Many Russian companies today adopt corporate codes of ethics setting out their corporate values. Are these mere token declarations or do Russian businesses really practice management by values? This was one of the key research questions in the study 'Corporate Values in the Management of the Russian Companies' conducted between 2012 and 2013 by researchers of the HSE's Faculty of Management Department of Human Resources Management.
«Discussing values is fairly new for Russia's corporate world, but even today, HR managers of some Russian companies recruit new staff in accordance with company values. In our study, we examined how companies create their corporate value systems in practice,» says Veronica Kabalina, Professor and Head of the Department of Human Resources Management of the HSE's Faculty of Management.
The researchers reviewed published data on Russia's 100 largest companies included in the Expert-400 rating and conducted in-depth interviews with their executives. Separately, the study's authors selected three cases of major Russian industrial and financial companies for an in-depth analysis.
Their main finding was that value systems capable of influencing the way companies are managed are usually implemented via a 'top-down' approach, and company owners tend to focus on values when their business is about to enter a new stage.
The study reveals that Russian companies recognise a diverse set of values, ranging from specific and relevant to corporate life, such as commitment to results, reliability, leadership, and teamwork, to general and vague, such as Russian spiritual values.
Presenting their findings to the HSE, Assistant Professor of the Faculty of Management Lyudmila Cheglakova described three cases of companies whose approaches to corporate values were studied in depth, including Company 1 (coal mining, energy), Company 2 (finance), and Company 3 (construction and development) – each having operated in the Russian market for over a decade and with regional affiliates.Table 1: Case Characteristics
|Characteristics||Company 1||Company 2||Company 3|
|Industry||Coal mining, energy||Finance||Construction and development, industrial and retail|
|Year of establishment||2001||1993||1989|
|Number of staff||30||35||3,5|
|Ownership (form and structure)||LLC, concentrated ownership||LLC, concentrated ownership||No data, concentrated ownership|
|Corporate structure||vertically integrated manufacturing company with headquarters in Moscow||financial conglomerate; a holding company with headquarters in Moscow||diversified holding company with headquarters in Moscow|
|Geography||8 Russian regions||52 Russian regions||48 Russian regions|
|Public non-financial report||+||+||-|
|Social responsibility programmes||+||+||+|
|Corporate code of ethics||+||+||+|
Source: presentation by Lyudmila Cheglakova
The study revealed a top-down approach to corporate values in all three companies studied, meaning that the company executives have initiated training courses, seminars, and coaching sessions with senior and middle management. Companies also use their corporate media, and Company 1 has established an Ethics Commission and an Ethics Officer.
To ensure proper integration of values, company staff are tested for knowledge and compliance. Company 1 administers a specially designed test over its private intranet; Company 2 includes compliance with corporate values in its appraisal of managerial competencies; and Company 3 runs periodical surveys of its staff, including questions about corporate values.
What are the effects? The study suggests that companies are getting a picture of their own corporate culture and values awareness of their staff, but whether corporate values have become an integral part of their management systems is difficult to say. Companies 2 and 3 consider management by values a strategic undertaking with expected long-term effects, while Company 1 believes that integrating corporate values in their management systems is part of being in business today and necessary for compliance with international standards.
When mentioned in the context of international standards, values tend to be declarative rather than practically relevant – a finding confirmed, e.g., by studies examining the process of developing corporate codes of ethics. However, besides seeking to meet certain standards, companies are driven by specific motives and goals in establishing corporate values, such as moving their business forward. Thus, when asked about motives for introducing management by values (MBV), Company 1 mentioned plans to launch an IPO, Company 2 considered it a competitive advantage, and Company 3 used it as part of rebranding and creating a new corporate identity.
Nevertheless, apart from IPOs and rebranding, management by values remains largely an abstract concept both for researchers and for the corporate world. However, Kabalina and Cheglakova believe that MBV will grow in importance, since it reflects a gradual shift in corporate mentality.