According to the survey of the basic gross salaries of the mid to senior management conducted in the last 6 month by Antal International Russia Limited, a recruitment firm concentrating on management recruitment, main management board in a major Russian company would earn 15 % more than in a western multinational. There are some reasons why the Russian employers are ready to pay management more.
The basic reason is that some Russian companies still pay grey salaries don’t operate in a fully compliant way. For the middle and senior management the official salary is becoming more and more important factor to choose the employer. “People often take a credit and the bank is don’t care how much you get in the envelope, - says Luc Jones, Partner at Antal International Russia Recruitment Company. – I noticed that many more candidates reject offers made by companies who pay grey salaries (without declaring their full income for tax purposes) during the last 5 years”.
Russian business is ready to overpay managers for the increased risks they can face. Candidates understand that Russian companies are less structured then foreign ones, the management style is tougher and the corporate culture is inferior to the western standards. “It is not common in Russian companies to delegate responsibilities. Usually the General Director takes many the final decisions and micro managers, this is sometimes as acute as purchasing of the paper for printers, - comments Luc Jones. – A Senior Executive can change the strategy on a whim and all the efforts of the senior management will be wasted”.
But the big Russian players often try to emulate multinational management and are ready to buy the managers from the foreign competitors for any cost. Often Russian business will pay a large premium to a western experienced manager who is able to bring the western spirit to the company, optimize the business processes and the structure of the company. Luc Jones notes: “There is tight competition on the Russian market, it’s very much in the candidate’s favour. In the UK there may be literally hundreds of specialists available on the local employment market, sometimes the numbers of specialists with specific experience may be counted on one hand“.
It is not easy to estimate the bonus part of the director’s salary in average. “The main complaint of out candidates is an unclear bonus system. And if in foreign companies it is more or less structured – in Russian businesses the bonus depends not only on the objective results but also on internal politics and personal relations with the top manager, - says Luc Jones. – Sometimes the bonus structure is so discretionary that the employee himself is not aware of why he has been awarded such a high or low bonus”.
In average the bonus (excluding share options / equity etc) can be 15-30% of an annual income. For example HR director can get 15-20%, Marketing Director – 20% and Sales Director can count on 30% bonus. 100%+ bonuses are common to banking and is played very rarely in other industries. “In Russia is still difficult to build the motivation scheme on the bonuses. Of course companies should offer bonus to the candidate especially on the senior managing positions, but the basic salary should be the main part of the income, - comments Natalia Kurkchi, Partner at Antal International Russia”.
The requirements to the directors have changed in the last few years. For example if some years ago the main requirements to the IT Director was the experience if the implementation of different information systems, and a commercial director had just to be a good sales person, now they are required to have a helicopter view on the business and be a great managers.
In summary it’s clear that Russian companies are more flexible to pay what it takes to get the right person on board. They are not restricted by salary grading systems and other corporate head office encumbrances. On the other hand Western firms tend to offer better non-financial benefits, generally offer the employee a more structured environment and better support infrastructure. Potential employees should always consider what their marketability will be beyond the next four years. It boils down to the personal motivation of the candidate. Quick money can sometimes be at the expense of a more sensible longer term career move. Employers now value much more a stable and continuous career development, there is usually room for one mistake in an average career, so 6 months of above market salary may be great at the time, but may not be the most sensible long term career strategy if it doesn’t work out. Generally the higher the money premium the more cash has to overcome the downsides of working for that particular company. It seems that everybody has their price.