Azer Efendiev sought to compare management methods in companies with Russian and foreign ownership, as well as the level of employees’ participation in company management. The study aimed to find out whether employees are involved in discussing tactical and strategic management problems. In order to complete this, about 700 Russian specialists and medium-level managers from 16 companies were interviewed. Eight of the companies were Russian-owned, and in the other eight at least 50% of equity belonged to foreign shareholders.
It turned out that the share of employees who are ready to participate in discussing business solutions in the areas of their expertise (on their own initiative or if asked to do so) is almost equal in Russian and international companies – 74% and 70%, respectively. ‘In this regard, a Russian employee in both types of companies is ready to actively participate in management’, Efendiev commented.
However, the political regimes and management styles in Russian and international companies are very different. Authoritarian types of management prevail in Russian companies, while in international enterprises ‘democratic or limited democratic types of management play a significantly more important role’. According to respondents’ assessment, in 78% of cases in Russian-owned companies, directors take decisions on their own, without any discussion, or on their own after a preliminary discussion with a narrow circle of close advisors. This means that authoritarian or authoritarian/consultative types of decision-making prevail in Russian companies.
10% of respondents working in Russian companies and 18% of those working in international ones said that democratic decision-making is practiced in their companies. The correlation was about the same between those who stated that decisions to be made are discussed in a broad circle, but as a result bosses ‘do everything their way’. The researcher defined this type of management as ‘limited democracy’.
Further analysis showed that management methods directly influence employees’ activity. In Russian companies, management prefers to simply inform employees on decisions made. For example, in authoritarian companies, the probability that employees will participate in discussing issues related to themselves is 58%, while in democratic ones it is 72%.
With regard to business solutions, employees of ‘authoritarian’ companies have even fewer chances to participate in discussions. ‘20% of employees actively participated in discussing strategic issues in foreign companies, and only 9% did this in Russian firms’, Prof. Efendiev commented on the results of the survey. 27% of employees in foreign companies participate in preparing strategic business decisions, and only 15% do so in Russian ones. According to Efendiev, this means that foreign companies create better conditions for employees’ participation in company management, which means they provide more opportunities for self-fulfillment.
As a result, companies with foreign ownership have stronger meritocratic principles, which means that employees’ professional skills are the main condition for their participation in management. While professional competencies, creativity and ability to defend reasonable arguments are an important condition of involving staff in discussing and developing business solutions both in Russian and foreign companies, the importance of this factor in international companies is considerably higher.
On the other hand, in Russian-owned companies personal relations with management play a higher role. One fourth of all respondents from Russian companies believe that ‘warm relations with the boss’ and being part of his close circle are an essential condition for participation in developing and discussing business solutions. Only 15% of respondents supported the same idea in internationally-owned companies.
According to Azer Efendiev, the limited selection did not allow the economic effectiveness of authoritarian and democratic methods of corporate governance to be evaluated. But this will be the aim of the next stage of the study. ‘We have to see in reality which of these three or four types is most effective economically’, the HSE professor reasoned. ‘We’ll see whether it is in the nature of business as an owner’s private entity that people are supposed to submit to the common style. And in this case authoritarian directive style becomes inevitable’.