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Knights of the Vine RUSSIA


Parachuting a Country Manager to Moscow? – Think Again
By Daniel Klein

Getting the kids into a good school
can be a hassle

It is typical in large multi-nationals to groom their own managers and, when the need arises, simply “parachute” over-performing “rock stars” at headquarters or at regional headquarters into Russia, or in most instances, into Moscow. This sounds like an every day occurrence in today’s global world. It is indeed standard practice for multi-nationals which are suddenly turning their attention to the Russian market. According to present-day practice, it is preferable to take successful and trusted managers from the main corporate office that have proven track records, understand the business, and most of all have proven to be a corporate cultural fit within the organization. This all sounds fine on paper. The classic paratrooper may know little or nothing about the Russian market, and typically speaks no Russian. The typical internal candidate may have been successfully parachuted into other markets, which predicts that a repeated success is in order. With the exception of the paratrooper/rock star’s language skills, this is the ideal manager to start or take over the Russian market. However, in many cases, when the logistics of “relocation” are considered, it may be difficult to convince a willing high-flying manager to actually relocate.

Schooling the offspring

The first and foremost issue for managers is where the kids will go to school. Since most candidates for relocation do not want their kids to learn only Russian, (perhaps it might be exotic that their kids learn Russian, but it would be nice that their kids also continue to speak English or their home language), the immediate concern is to place children in European language schools. The most well-known include: The British School, the Anglo- American School, the French School, etc. In total these schools accommodate around a thousand students. The availability of openings for new students at the schools is rather limited, and in fact there is frequently a waiting list, which may be for a year or two. Unfortunately, on the demand side of the equation, there are not only expat parents who are trying to place their children in these fine institutions, but many wealthy Russian families that are just as keen to have their kids educated in such an international environment. After all, the aforementioned schools are considered to be the elite programs for the next generation of captains of industry. When the schools were originally opened, the demand from Russian parents was a small percentag – but today it is on par or even greater than the demand from expat families. And as Russian families are more likely to have inside connections within these institutions, it is perhaps easier for them to get their children enrolled.

So, once the aspiring paratrooper understands that the first issue to deal with is the schooling issue, he or she and the employer may come to an arrangement where the paratrooper will move to Moscow and for one or two years will commute back to the home country while waiting for the children to be accepted from the waiting list. While most Western European capitals are 3-4 hours by plane each way, this can translate into a real hardship for relocators who want to spend ‘weekends at home’. This problem is exacerbated by the extra time it takes to travel in and out of Moscow’s airports due to traffic congestion and frequent delays at passport control. Hence, the first year or two on the job while waiting for their children to be admitted to the local and acceptable schools can be painful ones. And who can predict that after two years the company may decide to send their paratrooper elsewhere; leaving some very confused children.

It’s All About Housing

As all the foreign language schools are located far from Moscow’s center, it makes logical sense that the relocated executive would not want their kids to have to commute hours every day to get to school. Because of that, the parent must find accommodation in the vicinity of the school. For those with families numbering 3 or 4, a large apartment will not do. The relocating family is not living in apartments in their home country and will generally not accept those conditions in Moscow. The problem is, like with the schools, the number of houses or condominiums that are available near the vicinity of the schools is very limited. So much so that there is also a waiting list for such housing. Welcome to Russia; the country the invented the queue. This waiting list is also a year or two long; and in reality, only those who have some connections are able to snatch up rentable housing in these locations. And at what price? Anywhere from $7,000 to $30,000 per month.

So the happy paratrooper achieves his dream. The family finally moves to Moscow after waiting two years to get admitted to the school of choice. And things get better as the relocated family lives in a modern dream house with all the amenities including sauna, swimming pool, billiards room etc. The kids love it! Only one drawback; how does the happily relocated executive get to the office which is 30 to 40 kilometers from the happy home? Two hours to work and two hours back home, all the while fighting traffic snarls and congestion.

At What Cost?

Pokrovsky Hills,
one of Moscow’s most sought-after gated communities with easy access to the American Community School

According to David Gilmartin of Intermark: “With tuition running between $15,000 to $30,000 per year per child and housing running between $80,000 to $350,000 per year, it all of a sudden starts becoming an expensive proposition.”

According to Maxim Stepanov, Managing Director of Avenir Executive, a typical country manager makes $200,000 to $500,000 salary depending on the company, industry, sales market, etc. The parachute all of a sudden starts twinkling in golden colors. And for American paratroopers, the financial rules were just changed, effectively slashing many of the tax advantages for so called ‘foreign filers’.

Intermark offers full relocation services from advice on housing, schools to general advice on Moscow. According to Mr. Gilmartin, “We have had several cases where American and European FMCG companies have utilized our services to help relocate internal managers. In one instance, the manager realized that to move to Moscow meant that their school-aged children would need to have private English-language tutors while waiting to hear if they were accepted to the English-language schools. Once accepted, entry was not immediately guaranteed. In this case the manager finally declined the new post since this was too unstable a proposition. In another situation, a relocated family was able to get their child into the Anglo-American school but was unable to find a suitable house that was large enough to accommodate them within a 30-minute commute from the school. In that situation, the manager also refused the re-location offer.

Great! And now you have your company trained manager who understands the company’s industry backwards and forwards with 10+ years within the organization. This manager speaks the corporate language fluently, but not a word of Russian. The manager understands how things work in the West, but perhaps not in the Russian market. It has been a stressful year or two relocating the family, but the kids are finally settling into their new schools, and the spouse finds lots of similar spouses to associate with, but the manager is commuting 2-4 hours a day. And the parachuting investment is approaching a million dollars. Is it all worth it? After all of this, the company may very well reconsider the option of hiring a locally-based expat for $200,000 a year or even a local Russian manager with Western schooling or training for similar or lower compensation. The choice may be becoming an easier one to make for the company looking for high-level management stars in Russia.

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