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Transforming markets

Executives for change

by Gerd Schimansky-Geier, Daniel Strube
InWEnt’s Managers' Training Programme promotes private-sector development – with advantages for both foreign and German companies. The instrument has proven its worth, especially in the former Soviet Union. [ Gerd Schimansky-Geier and Daniel Strube ]

The countries of the Commonwealth of Independent States (CIS) have enjoyed a marked economic upturn for several years. The crisis of the 1990s, brought about by far-reaching transformation, seems to be over. The gross domestic product of the CIS countries has been growing for years – at an even higher rate than the EU average.

But is it true that, as many people claim, the cause is only region’s resource wealth? There are certainly enormous oil and gas fields; and rich nations as well as emerging markets are hungry for such resources. Commodities aside, however, there is another, little considered reason for the economic upturn. Reforms have taken root, and not only in terms of macroeconomic stability. A wind of change has been blowing in the boardrooms and executives’ offices of Eastern European companies for a number of years.

The business practices of large and medium-sized enterprises are now determined by Western management expertise – and not only in commercial centres of these countries. Beyond Moscow and St. Petersburg, Kiev and Astana, a young, well-educated business elite has worked its way up company ranks.

Initially, such young managers acquired their education at the top universities in Europe and the USA, but increasingly they are now graduates of local universities. Nevertheless, the numbers still do not suffice to support a fully operational market economy. For that reason, many current and future executives need to be taught up-to-date management know-how.

Training elites

In 1997, the Russian government under President Boris Yeltsin initiated a nation-wide “President’s Programme” for the further training of managers. The objective was to make young leaders familiar with western management skills, and to prepare Russian businesses for the world market. The numbers speak for themselves: to date, approximately 50,000 young managers at selected business schools throughout Russia have been trained.

This initiative was always – and will be in future – supported by leading industrial nations, including Germany. On assignment by the German Federal Ministry of Economics and Technology (BMWi), the German government has organised work placements for the best Russian graduates since 1998. This programme is coordinated by InWEnt, which has assisted Russian reforms for years. InWEnt is in charge of central coordination, whereas the programmes themselves are run locally by a selection of educational institutions.

Courses take one to three months’ time, and are made up of several modules. First, the Russian manager and his employer define a relevant task they want to be done during the advanced training. The manager next goes to Germany and attends interactive training sessions (on intercultural management, for instance) and then completes a work stint in a German company. The execution of his task is later evaluated in a follow-up seminar back home.

After the training proper, many alumni stay actively involved. Organisations of theirs have been set up in over 65 Russian regions; a huge alumni network thus spans the country from Kaliningrad to Vladivostok.

Sustained contact

It is not only the Russian companies that benefit from the programme; the German partners do so too. For example, 3,330 Russian managers so far have completed their advanced practical training in a company in the Federal Republic. That figure makes Germany Russia’s most important partner in this programme. The BMWi takes on the lion’s share of the funding, to the tune of over € 32 million. German businesses contribute another € 16 million. Germany’s federal states and educational institutions spend almost € 2 million.

Good business results justify the financial outlay. Almost 60 % of the young Russian managers have signed business contracts with German partners after their advanced training. The company of every seventh graduate is involved in joint production lines with a German partner. Bilateral trade volumes have increased as a result – by almost € 1 billion.

The success of the Russian President’s Programme has prompted other CIS countries to set up similar programmes. The “Ukrainian Initiative” got the ball rolling in 2001. With a funding share of approximately € 5.1 million, Germany is again the most important partner. More than 375 Ukrainian managers have completed an advanced training course in Germany. According to figures from the Ukrainian government, these measures have contributed to the creation of almost 5,000 jobs in the past two years. Investments to the amount of around € 65 million have been made. As is the case for the Russian programme, the Ukrainian initiative has also recently been extended to the year 2010.

InWEnt has also received positive signals from Eastern Europe. While talks are currently underway with Moldova, EU neighbour Belarus has already been won over. A total of 54 Belarusian managers have been trained in German companies since 2006. Here, they established business contacts, which would not have been possible otherwise in view of the political isolation of Belarus.

Advanced training programmes for managers are also being conducted in Central Asia, though on a smaller scale. To this end, the BMWi signed memoranda of understanding (MoU) with Kazakhstan, Kyrgyzstan and Uzbekistan last year. In recent years, 117 Kazakhstani and 56 Uzbekistani executives have come to Germany. A pilot group from Kyrgyzstan is expected this year.

Of course, the advanced training programmes for managers would also make sense in other Asian regions. There is lively interest in the growth markets of China, India and Vietnam. A MoU has already been signed with China. The first pilot groups from the three countries will come to Germany this year.

Skills and confidence

The success of the BMWi Managers' Training Programmes can be attributed to several factors:
– The programmes take into account the interests of all participating partners, aligning them with one another.
– The programmes are coordinated centrally but implemented locally, both in the partner country and in Germany. All Russian regions participate, as do all of Germany’s federal states. Young Russian managers are found all over the Federal Republic.
– In the partner countries, companies and institutions of higher learning cooperate in terms of qualifying managers. They are increasingly making use of interactive training methods.
– The programmes are win-win schemes, with benefits for all partners involved, including German businesses. They get to know and trust potential partners in Russia, which helps to boost their activities in CIS countries. The Russian companies, in turn, also benefit from new contacts as well as newly acquired management skills.
– In addition to the manager programmes, InWEnt also supports economic reform, for example in Russia and the Ukraine. The measures complement each other and provide for a better understanding between managers and employees of government agencies.
– Funding reflects the balance of interests between the partners. The jointly-designed programmes are jointly-financed. The respective governments, regional authorities, companies and, of course, the participants themselves contribute to the costs.
– The programmes can be expanded – as in the Russian Federation, for instance. Approximately 60 German managers have taken part in advanced training courses in St. Petersburg and Tver since November 2007, thus laying the foundation for more bilateral exchange.

The advanced training programme for managers is a success story. Russian alumni and their employers benefit from the management skills acquired and the new contacts made. A well-trained business community is growing; it is internationally networked – particularly in Germany – and ready to rise to the challenges of globalisation.

BMWi’s Managers' Training Programmes are more than merely an instrument to promote foreign trade. These programmes bring together managers from different countries and cultures and thus make an important contribution to understanding among nations and facilitates closer relations between Europe and its Eastern neighbours.