The Way It Was

Understanding the sales and service culture of Russia: is work a place to go or a thing to do?

Luc Jones, partner, IT/Telecoms, Antal Russia

American technology giants such as Microsoft, Google and DELL are proud of their humble origins, many beginning as a one-man show in someone’s garage. In fact you can even visit the garage where Hewlett-Packard was founded back in 1935, before it grew to become one of the largest IT companies in the world. When asked why there are so few such examples in Russia, a local businessman cynically replied that Russian garages are far too cold!

Joking aside, it is worth taking an indepth look at the entrepreneurialism, service and sales culture of Russia (or as some might say, a lack of it) to gain a better understanding of what drives the world’s largest country and what opportunities there are to be had.

Whilst throughout the 20th century business flourished in Western economies, particularly in the 1950s and 60s, any entrepreneurial spirit that existed in the pre-revolutionary Tsarist Russia was brutally wiped out. All private companies had been nationalized and their former owners had either fled abroad or been sent to the Gulag branded as “enemies of the people”.

All economic activity in the USSR was completely under state control and any attempts at private enterprise were met with a swift and severe response from the authorities. The expression of the day was “Initsiativa nakazuema” (Initiative is punishable) which pretty much summed up the entrepreneurial climate in the Soviet Union—simply put, there wasn’t one.

Countries which had embraced the free market continued to boom (and occasionally bust) as the Soviet economy stagnated under Brezhnev, and despite an attempted revival with the appearance of Gorbachev, the economy eventually collapsed under the weight of its own inefficiency. The USSR splintered into 15 independent republics. A population which used to be fairly certain of what tomorrow would bring were suddenly plunged into a chaotic uncertainty. Brought up to believe that private business and making money was what the evil capitalists did suddenly became not only the norm, but a necessity as guaranteed employment disappeared overnight.

As a student in Russia in the early 1990s, I witnessed the empty shelves gradually filling up with food. But that didn’t necessarily mean they would sell it to you. In a “Produkty” shop on the outskirts of Yaroslavl I recall a conversation with a shopkeeper when wanting to buy some beer for a party.

“Can we have 40 bottles of beer please?”

“I can only sell you twenty”

“Why? Don’t you have 40 bottles?”

“Yes, I have more than 40 bottles but if I sell you 40 bottles then there won’t be enough left for other shoppers.”

My Russian wasn’t as good back then, and I was less argumentative so I neglected to comment: “So there are bottles for other shoppers, but not for me”?!

The easiest solution was to buy the 20 allowed and to send someone else down afterwards to buy more. But I couldn’t help thinking to myself why this should be? Surely this lady should be delighted that I want to buy lots of her goods. Growing up in the UK they would be positively delighted at your purchase and would probably offer you a discount for a bulk purchase. And on regular trips to Canada and the USA to visit family, I would marvel at the fact that someone would not only pack up your groceries into (free) bags, but would then carry them out to your car for you!

Many employees who deal with the public wonder on a daily basis what sin they had committed that resulted in their having to deal with the public. Their attitude is “I get paid a pittance so therefore I don’t care”. Trying to explain that in fact “you get paid a pittance BECAUSE you don’t care” seems to have little notable effect!

On the one hand, it is easy to justify or explain the situation by the fact that given the persistent shortages that the country faced, coupled with the total lack of competition, there was absolutely no incentive whatsoever to try sell (or produce) more. The concept of P&L was non-existent and every enterprise, from small shop to large factory was state run so there was never any possibility of going out of business, regardless of performance.

Although Pepsi originally set up a jointventure in the USSR way back in 1959, one of the first global corporations to really make its mark on the landscape was McDonald’s during the Perestroika years. A common misconception in the west was that a Big Mac cost a week’s salary (in fact the Golden Arches’ trademark burger retailed at 3 roubles and 75 kopeks when the average salary at the time was round 100 roubles) but in all honesty they probably could have charged a week’s wages given the demand in January 1990, when McDonald’s opened its first outlet in Pushkin Square, replacing Cafe Lira and making it the company’s largest food outlet in the world.

The long lines broadcast to the world gave a clue as to how the first customers would be treated. In flew the North American seagulls from corporate HQ with a plan to make McDonald’s as successful and ubiquitous in the new free Russia as everywhere else in the world where they operate. One of the first induction sessions for the new staff began as follows:

McDonald’s senior executive, standing in front of a room of glum-looking, newly hired Russian staff with the hope of ridding them of their Soviet-era ways: “We’re now gonna train you to be polite to the customer”.

Young guy sticks his hand up “zachem?” (why?)

McDonald’s bigwig, who has probably never faced such a seemingly obviously question, replies “erm, well‑so that the customer feels welcomed, satisfied and will want to come back again in future and buy more.”

Same young guy who had asked “zachem?” asks with genuine sincerity: “It’s -10C outside, there’s a three hour wait to be served— and we’ve got the burgers.” !!

Welcome to the world of customer service, Soviet style. This is gonna take longer than we thought, no doubt pondered the McDonald’s executive. And yet, with hard work and perseverance, the McDonald’s empire has become is a massive success story in Russia, with around 250 outlets, which tend to be much fuller than their western counterparts. However, not all Russians warm to the obligatory “have a nice day” said with a forced smile. One teenager grumbled that when the staff say this to you, they don’t actually mean it. “Eto nie iskrenno.” (it’s fake, not sincere) His friend replied, “Zato v rossii iskrenno posilayut”! (But then in Russia people will genuinely tell you to get stuffed)!

But there has to be a bit more to it than simply blaming Russia’s customer service failings on communism. Even twenty years after the arrival of a free market economy and the huge choice of products on offer, many Russians genuinely believe that if a product or service is good then everyone will want to buy it.

Consequently, this is reflected in my day job when recruiting staff for multinational corporations in Russia/CIS. Around half of all the requests for personnel here are in some kind of sales role, whereas in our London office it is a tiny proportion. Perhaps in the West we were all born as expert bullshitters, but continuously in Russia I struggle to find strong salespeople for my clients.

Most commonly when I enquire about someone’s day-to-day tasks, the response is “when a customer makes an enquiry or places an order, we react”. “OK”, I interject, “but last week how many outgoing calls did YOU make to prospective buyers last week? How many clients did YOU visit? How many presentations/demonstrations did YOU arrange? How many of these did YOU then follow up on? All too often I am met with bemused looks.

Granted, it is probably quite a good thing that we are unable to help with requests from across the pond demanding “someone’s who’s gonna break that door down and will that deal” as not only do such people not exist, but if they did they wouldn’t sell anything in this manner anyway. I have explained countless times to first-timers to the former Eastern bloc that it’s not about having the flashiest presentation; rather sales in Russia are based much more on relationships and Russians like to talk technology, product and process. Connections are helpful but not everything. It’s a big country and you can’t know everyone. My guess is that Russia will need over three generations to shake off what the Soviets ingrained into the population’s mind-set, and we still haven’t passed the first one. Initially employees expected to be paid for showing up at work and saw little or no connection between the “work” that they did, and the salary that they received. But this is now changing, especially in Moscow and some larger, more progressive cities, albeit mostly among those not old enough to remember the old days.

My general advice to foreign managers here is that although Russians value freedom in a job, they will nevertheless expect you to tell them what to do, especially in the beginning. Flying in, hiring someone and saying to them “here are our products, go out and sell them” is unlikely to be the most successful strategy. Although it is true of the whole world but especially the case in Russia, far too many people equate “being busy” with “doing a good job” and assume that “work” is a place you go to, rather than what you do. A clear system of achievable Key Performance Indicators (KPIs) shouldn’t be seen as condescending, but a structured and necessary approach to the task(s) in order to achieve certain goals.

The upside of this situation is that it is much less likely your competitors are not speaking to, or dealing with, your target audience. I laugh when Russians tell me about excessive competition in Moscow. I tell them to visit New York or Frankfurt and try to do business there.

In my line of business, at the last count, Moscow had approximately 300 recruitment agencies. There are more such agencies within the vicinity of tube station near our head office in London than in the whole of Moscow, and most of them are bigger! London has around 10,000 recruitment companies alone, some with many branches throughout the city. Now that’s competition for you!

So next time you walk into an empty hotel and a bored-looking woman looks up from her magazine and barks “Miest nyet” (“We’re full”) at you, you may now understand her logic!

Luc Jones is a Parter with Antal Russia, an British executive recruitment company operating in Russia/CIS since 1994 and employs 100 staff in Moscow and has a branch office in Almaty (Kazakhstan).