It was her first day in a new job and Victoria Petrova, HR director at global aluminium producer Rusal, took a call from a senior production director. She expected a message welcoming her to the company, but instead she got “four-letter words”.
“I thought I had made a huge mistake and wanted to go back to my old company,” says Petrova, who started at Rusal in 2001. “My next thought was that if I was in charge of all personnel issues, it was my responsibility to teach people how to behave and communicate professionally. That’s when I started the programme of change.”
As organisational change projects go, there cannot be many HR professionals working worldwide that have taken on such a huge challenge.
Russian Aluminium (Rusal) was formed in 2000 by the merger of Sibirsky Aluminium and Sibneft, creating the country’s largest producer. It was an enormous post-Soviet organisation, with several industrial plants the size of small towns located throughout Russia, each employing more than 10,000 people.
HR as a function did not exist within the company; there was just personnel administration and simple legislation concerning hiring and firing staff, says Petrova.
Work was process driven rather than objective driven, there was no concept of competitiveness, and people actually measured their contribution to the organisation by how tired they felt after the working day: the Soviet Zeitgeist remained alive and flourishing.
A year into her role, Petrova commissioned a staff survey that revealed only 15% of employees were loyal to the company, with the rest indifferent. This was the mentality Petrova had to tackle from a zero starting point. Trained as a medical doctor, you would forgive her at that moment for checking her own pulse.
“Initially, I thought it would be easy to change the organisation,” she says. “You just tell people that now we have goals, now we have different practices, and they will do it. Nothing of the kind!
“For example, if a manager orders his staff to all start wearing blue from Monday, in Russia, this will not happen. Ninety-seven per cent will not read the order and the other 3% will pretend not to understand it. That was what I was up against,” she says.
Petrova realised she needed to identify people in the business who were eager to change and were focused on results rather than process.
She introduced the ‘Golden Reserve’ scheme to find young, ambitious employees who were keen to be promoted. “Around these people, we knew we could form the nucleus of the organisation and build the new Rusal,” she says. The company now runs the scheme annually for 300 people, with about 20% promoted from that pool.
Drawing on her decade of experience working for US businesses such as oil conglomerate Halliburton and pharmaceutical group Bristol-Myers Squibb, she started the dialogue between management and Rusal’s employees.
“In the Soviet era, people were not asked their opinions. It was always understood that only very senior managers made decisions. So we launched ‘information days’, where we got our people together and told them what was happening with the company.
“During the first month, staff were negative to the idea that they had to stand for an hour a month listening to company news. Or they didn’t believe things were actually going to change,” she explains.
Petrova encouraged people to ask questions, and personally replied to hundreds of queries in her first year. This typified her initial enthusiasm for the job, often working 14-hour days.
Training was another area that needed Petrova’s urgent attention. Western firms spend millions of dollars on staff training, but for Rusal, this was a completely new concept.
“The word ‘performance’ does not exist in the Russian language, so you have to tell people what it means and it takes a lot of explanation,” says Petrova.
“I had to teach people how to set goals, how to evaluate performance, how to understand why results are achieved or not, how to plan career development, how to write appraisals, and how to understand training needs,” she says.
The management training plans that did exist were questionable in value. For example, one option was learning to speak Italian in Italy. The reason given was that if Italian clients arrived in Moscow, people could communicate with them in their native language. “I said: ‘What if they never come?’,” she says.
Petrova can take credit for launching Russia’s first ever e-learning programme and introducing a corporate code of ethics, which every employee is signed up to. That in itself was a huge project, with 4,000 employees involved in roundtable discussions and training sessions as part of the approval process.
During her early years at the company, Petrova says she felt “a kind of pioneer” for corporate Russia. “It was interesting, it was exciting. In Russia, there have been so many difficulties in the past, somebody has to be the flagship for others,” she says.
The signs are that staff are responding to this new culture. Employee satisfaction scores have improved year-on-year and productivity has surged to record highs.
Rusal can boast billionaire Roman Abramovich as one of its former shareholders, before he sold up and decided to swap aluminium for silverware, investing millions in English football with Chelsea.
Now Rusal has just one major shareholder, investment firm Base Element, headed by chief operating officer Alexander Bulygin. Petrova has a seat on the executive committee and reports directly to him.
Petrova attributes her success and the company’s phenomenal growth to the leadership of Bulygin, and the dynamism of its surprisingly young top team, with an average age of 39.
Rusal is also opening new plants and aims to double production over the next 10 years at a time when its main competitor, US group Alcoa, has announced plans to axe 5% of its workforce – 6,500 jobs – as part of a cost-cutting drive.
Despite the company being heavily unionised – 85% of its employees are members of the Russian metallurgical union -the company prides itself on good industrial relations. Petrova is proud to say that the organisation has not suffered any industrial action in its short existence, despite the huge change that has taken place.
Petrova has her eyes on the future now she has modernised the company’s policies, processes and conditions. “We have to build the professional competencies of our workers within the organisation and it is a huge challenge,” she says.
“Talent management is vital for us because we anticipate new acquisitions. Typically, what we do is put a management team in the new enterprise, so we will need more managers able to go to different countries, speak foreign languages and manage in different cultural environments.”
From a strategic HR perspective, Rusal’s goal is no different from a Western company: to become an employer of choice. But what does that mean in practice?
It means paying the highest salary in the sector, creating an environment where people want to come to work and feel comfortable, providing opportunities to develop, and a good benefits package. “We are not doing this out of charity,” says Petrova. “The company is very ambitious.”
Her pioneer spirit is clearly evident. “Russia can only strengthen its position in the global economy when other Russian companies proactively embrace modern HR practices.”
Prior to joining Rusal in 2001, Petrova held senior managerial positions with the Russian operations of leading US companies Halliburton, Belcom and Bristol-Myers Squibb. Her areas of responsibility included developing personnel and training and employee motivation systems.
Petrova graduated from the Peoples’ Friendship University of Russia in 1991 with a degree in medicine. In her HR career, Petrova has earned a degree from the Russian Academy for Skill Development in Investment, and received training in HR management at the European Management Centre in Belgium and at France’s Insead business school.
1996 Bristol-Myers Squibb
Rusal: facts and figures
– Third largest global producer of aluminium and aluminium alloys
– Founded in March 2000 by merger of two Russian aluminium producers
– Produced 2.7 million tonnes of aluminium in 2004
– Annual sales of more than $5.4bn (3.09bn) in 2004
– 47,000 employees in 12 countries worldwide
– Allocates more than $20m (11.5m) annually to personnel development
– 85% of employees are members of the Russian metallurgical union
Then and now
The Soviet era:
– Work was process not objective driven
– There was no concept of competition or competitiveness
– Employees were rarely asked for their opinions on company operations or employee relations
– People potential was grossly undervalued
– Corruption and protectionism was rife
From a zero starting point in 2001, Rusal has introduced:
– Russia’s first ever e-learning programme
– Management and modernisation programmes
– Consultation processes and two-way employee communication tools
– Corporate code of ethics agreed by every employee
– Company-wide remuneration system and performance assessment
– Incentive packages
– Personnel training and development
– ‘Golden Reserve’ employee talent scheme