The biggest state corporations become one of the main customers of business schools. After beginning of the financial crisis they took care about the quality of governance
Marina Smolnikova, the leading engineer of the department of reforming of the Oktyabrskaya Railway together with 39 other middle-rank and top-rank managers of the Oktyabrskaya Railway from various departments will finish the education under a corporate Executive MBA program of Stockholm School of Economics (SSE) in June.
Ten years ago, management of the company saw its task in arrival of trains and cargoes on time. During this period Western companies were actively capturing traditional transit routes and creating the new ones. The reform of the holding started in 2003 showed that the company lacked managers of the modern type.
A new change
Since 2005, RZD has been creating a human resources reserve. Now it consists of 46,700 people (overall, the company has 305,800 managers and specialists). Inclusion into the human resources reserve requires recommendation of a boss, professional achievements and successful passing of a psychological diagnostic test of motivation (assessment according to the system of 360 degrees on the basis of corporate competences and assessment center will be added this year). Afterwards it is possible to count on promotion and, of course, education.
Stockholm School of Economics is known for its non-standard approach to management, which its professors have outlined in the book entitled "Funky business" that has become a business bestseller. Last year, Director of the Oktyabrskaya Railway Victor Stepov received Executive MBA degree there (the school has the 53rd place in the ranking of FT). Thirty other managers of the Oktyabrskaya Railway and five managers from the central staff studied in the school between November of 2008 and June of 2009. The group included top managers of various business lines who studied the first-year Executive MBA program for five days per month. Director of the program from the school Igor Dukeov said that some of them had a passive attitude to education finding various reasons not to come to the classes or "to go out to have a phone call." As a result, two students failed to defend graduation projects from the attestation commission that included President of RZD Vladimir Yakunin.
The second group was selected more carefully. Of the 60 candidates SSE selected 40 people (with assistance of tests of knowledge of mathematics, logic, intelligence and interview). Now RZD pays 70% of the costs of the course (the full program costs 33,000 euros per one student on the market, the companies do not say how much its first part costs for RZD) and the rest is paid by the students. If a student fails to defend the graduation project he will pay for everything himself. The program was amended too: some courses were adapted to needs of RZD after consultations with top managers of the company some of which read lectures. Dukeov says that in the process of education students are divided into working group before the beginning of each module and this teaches people from such hierarchic company as RZD not to be afraid of having initiative and efficient interaction with various departments.
The project of Marina Smolnikova is dedicated to development of a corporate governance system in subsidiaries. The school has taught her to develop a strategy and to analyze problems. She says, "This is an absolutely new approach to business."
An internal problem
Dukeov says that it is difficult to say definitely to which extent RZD will be ready to accept the new approach: there are people who do not wish to change anything everywhere. The school made corporate programs for the companies management of which was not interested in the process of education and employees of which did not attend the classes. He is convinced that management of RZD is involved into the project and this changes the entire approach to education of managers of the company.
There are 186 managers of RZD studying under MBA programs in Russian business schools now (ANKH, FA, REA, GU-VSHE, MIIT), whereas there were seven of them in 2005 (225 already received certificates). Twelve people are studying in the West (LBS, Oxford, IESA, IE, Chicago Business School, Hong Kong Business School) and 21 employees will enter the programs this year, according to social responsibility reports of the company for the last two year. A special committee chaired by Vladimir Yakunin decides who will study. Vice President of RZD Dmitry Shikhanov says that the company is interested in growth in the quantity of graduates of business schools in the management. To retain them the company signs five-year contracts with them before anyone quits the company. Shikhanov says, "The main result that we see from growth in the quantity of MBA graduates so far is growth of critical mass of active managers for transition to innovative development. Along with this, it is fairly difficult to calculate the economic effect."
Overall, 4,754 managers of all levels passed various kinds of training in the last three years and 10,000 managers passed training this year.
A convenient moment
Yulia Uzhakina, managing partner of Amplua company (the company does annual monitoring of the market of corporate education and development of human resources), says, "Crisis became a successful moment to show to top managers of state companies that it was necessary to do something to them, for example, to teach rules of the modern business. Several big state companies including Sberbank and Olympic Committee started individual education of their top managers."
Sergei Mordovin, rector of the management school of IMISP (St. Petersburg) says that state companies are among the few customers who have remained on the market during the crisis. Thus, Gazprom Dobycha Yamburg group requested IMISP to enlist an additional group of 25 people for teaching of basic skills of crisis management under corporate MBA programs.
The Higher School of Management of SPbGU had short-term programs for managers of Sberbank (51 people for two territorial banks), RZD (18 directors of economic services) and Rosneft (150 people). Rosneft, whose head Sergei Bogdanchikov is a member of the board of guardians of the school, ordered a corporate MBA program for 27 top managers of the central office and heads of subsidiaries of Rosneft. There will be 12 educational modules including two foreign ones between April 2010 and March of 2012. Ekaterina Karelskaya, director of the center of corporate programs of VSHM SPbGU, says, "This program is fully customized for needs of the customer and is aimed at development of leadership competences, strategic thinking and ability to find efficient managerial solutions, as well as studying of the best Western practices in the oil sector in conditions of business globalization."
Rosneft also has another corporate MBA program, "International business in oil and gas industry," organized by MGIMO, where Bogdanchikov teaches, and Bodo Graduate School of Business (Norway). The second group of 21 members graduated from it in October of 2009. Twenty-three other top managers are studying now.
Rector of Skolkovo school Andrei Volkov remarks, "In the last two years, state corporations started paying much more attention to education of top managers." Such state companies as UAC, OMZ, Gazprombank and Sibur became clients of the school this year. Their employees are passing preliminary selection. The companies also initiate industry educational programs with participation of state officials from the Finance Ministry, Natural Resources Ministry, Energy Ministry and Economic Development Ministry. He explains this trend, "The epoch of M&A and handing out of "cheap" assets is over. The corporations started thinking about efficiency of business. For this purpose they need 50-100 key employees to interpret the strategy, tactic and the main basic technologies in the similar way. However, there are no spare qualified managers on the market and it is necessary to invest in your own staff."
Sergei Filonovich, dean of the higher school of business of GU-VSHE, points at absence of demand for business education, "Decrease of interest in MBA in Russia is connected with the fact that it has turned out to be unnecessary in practice. If the obtained knowledge can somehow help small and middle-sized business, big companies, especially the state ones, play according to their special rules. However, I am an optimist. This year, a manager of RZD studying under DBA program wrote a graduation work in our school dedicated to turning of service divisions like a railway car repair depot into a business. Along with this, I believe in globalization and in the fact that Russian companies will have to compete on the international market. That is why any companies have to teach their employees because someone needs to know how to prepare documents correctly."