Both company and employee have to work together as partners

Sibirskaya Neft magazine

Interview with Gazprom Neft Deputy CEO for Administration, Vitaly Baranov

Sibirskaya Neft magazine Vitaly Baranov

According to Gazprom Neft Deputy CEO for Administration Vitaly Baranov, that level of cooperation is essential to the effective development of both the company and each if its employees.

— What, in your view, marks out Gazprom Neft as an attractive employer?

— There are several key factors here. The first, of course, being remuneration. We do still live in a world in which people work for money. For that reason, we have to offer employees a competitive compensation package — maybe even somewhat beyond market rates since Gazprom Neft, as a market-leading company, wants the best professionals on its team. Nonetheless, we broadly follow the market and try not to over-pay — because the right package isn’t just about money, but also bonuses, benefits, insurance, long-term incentive programs, the opportunity for company-subsidised sports, family events, and so on. The second most important factor is corporate culture — which determines the decision-making process, the delegation of authority, and working relationships — between bosses and subordinates, and between colleagues more generally. It’s a common public perception that, in oil companies, people don’t tend to interact much, to share ideas: but, so far as I can tell, our culture seems to be pretty attractive to most.

Another factor concerns geography. In Russia, people tend to work where they live — and not to live where they work. In contrast to America, for example, where everywhere offers more or less the same living conditions and developed infrastructure, we have very diverse cities, whose differences can be quite marked.

— So in relocating to St Petersburg, was Gazprom Neft trying to adopt the adage of ’living where you work’?

— Yes, but St Petersburg — that’s the northern capital, of course. I, personally, didn’t really see any major difference with Moscow. But if the company had relocated to Tyumen or Murmansk, say, I think far fewer people would have taken the decision to move.

— And these are the only factors in a company’s attractiveness?

— I would also point to the issue of future perspective. Gazprom Neft is a state-owned company, and this opens up considerable opportunities for development. For example, only state-owned companies have the right to work on the Russian continental shelf. We have a major shareholder — Gazprom — with serious resources at its disposal: and that means we can think in terms of major development. The knowledge that the company won’t collapse, won’t go into bankruptcy — that offers a degree of security: and the industry itself, of course, is very attractive.

— Do these factors apply individually? Would a company be attractive, for example, if it offered high wages but had a strange or alien corporate culture?

— You do get a fair few cases of people changing company for a more sympathetic corporate culture — even at the cost of status or salary. I would include our own company in this.

— What would you say are the key characteristics of Gazprom Neft’s corporate culture?

— I think one of the core underlying values of our company is — honesty. For me, this is an all-encompassing and key determining factor, whose influence is felt exponentially. Corruption and abuse give rise to a lack of responsibility, which influences people’s relationships with one another —making them unable to trust each other. It completely destroys the company.

— So are you saying other values aren’t so important?

— No, of course not. All of the values inherent in our corporate code are not just dreamt up — they are, without exaggeration, all issues we have had to work through. But I’m talking, rather, about those values that are not included in the above list but which are, nonetheless, very important — particularly in employing someone, and in recruitment more generally.

The first of these is competence. The more an individual knows, the more useful he is going to be to the company: and another fundamental value is directly connected with this — trust. We are all in the habit of calling things into question. But that’s not the right way to do things. A lack of trust, the constant checking and re-checking of things — and, far worse, unfounded criticism, often arising from nothing other than a desire to look smart — all of this can be deeply destructive.

Passion and commitment are also very important. A person has to be genuinely interested in what he’s doing — his eyes alight, his interest fully engaged — energised, with a real desire to change things, to do something with his life. Such people are interesting to us, as much as those motivated by opportunism (in the best sense of that word). That is, people should be constantly looking for new opportunities and alternatives — taking a critical approach to whatever they are doing.

— And the company somehow motivates people to display these qualities?

— We have a very effective tool in the annual review (which has a direct influence on the annual bonus), which includes an evaluation of individual engagement with this process. That is to say, we evaluate not just what a person does, but also the way in which he or she does it. As regards competency, for example: the company has a whole range of training programs, at every level — from young specialists to senior management — directed at the development of managerial as much as technical or specialist skills. In this context we try, on the one hand, to meet the demands of the business while, on the other, trying to reach the necessary balance in terms of core skills, correcting our training programs where necessary to avoid any imbalances or distortions.

— But doesn’t unlimited confidence risk increasing the likelihood of problems or shortcomings and, accordingly, compromising the effectiveness of the company? In your view, does a person have the right to make a mistake?

— If the number of problems or business failures is going up then that begs the question of employees’ competence — or their managers’. It’s for precisely that reason that, as I say, trust and competence are very closely entwined. Anybody can make a mistake — what’s important is the nature of that mistake. If it’s the result of laziness or a lack of professionalism, then that’s one thing, but mistakes can result from a variety of reasons. Without the right to make a mistake an individual will not take the initiative, won’t take risks, and precisely that pressure — of not making a mistake — will kill the very effectiveness that he or she might otherwise demonstrate.

— Do you have people, within the company, displaying all of the characteristics you describe? Ultimately — the ideal employees?

— The ideal people don’t exist — even your own children show characteristics you might want to change. But there are people who constantly strive for the ideal, who develop, learn, and change. The most important thing, for me, is not what a person is like, but the rate at which he or she develops.

— And do you feel the Gazprom Neft team is developing?

— Yes, we’re learning and developing fast enough. This is evident in very telling details such as, for example, the knowledge of the English language within the company. In today’s globalized world — and in business generally — it just isn’t possible to get by speaking Russian alone. People understand English, study it in the evenings, and chat with native speakers by Skype. We are changing our management models and are introducing new organizational structures — another outcome of our ongoing development. Recent years have seen the introduction of a ’matrix management’ model, which has cut paperwork by 95 percent: and we’ve got many more similar examples.

— Is an employee’s striving towards the ideal always evaluated appropriately?

— One of the key principles I try to promote — and which I’m happy to say is embedded within the company — is meritocracy. We have virtually nobody here recruited as a favour — let alone a bribe. All key staffing decisions have been — and continue to be — taken solely on the basis of an individual’s competency, professionalism, honesty and loyalty to the company.

— I’ve heard it said that Gazprom Neft is a company ’from which nobody is ever fired’... Simply because there just aren’t such people left who haven’t got ’a glint of passion in their eyes’, those who are simply serving out their time?

— Of course not. It’s certainly the case, in today’s corporate culture, that we don’t part company with people lightly. But that doesn’t mean that we never take difficult staffing decisions. About 15 percent of the workforce leave the company every year — through retirement, for other companies, and some who leave because they aren’t right for us. The move from Moscow to St Petersburg is probably revealing here. Some 30 percent of employees remained in the capital, on third of which represent those we did not want to take with us and who, therefore, we did not invite to transfer with the company. There was a famous strategy at General Electric — the ’bottom 10,’ which allowed the selection of the worst 10 percent of employees annually, with whom the company parted. We are not yet ready for such drastic measures, but plan to move in this direction in the future. And our current appraisal system is, as it happens, directed at identifying those employees that don’t adhere to key corporate criteria.

— In your view, if an individual works at the same company for a long time, if a ’dynasty’ starts to emerge — is that a good thing? Or should there be more rotation?

— There’s a place for some sort of ’dynasty’ and traditions, but there’s also a place for change. In a big, well organised company such changes should occur simply in the course of people moving on to their next position — which can be upwards or sideways: and leaving the company is, of course, entirely possible. It should be possible to change one’s area of activity, take a step up the career ladder, or simply transfer to another subsidiary division. Of course, a valued employee leaving the company is always a loss in terms of the investment you’ve made in him or her. A new employee will have to spend considerable time getting on top of the situation, and in just reaching the standard of his or her predecessor.

— How does the company hold on to valued employees?

— We have mechanisms in place for that, involving long-term incentive programmes. As it happens, I have an (as yet unrealised) idea here — to transfer at least the most senior managers onto fixed-term contracts. On that basis, an individual is given a discrete period of stability. Of course, few in Russia these days can predict what is likely to happen within one year or two; and where a period of stability is limited to one year, then an individual expends their time, resources and emotion in precisely that one year. If you extend that framework to five years, then that individual will take an entirely different approach to his or her goals and objectives. At the same time, it also gives rise to competition — an individual knows that in five years’ time he or she will have to account for his or her activities in terms of what was agreed in the contract. Competition — it’s a major driver for progress.

— Is it possible to put some sort of figure, proportionally, on the input both company and employee have to make for the latter’s successful development?

— The simple answer is — it’s 50:50. We’re partners, both in the same boat. You know, I recently set up a forum for young professionals, and was unpleasantly surprised by the question of which door they felt they had to knock on in order to build a career in the company. The feeling that you have to ’knock on doors’ — that’s immediately a bad sign, suggesting as it does the existence of some or other limitations. This is probably the number one task for managers in the company — to open any closed doors. But, at the same time, it’s not for nothing that I talk about meritocracy — our company distinguishes itself by being one of those in which people progress fast — assuming, of course, they are effective in their work. And the company is creating opportunities for this. We have, yet again, reformed the basis on which we create our talent pool; we have established ’talent committees’ through which we identify not just key candidates for key positions, but also high-potential employees. And, moreover, candidates for the talent pool are selected from among both direct line managers as well as managers of supporting business units.

— And do you have, within the company, a current ’live’ example of promotion from within?

— The best example of this would probably be Vadim Yakovlev. He joined the company as head of the planning and budgeting department, before becoming head of the finance department, subsequently holding the position of CFO and then becoming First Deputy CEO (and Head of Upstream Division). In addition to which, his functional responsibility now includes M&A, strategy, and operational effectiveness. So there you have it — an individual who, in the space of six years, has built a colossal career — not just, moreover, in terms of ’vertical’ promotion, but also in terms of sheer ’horizontal’ range.

— But there has to be some kind of inflow for the talent pool, surely?

— In principle, it wouldn’t be correct to say that we promote only ’our’ people. Without competition in terms of personnel, we cease to be competitive as a business. Moreover, the talent-pool system is just one part of a wider programme. We work closely with schools, with further education establishments, because everything is interconnected. It’s unfortunate that the collapse of vocational education means we have to do this — develop educational and training programmes, supplement teachers’ salaries, and set up the supporting educational infrastructure — in order to secure the input of qualified and trained young professionals, with whom the company has to continue to build long-term relationships. To quote St Seraphim Sarovsky: ’Nothing good comes from exertion: but joy can achieve anything at all.’ It’s hard to disagree with that: the effectiveness of an individual working in a conducive atmosphere, not under stress or pressure from above, is significantly higher. And that’s our job — to create such an atmosphere.

Vitaly Baranov

Vitaly Baranov was born on 19 June, 1966, in Leningrad. After serving in the ranks of the Armed Forces of the Russian Federation, he enrolled at St Petersburg University of Economics and Finance, graduating in 1993 with a degree in Economics and Production Management. In 2003 he was appointed to the post of Advisor to the President, SIBUR, subsequently being appointed Chief of Staff, before being appointed Deputy CEO for Administration. Since 2009 he has been Deputy CEO for Administration at JSC Gazprom Neft.