Multinationals have much to teach Kazakh companies

September 06. Universal Newswires

By Dr. Paul J. Davis and Yevgeniya Yugay

Multinationals have much to teach Kazakh companiesKazakhstan has come a long way in building a functioning business sector since independence from the Soviet Union in 1991, but still has some improvements to make in terms of establishing a corporate identity and managing employee behavior, researchers from the Kazakhstan Institute of Management, Economics and Strategic Research (KIMEP) have noted.

In a study undertaken by myself and Yevgeniya Yugay, interviews with fifteen senior managers at major Kazakh and international companies in Kazakhstan’s business capital Almaty have revealed important differences of opinion between them on forging corporate identity.

The study – which considered businesses in the banking, financial services, construction, retail, education and hospitality fields – has concluded that local companies can benefit from the wealth of international experience and knowledge that multinationals have accumulated on identity management. In particular, local companies should embrace the view that employees are a strategic resource rather than controllable ‘property’.

The interviews, conducted in June and July, discovered that local companies and multinationals have differing views on what corporate identity is. The managers in local companies saw corporate identity as: “behavior of staff in terms of good service and atmosphere” or “appearance associated with employees’ dress code and reliability” and “the speed and quality of work,” whereas the multinationals talked about “employee knowledge and skills” and “reputation, uniqueness and professionalism.”

The difference here is stark. Local companies see corporate identity at the micro level in terms of what employees must do. The multinationals perceive corporate identity at the macro level in terms of employee capabilities and how they add value. The multinationals are thinking strategically, focusing on what drives competitive advantage. The local companies are minding output and the thinking is introverted.

The implication in this is that local companies are still focusing on their relationship with employees being transactional; the multinationals seem to be building a transformational relationship with their employees.

When asked to name the main participants who define corporate identity in their company, perspectives between Kazakh and multinational firms again differed. The managers in local companies tended to identify individuals: “the owner of the company” or “the strategic planning manager” while another said “the HR director.”

However, the managers in multinationals saw the responsibility for shaping corporate identity as being much more widely shared. They said it was “the management of the company” or “faculty” or “sales personnel and employees in logistics”. It seems that the multinationals practice a more devolved and participative form of decision-making which requires shared responsibility for achievements. In comparison, the inference for local companies is one of a more rigid hierarchy with authoritative decision-making and clear-cut individual accountabilities.

The study also found a difference in focus regarding what the managers saw as desirable employee behavior. Local companies saw desirable behavior as something determined by the expectations of others. For example; “politeness to clients and co-workers” and “compliance with requirements…and positive attitude toward clients” and “the client is always right, so we expect maximum flexibility from our employees.”

The multinationals did not mention third parties when answering the question. They saw ideal employee behavior as inherent to the individual and an end in itself: “professionalism, meeting deadlines and creative ideas” and “responsibility, meeting deadlines and communication.”

The difference is an important one. Multinationals seem to promote a set of universal behaviors that are core to achieving the goals of their business. The local companies appear to ‘follow the lead’ of clients rather than identify the behaviors that the company believes in and use these to create a customer experience. The possible problem is that when customer and client expectations change, employees may be expected to prioritize other behaviors. The company is then turning over control of shaping corporate identity to people external to the business.

On the topic of enforcing desired behaviors, managers were asked how their companies do this. While both local and multinational companies talked about money and codes of behavior, the underlying philosophy between the two appeared quite different.

Local companies see money and rewards as a way to force and control employee behavior: “There is a system of fines and rewards that always work. Our company also has a policy to hire flexible, usually young candidates whose behavior can be shaped easily.” Another manager of a local company said: “The most effective tool in order to reinforce desired behavior is monetary policy because in some ways it is the only way to enforce people to do something officially.”

In multinational companies, money is viewed as a way to encourage desired behaviors: “We have specific bonuses for sales people that allow them to increase their earnings and encourage performance above minimum sales requirements.”

The multinational companies reported having basic and brief codes of conduct about general legal requirements. Local companies had more significant written rules for employees that, in one case, stressed “even the height of the heel” women are permitted to wear.

As Kazakhstan continues to develop and modernize local business and industry with a view to greater global integration, the exposure to overseas corporate management philosophy will increase and so will internationalization. With the growing presence of major foreign-based multinationals in Kazakhstan, there is opportunity to learn from their experience.

Managers in local companies should make full use of networking opportunities through business forums, professional associations, conferences and public training to forge collegial relations with their counterparts in multinational firms. This would be a productive way to benchmark their own practices against what others are doing. With regards to corporate identity and employee behavior management, there clearly exist areas for reviewing and improving current approaches. Change will help drive business success in a world where employees really are a company’s key competitive advantage.

Paul J Davis is Assistant Professor of Management at the Kazakhstan Institute of Management, Economics and Strategic Research (KIMEP) at Almaty, Republic of Kazakhstan. He is on the Editorial Advisory Board of The International Journal of Corporate Governance. Yevgeniya Yugay recently completed her MBA at KIMEP with a major in Management. She works in financial services in Almaty.