Russia — War (For Talent) and Consequences on Human Capital and Business
Not even a week after the start of a war in which Russia invaded Ukraine, many consequences are already visible, and partially predictable. And I am not talking about those connected with the evident destruction and battles on the ground. Economists are calculating, damages on the economies of both countries, and long-term perspective, even on the global scale. And we all hope we will never have to calculate any consequences that any kind of even smallest nuclear conflict might bring.
And I wanted to comment on this situation from my field of work. Human Capital, and Human Resources.
War for best talents is not a new thing. Companies and even countries are fighting to attract and retain the best of what they can get: students, employees, professionals, managers, etc. A lot of it is based on good branding, and thus, Employer branding as a field is developing fast in the last decade.
So what is the new input in this situation? What is happening to Russia and their companies, as a result of their aggression to Ukraine? They are isolated economically, expelled from many associations, events, competitions, etc. Their “brand” is losing value rapidly. Similar things happen to their companies, and subsidiaries around the world, as a very logical consequence. Sberbank is announced to close all of its operations in Europe. Their stock price plummeted In a week.
For example, in Croatia, (as in many EU countries), it had to close its offices for a few days, because of withdrawal requests. Fortunately, it was expressly sold to another bank. But this is the pattern that many Russian companies will witness. Both in the short term, and even more importantly in the long term.
So what is the future of Russian companies, both in Russia and over the world? Let's try to answer that question through some basic HR elements.
So what is the future of Russian companies, both in Russia and over the world? Let’s try to answer that question through some basic HR elements. Employee value proposal is an overall package that is offered to prospective candidates (consciously or not). Their brand is ruined in the eyes of many, and the risk of working in Russian companies has multiplied. As many sports players are fleeing Russia, so are many managers, engineers, and business professionals. So, imagine you are a Russian-based company that is selling knowledge and any kind of knowledge-based product or service. And that you want to work in international/global environment. Your most important asset is the Human Capital you have or can attract. What can you expect?
1. It will be much harder to bring skilled professionals from other countries to Russia, thus losing all of the added value they bring.
2. Their price will be much higher for the risk premium they are experiencing right now, and potential reputational risks.
1. Russian companies operating abroad (Western countries for sure) will have the same problems of sourcing and attracting the best people.
2. Their salaries will be (as I predict) significantly above the market because their EVP will have to compensate for potential moral and ethical conflicts employees might have (as is happening in certain industries).
And this is not putting Russian companies in a good position locally or globally, because their performance could get a significant blow. Less good people to be hired, and that will contribute to their current Human Capital. Those who will accept will cost them much more, and affect their bottom line, leaving less money for other business drivers. Not to be forgotten, business partnerships will be much harder to maintain or to create in this unfavorable position. Russian companies are not the only ones who are influenced by the current situation. A similar thing, maybe on a smaller scale, happened to all other companies that are working with them, and that is overly dependent or financed by them.
Hopefully, this conflict will be resolved as soon as possible, without many victims. After that, Russia will have a long way to go to re-establish itself as an “employee of a choice”, and to maintain its global relevance. Serious PR and marketing actions will probably be needed, in case there will even be room for reparation. That, or complete strategic turn to few of the supporting countries, who might ease the situation, but not help enough to solve it.