Soviets' lack of Western work ethic confounds U.S. businesses

September 19, 1990|By David Rosenthaland Kim Clark | David Rosenthaland Kim Clark,Sun Staff Correspondents

MOSCOW -- After running a print shop for several months in this twisted economy, American entrepreneur Paul Richardson finally started thinking like a Soviet: He persuaded a customer not to pay his bill.

Instead, Mr. Richardson proposed a barter deal to the new customer, an official at a television factory. Alpha Graphics would print the factory's business cards and, in return, print-shop employees would get the opportunity to buy 10 television sets directly from the factory.

That's corporate life in the Soviet Union, where chronic shortages and a near-worthless currency make every business deal an adventure.

"People in the West . . . can't understand what an economy is like without a market," says Mr. Richardson, 28, deputy director of the Alpha Graphics joint venture. "There are no real prices, no competition. You can't picture how completely warped the economy is until you experience it."

The Soviet Union -- a nation with 287 million people and rich resources -- is a natural attraction for foreign companies. President Mikhail S. Gorbachev, desperate to quell protests triggered by food shortages, is pleading with foreign companies to invest dollars, deutsche marks and yen to jump-start the economy. The Soviets are making their most aggressive pitch to Americans, who are viewed as cultural soul-mates living in a land of bounty.

Yet anyone who thinks business in the Soviet Union resembles business in the West faces a rude shock. "Nothing works logically here," Mr. Richardson says.

How warped is it? Baker & McKenzie, which has a four-lawyer office in Moscow, employs a cook so the lawyers can avoid long lines at restaurants and food stores. McDonald's, lacking even a simple Yellow Pages directory of potential suppliers, must develop its own data base. To recapture ruble profits on Pepsi sales, Pepsico Inc. takes its payment in the form of vodka and oil tankers from the Soviets. And bribery is a way of life.

Western managers often are confounded by Soviet workers and equipment -- neither works, they say. Asked about her job at McDonald's, 17-year-old Natasha Semina says, "It is different from Russian restaurants. It is impossible to steal something from the job."

Nearly two years ago, Mr. Richardson put aside his Ph.D. dissertation project -- "Soviet Policy Toward the Vietnam War" -- at Indiana University for a chance to work in Moscow. He was interested by the economic reforms. After reading about a joint venture involving a Soviet publishing house and a franchise of Tucson, Ariz.-based Alpha Graphics, he shelved plans to become a university professor.

Since then, he has managed a growing and highly profitable business. The business, which includes two Alpha Graphics outlets, two small bookstores and a book-publishing division, was among the few joint ventures in the Soviet Union to earn profits in dollars or other convertible, "hard" currency in 1989. Last year's revenues were $1.5 million from printing and the bookstores and 4 million rubles (about $6.4 million) from book publishing.

Still, Mr. Richardson has struggled to adapt to Soviet corporate life.

One problem is motivating Soviet workers.

The promise of high pay -- nearly twice the salary available from a state-run enterprise -- lures workers. But promising more rubles isn't enough. Alpha Graphics, like many other joint ventures, pays part of its employee salaries in dollars, which can be spent on the black market, in hard-currency stores or in catalogs for goods unavailable in state-run shops. Mr. Richardson is always on the lookout for televisions or other bartered goods for his employees.

Many workers, used to taking orders, are reluctant to innovate. "Their first response is: It can't be done. . . . That kind of mind-set has to be overcome," Mr. Richardson says.

"Some companies have had problems getting the Soviets to adopt a Western work ethic," says George Tate, a Baker & McKenzie lawyer. "At a restaurant, the waiters come to work at 9:30, have a cup of coffee, smoke a couple of cigarettes and work for a while. Then they go to lunch and stand in line to buy potatoes. They just don't quite get it."

Managers also must be taught to concentrate on boosting revenues and profits as much as on cutting costs.

The most fundamental business concepts, such as "service with a smile," are alien to a society accustomed to the indifference of a state-controlled economy.

To combat such problems, some companies send Soviet employees abroad for training. Baker & McKenzie, an international firm based in Chicago, sends secretaries to a one-week training session in London. McDonald's trains key employees at its Hamburger University outside Chicago.

Or they hire young workers. "It is much easier to mold someone than to remold them," says Jack Liczkowski, director of McDonald's processing and distribution center outside Moscow.

Getting supplies in a nation plagued by shortages also can be a problem.

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