individualism – Collectivism

Even after the fall of communism, Russia remains a very collectivist society. Many Russians are still unfamiliar with, or misinformed about, concepts that are basic to Western business culture, particularly those dealing with profits, motivation, etc. (as explained in the ‘Background’ section above). Even for well-paid Russians, after they've reached a sufficient level of income, working in a comfortable environment can be as or more important than a higher salary.^[17]

Perhaps due to the oppressive nature of the former Soviet Union, Russians find it difficult to admit mistakes publicly, and sometimes even privately. In addition, because of it’s historically collectivist culture, public praising of individuals is looked upon with suspicion. As in other highly-collectivist societies (e.g. South East Asia or Japan), foreign business people must instead find ways address the group, not the individual and to comment on both problems and successes in a way that encompasses the broader scope of the issue in order to avoid singling out individuals.

2.5.4. Masculinity – Femininity

Russian culture encompasses elements of both a Masculine and a Feminine orientation. From a masculine perspective, Russians can be forceful and aggressive people to do business with. Also, sexist attitudes towards women persist and women are likely to face considerable challenges conducting business in this country. At the same time however, research indicates that Russians are sensitive to feelings of others – a trait generally attributable to a feminist society. Strong affection for children reinforces this feminist orientation as well.

2.6. Trompenaar’s Framework

2.6.1. Getting along with People

First and foremost, a good deal of patience, flexibility and understanding is necessary when doing business in Russia. Not only is the bureaucracy extensive, but also establishing personal relationships is very important for Russian businesspeople. For a Russian, the quality of such a relationship is extremely important; it basically signifies trust. Personal relationships are what keep business between individuals and companies going.^[18]

2.6.2. Living in Time

Out of necessity, Russians live in the present and have trouble with long-term planning and assessing the ‘big picture’. When faced with an ambiguous problematic situation, they have a tendency to alter the scenario to fit the picture that they find most useful.^[19]

Russia’s recent past includes economic, social, and political chaos and havoc and the former communist regime that existed before the chaos is no longer a relevant reference point for daily activities in 2002. At the same time, the chaotic history has created a feeling amongst Russians that the future is uncertain and that they cannot control their destiny. Long-term planning then is not something most Russians are adept at, making careful communication necessary for Westerners implementing or relaying long-term goals in Russia.

2.6.3. Living with Nature

Russians are enthusiastic about discussing politics and the challenges of living in Russia. When this occurs, the best policy is for one to become an active listener rather than participant. Expressing Westernised views may cause offence. Russians like to have a strong Internal Control and to dominate the conversation (at least when discussing this subject). As a Westerner, one should focus on them and be flexible to best get along.

3. Russian communication principles

3.1. Meeting and respectfully addressing Russians

When Russians meet people for the first time, the greeting may come across as cool and unfriendly. Friendly smiles should not be expected. Handshakes are always appropriate when greeting or leaving, however it is not obligatory. In case someone is wearing gloves, they should be removed before shaking hands.^[20]

When meeting someone, it is perfectly appropriate to simply state the family name without any additional greeting. Titles of Russian contact persons one will encounter should be learned, as these distinctions are extremely important in the Russian culture.^[21] The first name is only appropriate with very intimate relations and friends. For visitors, it is appropriate to refer to Russian colleagues by either "gaspodin" (a courtesy title similar to "Mr.") or "gaspazhah" (similar to "Mrs." or "Miss") plus his or her surname.^[22] Using “comrade” or the Russian equivalent “tovarisch” is now out of date. It was popular in Communist days, but should no longer be used.^[23]

3.2. General communication guidelines

Non-verbal communication is important in Russia, but it all depends on the situation. Sometimes, Russians are very careful about what they say and how they say it, and may speak metaphorically, symbolically, and perhaps even cryptically. Consequently, there is a great deal of reliance on non-verbal communication. At other times, however, they can be extremely frank. It is permissible to discuss feelings and hopes for the future, since Russians will be far more interested in the personal side of one’s character than in the business agenda.

Physical contact is nothing unusual in Russia. When a Russian is touching another person during conversation, it is usually a sign of confidence. Personal questions are best avoided, although Russians are interested in personal issues such as family and children and showing photographs of one’s children can be an effective way of building good will. Compliments should be given with caution, since they may cause Russians to feel obligated. For example, if visiting a home, admiring a decorative object too enthusiastically, the host may insist that the visitor takes it.

3.2.1. Good topics of conversation

Foreigners should be careful when choosing a topic for casual conversation. Russian culture and history are always appropriate topics, however showing too much knowledge or enthusiasm about these subjects may appear odd to Russians, because it is hard for them to believe that a Westerner actually likes or is interested in Russia. Some welcome topics are also the changes taking place in Russia, recent events, economic problems, and positive contrasts and comparisons between Russia and other developed countries. However, when talking about the comparisons, it is advisable to let Russians bring up the subject first. Further welcome topics are all aspects of Russian culture, such as books, art and films.^[24]

3.2.2. Topics to avoid

Sensitive issues include complaints about Russia, such as political or economic criticism, World War II and the Holocaust, the Czar and the monarchy, ethnic minorities, religion, comparing or contrasting Russia to other developing countries and comparing or contrasting Moscow and Saint Petersburg.^[25]

[...]

---

^[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.

^[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.

^[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.

^[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 Swinburne University, Melbourne, who worked for 4 months with Roland Berger Strategy Consultants, a German Consulting firm, in Moscow.

^[17] 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.

^[18] Intermark Residential Real Estate, retrieved from the World Wide Web 25.11.2002, http://www.intermark.ru/moscow/cross_cultural.htm

^[19].quoted from Ethics paper, ‘Comparing Russian and American Attitudes on …’

^[20] 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.

^[21] Russians have usually three names: the first is a given name, while the last is the father's family name. The middle name, known as a patronymic, is a version of the father's first name. For a man, it ends with the suffixes "vich" or ovich" meaning "son of." For a woman, the patronymic is also the father's first name but with suffixes "a" or "ova" added, which means "daughter of." When becoming well acquainted with a person later on, one might be invited to refer to him or her by the first name and patronymic. First name or title? Retrieved from the World Wide Web 25.11.2002, http://www.executiveplanet.com/business-culture/92777777796.html.

^[22] Some names are so common that additional information is needed to identify the correct person. Therefore, Russians use a person's birth date to differentiate between identically named persons in official circles. Moreover, Russians often use prefixes "senior" and "junior" after a name to differentiate between two persons (especially men) that are identically named.

^[23] First name or title? Retrieved from the World Wide Web 25.11.2002, http://www.executiveplanet.com/business-culture/92777777796.html.

^[24] Conversation, retrieved from the World Wide Web 25.11.2002, http://www.executiveplanet.com/business-culture/92777341671.html.

^[25] Conversation, retrieved from the World Wide Web 25.11.2002, http://www.executiveplanet.com/business-culture/92777341671.html.