Trends and Experiences for People Management and Motivation in Russia Lauri Veijalainen Development Director for International Operations Lauri Veijalainen, b 1968 1995-1997 Finance Manager Embassy of Finland, Kyiv,Ukraine 1997-1998 Finance Manager Embassy of Finland, Vilnius, Lithuania 1998 2003 Admin- and Finance Director Skanska East Europe 2003 2010 Chief Financial Officer IKEA Russia & CIS 2010 - Stockmann Group, International Operations Development, General Director of Stockmann in Russia 1
Stockmann in brief International multichannel retailer founded in 1862 Revenue in 2013 EUR 2 037.1 million Operating profit EUR 54.4 million Approx. 60 000 shareholders on Nasdaq OMX Helsinki Department Store Division 16 department stores and 13 other stores in 4 countries; 3 online stores Revenue EUR 1 232.6 million Operating profit EUR 26.0 million Fashion Chain Division 688 stores in 16 countries ( 479, 209); 2 online stores Revenue EUR 805.2 million Operating profit EUR 38.6 million Stockmann today: over 700 stores in 16 countries, operations in 21 countries Revenue by market area in 2013 ICELAND NORWAY FINLAND Baltic countries and Central Europe 7.9% SWEDEN ESTONIA RUSSIA LATVIA LITHUANIA POLAND CZECH REPUBLIC SLOVAKIA Russia 17.0% Finland 48.3% CROATIA BOSNIA AND HERZEGOVINA SERBIA TURKEY Sweden and Norway 26.9% CHINA PAKISTAN Department Store Division, and and SAUDI ARABIA UNITED ARAB EMIRATES INDIA BANGLADESH Group s purchasing offices Status as of 31 December 2013 2
Stockmann Group in Russia today: over 60 stores and 3 000 employees St Petersburg Shopping centre, department store,, Ryazan Yaroslavl, Ekaterinburg Department store,, Nizhny Novgorod Novgorod Moscow Department stores, outlet,, Rostov-on-Don 35 23 Outlet 1 Kazan Kolomna Voronezh, Department Stores Moscow 5 St Petersburg 1 Ekaterinburg 1 Samara Omsk, Volgograd Krasnodar Status as of 1 March 2014 First stores in Russia opened over 20 years ago Stockmann opened two stores in Moscow in 1989, GUM and Zazepsky Val (picture). Opening of Stockmann grocery store in St Petersburg in 1993. 3
Department stores in Russia: five in Moscow, one in St Petersburg and one in Ekaterinburg MEGA SOUTH MOSCOW MEGA NORTH MOSCOW MEGA EAST MOSCOW METROPOLIS MOSCOW Opened 4/2004 Opened 12/2004 Opened 2/2007 Opened 2/2009 ROSTOKINO MOSCOW NEVSKY CENTRE ST. PETERSBURG EKATERINBURG Opened 3/2010 Opened 11/2010 Opened 3/2011 Nevsky Centre shopping centre in St Petersburg was opened in November 2010 4
Retail trends in Russia today Retail growth has also slowed down, approx. 3.8% in 2013 Tough competition with new players coming to the market all the time Rental costs are growing very fast is the real estate market overheated? Record prices in retail real estate transactions: Galleria in St Petersburg, Metropolis in Moscow Staff costs up, competition for best people Russia s WTO membership took place in August 2012 WTO has not yet brought greater clarity to the competitive environment and daily business Competition continues to increase Direct Franchise Anchor Newcomers :. 10 5
Some characteristics of business environment in Russia Legislation Size of the country, distances Regional differences Red tape, www.doingbusiness.org High competition Heavy administration, bureaucracy HR, people management Recent HR Trends in Russia, People Management Market is still overheated for best people Standard turnover of staff on the shop floor over 60% in the market Specialist positions more stabile, but movement now visible there as well Labor code rather pro-employee which enables active mobility of employees Employer loyalty Place of work vs traffic situation Quality of living started to matter more Stability, foreign company vs Russian 6
Recent HR Trends in Russia, People management Highly qualified staff, often with more than 1 degree Salaries have been increasing by 6-8% p.a More and more of competent people entering especially Moscow higher salary level Labor Code, KsOT the base legally for management of people HR process is often bureaucratic and paper-heavy English level greatly increased, especially in large cities Motivation of staff Open and honest dialogue Salary level and the compensation package still important staff compares each other Career expectations sometimes unrealistic Clear career path, employee-employer discussions are more and more appreciated Stability. People recall crisis in 1998, 2004, 2008 Social life. If compared to Finland, work places have a more a social aspect Business culture and etiquette knowledge, public holidays 08.03, 23.02, New Year 7
Motivation of people, continues Education and training, both internal and external Opening hours are continuously extended 24/7 when? Distance work will increase Career rotation could be more active Russians working abroad not very interested, tax rates, higher net income at home Hierachy - equality Trust - responsibility Thank You. 8