Russian and American Management Styles - Assignment Example

Comparison of Russian Management Style with American Management Style Introduction Management is both art and science that are universally applicable and widely used throughout organizations worldwide. Management is know-how. It has been considered to be a best practice by which things are done in the light of the realities of a situation. Managers do things differently by using the organized knowledge and also associated with varying styles and foundations. The general management thoughts can be affected largely by demographic, geographic and social aspects from country to country and business to business. This paper examines the management styles and differences between Russia and USA. Beginning with examples of Gazprom and Chevron, Russian and USA oil companies; the paper presents an analysis of management style and organizational culture and effectiveness in a changing economy. The paper identifies that there are significant differences between Russian and USA managers in the functional areas of management including planning, organizing and controlling. This paper emphasizes that management effectiveness in Russia is depending more on adaptability than in the USA. Gazprom and Chevron Gazprom is a Russian gas and oil company which is the world’s largest gas company. Gazprom is mainly focused on extraction, production, storing, processing and effective marketing of gas and hydrocarbons. It produced about 550 million cubic meters of natural gas only during 2008. Gazprom has been on its success track with a strong mission of providing continuous supply of gas and oil products to Russian customers and also to maintain a domain for long term gas exports. Aslund (2007) stated that Gazprom was the mightiest of all Russian companies and it was ruled by its managers. It was privatized in a unique manner in 1993-94. The management used voucher actions to privatize 40 % of shares for an implied price of $100 million (p. 140-141) The economic crisis seems to claim more victims day by day and many organizations suffered due to the severe attacks of global economic crisis, but, Gazprom is winning with its technological excellences. The Gazprom website gives an impressive message showing how strong the company is in such a crucial economic condition- “Crisis come and go, but Gazprom keeps moving forward”. Chevron Corporation is the largest Oil and Gas Company in the US, headquartered in California. It works in more than 100 countries employing around 60,000 people around the world. The company is focused in exploration, production and refining oil and gas products. Chevron is highly committed to serve its customers with high quality oil products, including gasoline, diesel and fuels. Chevron gives high priority to safety measures. During last year, Chevron has achieved the awarded for highest safety from U.S Minerals Management Service. The Russian management: Contexts and styles As compared to many countries, Russia has well educated workforce and it is naturally rich in resources. During the transition of Russia to the market economy, it had not attained its potential development and economic well being. Russia had been facing a number of challenges that were very severe and remained as threats to the economic development. Bureaucracy and unbalanced social and political conditions were the challenges to the business and economic development. There were concerns that Russian managements failed, quite often, because of that they know only little about modern management techniques and also because of that Russian management style is largely affected by many cultural factors like power distance and collectivism etc. Russian management practices like decision making, planning and policy implementation have been centralized and there was little empowerment in decision making and planning. According to some researches, Russian managers were punished for negative results and bad performances. They have even been punished for those that are beyond their control. They showed helplessness when they had something hard to do and even wanted someone else to do those things (Matveev and Nelson, 2003, p. 598). Impact of culture on Russian Management Style Russia is the largest country by means of territory and sixth largest by population. It is highly important to study and analyze Russian culture and its impact on business management system because of that its foreign investment is vitally important to Russia’s success and also due to the cultural problems faced by foreign firms doing business in Russia. Management and its nature within a communist system have been widely debated. Scarborough (1998) finds out that Russian managers care little about perfectness in a job being done by an employee. An employee makes his quota was significant to them than how well a job is done. It also considered by them that there is not apparent incentive beyond fear of punishment to improve the productivity. Bureaucracy is worst as it prevents risk taking (p. 165). During the pre-revolutionary period in Russia, the state was the only employer who is legally responsible and capable of exploiting economic freedom. The moral responsibility for judgments had been monopolized by the Communist Party. In the post-revolutionary Russia, the features of business culture and leadership aspects were largely affected by Russian culture which was rich in contradiction and spiritual aspects. After the fall of communism, even though there was entrepreneurism in Russia, it was not always with a social touch. Management in Russia was influenced by communist thoughts and ideas. It has been found by many researches that traditional Russian management system was affected by uncertainty avoidance, risk avoidance, power distance and individualism. Power Distance Power distance is a degree by which members within a culture boundary expect that the power, which must be distributed equally, will be distributed unequal. In short, power distance is un-equal distribution of powers within members of a culture. According to Scarborough (1998), Russians seem to expect and even prefer power distance. Russian management and leadership system is absolutist and it doesn’t tolerate any compromise (p.176). Power distance is factor which determines how a community stratifies its members and groups in regard to the power, prestige, dignity and wealth. Cultures with power distance make differences between people with status and dignity and people without those things. Matveev and Nelson (2003) argued that lower distance cultures always prefer consultation, participation and cooperation. At the same time, high power distance cultures prefer autocratic or majority rule and decision making. In the later case, individuals are reluctant to trust each other (p. 259). Mitchell (2003) emphasizes that in cultures with low power distance profile, each employee will seek a role in decision making and, same time, and individuals do not seek any role in decision makings in high power distance profile (p. 18). Employees become more individualistic naturally and they even to tend to suit a particular situation. It would a mistake from the side of management to verdict an ethics code by fiat. Mitchell (2003) examines Russia as high power distance culture and United States as low power distance culture. More specifically, Gazprom can be affected by high power distance culture and hence individuals may have less roles in decision making, and at the same time, Chevron Corporation would be affected by low power distance culture in which individuals have vital role in managerial decisions. Individualism or Collectivism The Russian management style, which was affected by traditional communist thoughts, also has been criticized that it is moderately individualistic and short term oriented. The scientific management approach is a social approach which gives priority to group work rather than individual importance. The individual interest mustn’t be contrary to group interest. Individualism can be found when culture values individual goals and individual interests. Collectivism can be described as culture that values the group goals and interests collectively. In management system, it the culture has an impact that individuals tend give priority to their individual goal, it can be described as individualism. If the individuals give priority to the group goal instead of individual goal, it can be termed as collectivism. Even though there are different opinion regarding individualism and collectivism and whether Russia is collectivistic or individualistic, some researches show that Russia is collectivistic while USA is individualistic. Matveev and Nelson (2003) stated that individualistically oriented cultures like USA, Germany and Hungary give values to autonomy and self-interested performance. But, collective cultures like Japan and Russia give high values to group work, group harmony, collaborative works, cooperation and satisfaction (p. 259). Mitchell (2003) also examined that Russia has collectivistic cultures and USA has individualistic cultures. He argued that a culture with collectivistic mindset values conformity and control the individual behavior through external sanction. (p. 17). Collective cultures exhibit more emotional dependence on the team work. These would be more conforming and team oriented. When multicultural team works in an organization and members represent different cultural orientation, for instance, members from USA and Russia work in a same company, there may have challenges in developing and establishing tem roles because different senses of organizational responsibility would be there. Individualistic and collectivistic cultures have its different implications and influences on business performances and managerial activities. Managerial functions like planning, decision making, co-ordination, staffing, directing and controlling will be affected by cultural orientation. For instance, individualistic culture will impact on managerial actions of Chevron and Collectivistic approaches will influence in the managerial functions of Gazprom. Decision making and planning will be more rapid in individualistic culture than collectivistic culture and same time, implementation of a new policy like a new manufacturing process will be slower in individualistic culture than in collectivistic culture. It is because of that in individual oriented culture, workers tend to argue against a new policy or decision and they will question it. Mitchell (2003) argued that, in a society that gives values to individualism, workers will question the new method and they won’t even sign on it until they all clearly figure it out how it will directly affect them (p. 17). Uncertainty avoidance According to the definition given by Hofstede (2004), Uncertainty avoidance is “the degree to which people in a country prefers structured over unstructured situations” (McGee, 2008, P.146). In organizational management system, uncertainty avoidance may be manifested by the plans, policies, decisions and procedures. It is important to recognize whether uncertainty is alleged as threatening within a particular culture. Matveev and Nelson (2003) argued that Russia is having low uncertainty avoidance culture and USA represents, up to a degree, high uncertainty avoidance culture. A low uncertainty avoidance culture demands less structured ways and means in management and all other concerned paths. A high uncertainty avoidance culture prefers consistency and structure lifestyles. They also have articulated expectations (p. 259). A culture that has a low uncertainty avoidance mindset generally gives values to the achievements over security and it shows a bit free flowing style of management. The management style in Russia, according to those argument that say Russia is low uncertainty avoidance cultured, will be generally a free flowing approach and hence it may have fewer workplace rules comparatively. Countries that measure low density of uncertainty avoidance may experience high employment turnover rates and job mobility as well. Many researchers found that uncertainty avoidance would be present in the first stages of cross cultural interaction of management. The initials stages of business start ups and other activities in relation to managerial activities will be affected by uncertainty avoidance. For example, business meetings with people from different cultures, more specifically, in a meeting of managers from Russia and USA, the uncertainty avoidance will be present and it will have its impacts on business strategies. The presence of uncertainty avoidance is more obvious in an international business relationship. In the case of Gazprom, the Russian managers who live with a low uncertainty avoidance culture and mindset tend to perform fast paced economic and social transformation and they are more likely to show lower level of cultural uncertainty than their counterparts of American manages. In the case of Chevron, managers who are with high uncertainty avoidance are more used to rules and are more likely to be accustomed to the policies and regulations. Performance Orientation Performance orientation is the degree to which a particular culture rewards its individual members for improvement in their performance and perfectness in their jobs. According to Matveev and Nelson (2003), the least performance oriented cultural dimensions like Russia and Argentina value their tradition, loyalty and family status. The most performance oriented cultures like USA and Singapore value performance, training and development (p. 260). The managerial functions and components will be affected by this performance orientation. American and Russian managers do differ in their cultural orientations as well as in components of adequate communicative behavior. Comparing Managements of Gazprom and Chevron Management is universal, but it can be affected by cultures and cultural values. Russian culture has greater impacts on its management style. So is the case with Gazprom management too. Even though there are no direct studies and researches showing Gazprom management being affected by Russian cultures, it is obvious that a general situation that prevails in Russia is that its management system would be affected by its culture and so with the management of Gazprom as well. Chevron is typical American oil and Gas Company and its management also will be influenced by the culture or other factors that prevail in the US. In Russian management style, authority is centered to the top level managements and any strikes by employees are considered to be illegal. Workers have no rights to strike for anything in Russia. Employees must have an attitude of co-operation with management and this has been enforced. Collective contract between management and employees don’t offer any sorts of job security. Workers in Russian management context have been found that they are reluctant to take responsibility for activities that they do initiatively. How workers are treated and considered in the workplace by their concerned management team is fairly important to note. If there are problems regarding managerial action and hence if the workers go for petition, it may happen that management and Trade Unions in Russia are more likely to serve management rather than employees. But this is entirely different in American context of management. America is a democratic country and hence to observe how far the authority is centered would be a difficult task. Authority in American management style is not centered as in the case of Russian management style. The workers have right for strike and hence they have their voices regarding company affairs and mainly regarding matters that concern them too. The employees can involve with strikes, but it has been legislated that strike can be declared only from the company floor and this can be until union head office. It means, workers in US have more voices than their counterparts in Russia. Some time, after a strike has been declared, there may be an artificial delay for beginning of the strike in order to facilitate management and workers think and work collaborate to find better solution for the problem. This is helpful to avoid any major damages to the organization and also on the economy itself. For western managers to engage in Russian business and investment practices, Russian companies need to increase their credibility by significantly renovating their organizational and business practices. There was less attention to corporate governance in Russia during the past decade in which it has transferred to a market economy and it has led to flagrant abuses of shareholder rights that in turn caused foreign investment to come to a virtual halt (McCarthy and Puffer, 2004, p. 357) Conclusion This piece of research work analyses the difference between management styles of Russia and USA. Management can be affected by a number of external factors. The management system of an organization can be affected by cultural factors. This work finds the best example from Russian management context and it examines what factors make Russian management different from that of USA. With the examples of Gazprom and Chevron, this work finds out that Power distance, collectivistic culture, uncertainty avoidance and performance orientation are some of the factors that can affect a management in its functions. These factors play vital role in Russian management style. Managerial functions like planning, decision making and policy making can largely be affected by these cultural values. References Aslund A (2007), Russia's capitalist revolution: why market reform succeeded and democracy failed, Illustrated Edition, Peterson Institute Matveev A.V and Nelson P.E (2004), Cross Cultural Communication Competence and Multicultural Team Performance: Perceptions of American and Russian Managers, International Journal of Cross Cultural Management 2004 Retrieved from http://ccm.sagepub.com/cgi/content/abstract/4/2/253 McCarthy DJ and Puffer SM (2004), Corporate governance in Russia, Illustrated Edition, Edward Elgar Publishing McGee R.W (2008), Accounting Reform in Transition and Developing Economies, Springer Mitchell C (2003), A short course in international business ethics: combining ethics and profits in global business, Short course in international trade series, World Trade Press Scarborough J (1998), The origins of cultural differences and their impact on management, Illustrated Edition, Greenwood Publishing Group Read More