PROJECT

Human Resource Management in Russian

Oil and Gas Organizations: The
Contemporary Social Priorities – The
Recruitment Process example.

a conceptual Project submitted in partial

fulfilment of the requirements for the degree
of Master of Arts in International Human
Resource Management at the Westminster
Business School of the University of
Westminster, by

Alex Kouchev on 29th August 2013.

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Table of contents
Abstract: .........................................................................................................................................3
Introduction: ..................................................................................................................................4
Literature Review: The human resource management in oil and gas industry as the scope of
social research. ...............................................................................................................................6
The research methods employed in the study: ..........................................................................13
Interpretation of the findings: ....................................................................................................15
Recommendations based on the findings: .................................................................................27
Conclusion of the research:.........................................................................................................32
Reflective statement: ...................................................................................................................34
APPENDIX A – MANAGEMENT PRINCIPLES APPLIED IN SOVIET ORGANIZATIONS
.......................................................................................................................................................35
APPENDIX B – HARD AND SOFT HR MANAGEMENT STRATEGIES APPLIED TO THE
RECRUITMENT PROCESS .....................................................................................................36
LIST OF REFERENCES: ..........................................................................................................37

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Abstract:

The research deals with the up to date problems in Human Resource Management in Russian oil and
gas industry. The future development of the market economy in Russia is closely related to Human
Resource strategy of an organization. Nowadays, the oil and gas organizations experience the human
capital deficit. The specialists plan the increase of the deficit in the near future due to the senior age of
actual workers and the shortage of qualified specialists on the market. The essential issue for Russian
organizations is to modernise their recruitment process in order to attract talents. This research adapts
a humanistic approach to HR and analyse the current situation in the Russian oil and gas organizations.
The aim is to propose solutions for companies by combining recruitment methods used by foreign and
Russian organizations and by developing their social implications.

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Introduction:
During the past years, the human resource management in Russian organizations is subject to major
changes. On one hand, the economy is involved in staff turnover, where employees educated under
soviet system are progressively delegating their responsibilities to a younger generation, grown under
democracy and globalization. On the other hand –the market-oriented economy adopted by Russia, has
increased the role of employees and the development of human resource strategies within
organizations, including the oil and gas industry (Fey et al. 2000). The issues concerning learning &
development of employees, their mobility as well as their capacity to innovate and bring initiative are
coming up at the corporate level. Efforts made by management to bring the team spirit inside
organizations play a significant role. Researchers in Human Resources and Psychology have
demonstrated that in a competitive environment survives the organization with team-spirited workforce
and organizational citizenship behaviour (Dehler & Welsh, 1994; Podsakoff & MacKenzie, 1997).

In the beginning of the 90s, the Russian oil and gas industry started to attract foreign investors, who
imported with them new management strategies, technology and social approach to HR. Until that
period, the sector used to be organized under soviet nomenclatural principles. Nowadays, specialists
from Western and Russian schools drives the business in this industry with their different approaches.
However, due to the globalization of the economy these disparities tend to merge and generate new
concepts of international human resource management. The central objective is to engage personnel
by improving efficiency and quality of its work, by creating necessary social conditions for the
development of its creative abilities and by developing its business skills and professionalism.
Promotions, salary increases and improvements in social conditions are able to increase the level of
productivity of an organization (Kanter, 1996). An employee is considered as a person who have a
variety of social needs and interests. Today development trends for the Russian oil and gas industry
management is to switch from technocratic-rational model to social oriented model. It is also obvious
that human resource departments in Russian organizations have just started to implement modern
managerial tools (e.g adverse-event management, recruitment). For many of them the differences
between modern and traditional HR practices are only theoretical. In this case, the human resource
departments do not have a significant impact on the business performance and fail to create competitive
advantages. The problems are accentuated by the lack of competencies from the HR function and the
unwillingness from the business to share information and understand the role of HR function.

Currently, the oil and gas industry is facing the human capital deficit (Ernst & Young, 2013; Orr &
McVerry, 2009) because of the high senior age of employees. For this reason, the organizations are
looking to improve their recruitment, training and retention processes in order to decrease the
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turnovers. The mentioned factors are demonstrating the role the human resource management has to
play. It is essential to lead researches concerning the modern forms of human resource management in
oil and gas industry, due to the specificities of this economical sector.

The target of the research is the human resource management in the oil and gas industry. The field of
study is the contemporary social priorities of human resource management in the Russian oil and gas
industry. The aim is to identify the social priorities of the human resource management policies in the
Russian oil and gas industry in accordance with the transformation of the Russian society. The
achievement of the research is done by accomplishing the following targets:

- Identification of theoretical and methodological background for the research concerning the
contemporary social priorities of human resource management in Russian oil and gas industry.
- Analysis of social schemes and recruitment procedures in the Russian oil and gas industry.
- The conceptual recommendations for the organizations operating in the industry in order to
implement the social oriented recruitment procedure.

The research is primarily based on the fundamental theories established in the organizational
management and human resource management, which take into account the social framework. The
principal supported theories are V. Pareto’s “social system” (Parsons, 1965) and “the division of labour
in society” from E. Durkeim (Merton, 1934), the Structure of Social Action (Parsons, 1949) and
Weber’s theory of social and economic organization (2009). It is also necessary to focus on the “human
relations theory” by Mayo (1960), which analyses the employee as a social-psychological appearance.

The research will be analyzed under different approaches:

- Comparative: in order to contrast social phenomenon’s in different oil and gas organizations.
- Historical: evolution of the human resource management in the time line of Russian oil and gas
industry.
- Structural: consideration of general factors in activity of oil and gas organizations.
- Comprehensive: consideration of the research topic because of cohesion between the social
process and social organization.

The result conducted by the research have the following theoretical conclusions and its academic
novelty is qualified as:

1. The understanding of “human resource management” as a social approach of the management,

which has a conscientious exposure on the employees and takes into account their motivation,

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 interpersonal relationships. It places the employee as the central element within the
organization that has to be developed in order to help business to achieve it targets.
2. Detection of primary factors that constrain the development of social oriented human resource
management in Russian oil and gas industry (lack of career planning tools, information
protection, technocracy)
3. Methodical application of recruitment tools in the oil and gas industry (recruitment of
specialists from universities and colleges, use of external recruitment agencies, advertisement
in mass medias, internal promotions)
4. Detection of some contemporary trends in development of motivation at work and that
influence the employee retention.

Theoretical value of the research is the additional expertise in human resource management in Russian
oil and gas industry.

The practical value of the research is its capacity to be used by the human resource departments in oil
and gas organizations in order to implement new recruitment processes, which will increase the overall
performance of the employees.

Literature Review: The human resource management in oil and gas industry as the scope of
social research.

The following literature review allows to understand what the social oriented “humanist” HR strategy
is and why it is so important in oil and gas industry.

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According to Lincoln & Kalleberg (1985) and Becker et al. (1996) the main factor that guarantees to
an organization the competitive advantage and survival is employees’ attitude towards work, their
professionalism and creativity. The role of the staff in the company's success is particularly evident in
the situation when natural resources are available and their utilization is less of a problem for the
employees (Lado & Wilson, 1994). The staff also plays a critical role in unstable economic situations.
The professionalism, the capacity to anticipate the issues and the employee creativity in case of
precarious conditions (Oldham & Cummings, 1996) are appraised by the return on effort.

Personnel (from lat. Personalis) describes the workforce of an organization, including all employees,
as well as working owners and co-owners. Kotter and Cohen (2002) describe people as core elements
in an organization. They are the ones who can change how it operates. Other name used to describe
personnel is human resources. Resource approach includes cash, valuables, stocks, opportunities,
sources of funds and income. Consigning people to resources switches them from the category of
“subjects” to “objects”, restricts their perception as individuals who needs to be provided personalized
experience and be assisted in their development. In reality, Personal Management, as described by
Aswathappa (2005), is an ancestor of HRM: “PM has a limited scope and inverted orientation. It
viewed labor as a tool, the behavior of which could be manipulated for the benefit of the organization”.
In human resource management, personnel can be classified under several categories such as a
profession and job position, level of management, occupational groups. However, the most general
classification takes into account the participation in the production process: blue and white-collar
workers. Human resources changed the relationship towards employees from consumers’ attitude to
humanist, where the employee is the principal asset of an organization and his satisfaction is the central
element for an organization in order to be competitive (Rasca et al., 2008; Patterson et al., 1997). Lee
Iacocca (Iacocca, 2007) defined human resource management as incitation of people to work: “Any
supervisor worth his salt would rather deal with people who attempt too much than with those who try
too little.” It is possible to get the expected result from an employee by knowing his own expectations,
principles and aims, his singularities. This understanding of human resource management corresponds
to a humanistic orientation, which involves the creation of working conditions that will reduce the
disposal of workers from their professional activity. The partisans of the humanistic approach (Sisson,
1994; Kamoche, 1994; Storey, 1989) consider the employee as a person with needs, motives, values,
attitudes.

They believe that the efficiency of production depends on not only equipment and technology, but also
on the level of motivation of employees, the degree of consideration of their interests.

Human component of Strategic HRM should not be diminished as well as the impact of human resource
on organizational performance (Becker & Gerhart, 1996).
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Taylor (1912) with his Scientific Management principle has developed a system of labor and
production management, based on achievements of science and technology. He attached singular
importance to people management, describing it as an exact science and individual handiness. Before
Taylor, nobody was concerned by the occupational selection and vocational preparation of the
managers. There was no benchmarking criteria and the exercised function was arbitral and random.
Taylor concluded that certain people could work more efficiently than other. The relationship between
management and the workers is described as the most valuable part of Taylor’s art of management. He
also focuses on motivation at work, which goal is to develop the competencies of workers, and pay
them the sufficient amount in order to improve their living standards (Kanigel, 2005). Taylor also
proposed for the functional administration to setup a separate division for personnel function, in
modern terms human resource department. A person has to hold the disciplinary role, and be in
permanent contact with line managers in order to assess the workers performance. By this means,
Taylor has introduced two new departments in organizational governance: 1) Planning office -
responsible for administration of tasks, support the workers with the documentation, instruments and
materials. 2) Personnel Department – subdivision of the planning office, do the same task but with
people. The crucial issue for Taylor was bringing into proper correlation the work contribution and the
obtained reward. According to him, the compensation has to be in strict conformity with the performed
work. He found out that is equally wrong to overpay and underpay an employee. Taylor’s earnest
conviction states that money has to be earned and not take in (Locke, 1982). Only in this case it has a
real value in the eyes of somebody. Taylor’s personnel department is also responsible for handling the
data on the employees, which shows their accurateness, infractions, competencies or average earnings.
It makes this department responsible for internal and external recruitment, occupational training, data
quality, performance appraisals. In conclusion, another Taylor’s postulate is the fundamental pillar of
contemporary personnel practices: the manager can get his promotion only after he prepared his
replacement. The concept of successful management is reached when these conditions are made.

A role in the research plays the theory of “human relations” – a concept of people management in
organizations (mainly in the industry) based on central postulates of humanitarian paradigm. This
concept first appeared in USA in the 1920s in order to counterbalance Taylorism.

It is often associated with Elton Mayo, who carried out experiment in Hawthorne at “General Electrics
Company”, near Chicago.

The results of this experiment are presented respectively in “The Social Problems of an Industrial
Civilization” (1945) and “The Human Problems of an Industrial Civilization” (1933). The main
outcomes are as following:

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 1) The human is a “social animal”, oriented and included in the context of group behaviour.
2) There is no mechanical interlocking between one change in working conditions and production.
3) The increase of labour efficiency (irrespective of working conditions) is impacted by team
cohesion, interpersonal communication, subjective attitude of the employees towards their
work and production in general.
4) Rigorous hierarchy of subordination and red-tape organization are non-compatible with human
microcosm and its freedom.
5) The management should in a greater degree privilege workers than production. It will guarantee
social stability and an auto satisfaction for employees concerning the performed job.

The innovative findings during the experiment have reorganized the characteristics of organizational
management. It is imperative to interconnect the employees to the management within their level of
competence. It was found that by spending 4 million dollars on this study, General Electrics has
generated 80 million dollars of net profit during the next 10 years. In his analysis, Mayo (1933) states:

The industrial worker, whether capable of it or no, does not want to develop a blackboard logic which
shall guide his method of life and work. What he wants is more nearly described as, first, a method of
living in social relationship with other people and, second, as part of this an economic function for and
value to the group. The whole of this most important aspect of human nature we have recklessly
disregarded in our "triumphant" industrial progress.” (p.181).

Among other matters, Mayo has concluded that managers of the future will play a significant role in
rehabilitation of social equilibrium and therefore have to meet the educational standards. In other terms,
the management faced the need for transition to appropriate people management standards in order to
improve the competitiveness and efficiency of the production. Appeared the necessity to prepare
organizational leaders who are able to motivate people and create conditions for the self-expression at
work. According to O’Connor (1999), for Mayo,

Taylor has committed a mistake by restraining the workers in simply the pursuance of their duties and
by not allowing them to play a managerial role.

The theory of “human relations” has demonstrated that alongside with a financial incentive (Taylor’s
theory) great significance have psychosocial characteristics: group cohesion, relationships with
management, favourable working environment, and work satisfaction. As stated by Bendix & Fisher
(1949), Taylor’s and Mayo’s works are not unrelated.

In URSS, for Sharapov (1998) works from Lenin, Marx and Engels (1975), Bogdanov and others,
influenced the principles of socialist management. Lenin ideas took directly inspiration from Taylor’s
but were never totally implemented because of the communist behavior to privilege production rather
9
than workers. Among particularities of the socialist approach to the economic management, there are
centralization and direct control of the production process by public authorities. Appendix A exposes
the philosophy of management in socialist organizations.

In reliance with these principles were established managerial standards for organizations and public
authorities. To some extent, they are absorbing the range of known problems in production
administration and management. Research performed by McKee et al., (2000) demonstrated by taking
the “Family Friendly” approach, the importance of social oriented HR strategy in oil and gas.

Nowadays, social policies are becoming the mainstream of human resource management in Russian
organizations. For Wright et al. (1998) the organizations are progressively replacing the role that was
held by the state during soviet period and have to be socially oriented in order to attract foreign
investors. However, the intensity of the process is not sufficient. The studies from May et al. (1998)
and by Fey et al. (2000) help to notice the following limitations. They are further extended by
Denisova-Schmidt (2011):

1) The majority of organizations in Oil and Gas industry have traditional, defective and segmental
human resource management procedures (HR department, payroll department, training
department etc.) This structure obstructs cooperation between the employee and the
organization, implementation of social security schemes and technologies of recruitment,
motivation and career management.
2) The majority of HR and personnel management structures in contemporary Russian oil and gas
industry organizations are using an outdated set of guidelines when reporting on their activity.
The information on career management, learning and development, employee engagement is
not widely available to employees.
3) The considerable part of middle and top management in this sector of the industry has technical
education. However, in order to deliver lean management in contemporary conditions and
provide employees with necessary social support,
it is essential to have humanities knowledge. Only this knowledge will help the manager to deal
with the contemporary conflict situations.
Insufficient qualifications of the management will result in the technocracy of managerial
processes and prevalence of authoritarian traditions in Russian system of personnel
management. E.g. 60% of the middle management of OAO Gazprom did not have any degree
at the end of the 20th century (Vorobyova, 2000).
4) The majority of Oil and Gas organizations in Russia are avoiding panel discussions and are
trying to solve internal intern issues related to personnel by themselves. The total number of
employees in this industry in Russia is less than 1 million people, which represents about 1.6%
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 of the active population (Martynov, 2003). The transition to new management principles, the
privatization and the decentralization of the economic management have resulted in the
disappearance of the government principle to provide the industry with the fresh qualified
graduates. The systems that were responsible for the disposition of graduates have been
dismantled (Vladimirov, 2001).
5) Contemporary managers of oil and gas organizations are reluctant to use the methods of
personnel management. The main emphasis is done on non-social oriented methods in order to
achieve the expected results, utilitarian and pragmatic approach in order to solve the emerging
issues.
6) The difficulties to implement social security’s schemes in Russian oil and gas industry comes
mainly from low performing workforce, multiple-link management system, the impact of new
technologies in this industry. Ellman (2006) is noticing that intensive changes of the external
environment: increase in the number of competitors, implementation of new technologies, flow
in of foreign investments in Russian market have a contradictory impact on the oil and gas
industry. On one side, the strategy is to reduce the number of people working in this industry
by 30-50% in the next 10-15 years. It may have a negative impact on the level of unemployment
under an immigration level of 250-300 thousands of people per year.

The lack of high-qualified young specialists and the rapidly shrinking workforce in Russian oil and gas
industry is another problem for the development of this sector. Foong & Lim (2010) acknowledge that
it generates risks in the recruitment process. In 2012, the oldest recruitment agency for oil and gas
industry in Russia, ANCOR Energy Services has received more than 800 demands for recruitment of
people with highest vocational education. In 2000, there was eight times fewer requests.

Nowadays, multiple organizations have integrated recruitment specialists in their human resource
strategy. The future development of oil and gas organizations depends on how they will manage to
recreate conditions in order to support the development of their human capital. The main specificity of
the oil and gas labor market is the constant requirements changes in quality of the workforce.

The sector permanently requires high-qualified specialists and is more and more demanding concerning
their level. As stated above, the industry is facing a talent-crunch worldwide (GlobalEnergyTalent,
2013). Organizations, which develop business all around the world, need flexible employees who are
ready to work in any conditions and specialists who knows all the specificities of this industry.
However, these demands are often in short supply (Massie, 2013). Moreover, the dynamics of change
increase under the pressure of the external environment and the organizations cannot avoid
transformations. They are under constant change process: improvement of training systems, expanding
the scope of activities, looking for more efficient management approaches, redesigning the corporate
11
structure. For these reasons, consulting companies mainly maintain this function. Waterman (1988)
acknowledged that there were times when people were production factors. Managing people were not
different from managing tools and equipment. If before it was acceptable and helped to increase the
production level, today it generates the opposite effect. People have personality and have to be managed
in a different way.

Major impact has employment security, work conditions, level of incentive, nature of interpersonal
relationships between colleagues and others, which can be input in one group named “quality of social
and labor relations”. The social approach towards human resource management is not only oriented on
resolution of actual issues. It also looks to improve the involvement of the employees, the quality of
their outputs by reinforcing the social oriented practices as one of the primary elements of the
organizational competitive growth. These aspects are very well developed in Ferris et al. (1998) and
Collins & Clark (2003).

An individual in the human resource management has the prime value as stated by Aswathappa (2005).
For this reason, it is interpreted as social-oriented activity, which deliberate action results in the
improvement of employees’ engagement, in order to achieve organizational strategic objectives. The
main factors, which hinder development of social-oriented model of human resource management in
Russian oil and gas industry are: the technocratic management (Ageev et al., 1995), prepotency of
pragmatic and social ineffective methods for corporate problem solving, unavailability of information,
reduced employee engagement policy, lack of structures for career planning, lack of prevention
methods against social conflicts inside organizations.

The priority areas of work for Russian oil and gas organizations are now:

1) Contemporary social technologies for talent acquisition;

2) Motivation factors for recruitment and employee retention;
3) Evolution of the system for additional trainings and personnel development;

In the conclusion of this literature review, it is essential to notice that the central issue for human
resource management in oil and gas industry is to find how to improve the mutually advantageous
cooperation between the organization and the employee. The start of this cooperation begins with the
recruiting processes that this research paper analyses.

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The research methods employed in the study:
The sources for the empirical and factual data are documents published via periodical printed medias
and online resources; data provided by the recruitment agency “Ankor” specialized in recruitment for
oil and gas industry for the period 2009-2012; the survey realized by the author among the employees
of Schlumberger Russia. The survey was anonymous, composed of 4 questions and published online.
The aim was to identify the seniority of the concerned employees, their position, average annual salary
and the level of satisfaction of the employee regarding the salary. The sample population was 80
employees, divided into 4 categories: 62.5% technical and administrative staff, 25% low
management/Junior Engineers, 10% middle management/Senior engineers, 2.5% top management.

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Interview with Comp&Ben Manager for European and North African Geomarket and Junior Recruiter
for Schlumberger.

Third party survey, realized in 2008 by Gaisina Lucia Mugtabarovna, the Candidate of Social Sciences,
senior lecturer of History and Culturology Chair at the Federal State Budget Institution of Higher
Professional Education “Ufa State Petroleum Technical University” among the employees of oil and
gas organizations on the territory of Republic of Bashkortostan: OAO Bashneft, OAO Gazservice,
OAO Gazprom, OAO Transneft, OAO Uralsibnefteprovod, OAO Ufimskiy NPZ, OAO Ufaneftehim,
OAO Ufaorgsintez, OAO Novoil, OAO Lukoil. The sampled frame accounts 1570 employees, divided
into 4 categories: 62.2% technical engineers, 5.4% low management, 29.3% middle management, 2.1%
top management.

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Interpretation of the findings:
The oil and gas organizations do not differ from other organizations in terms of their core element. As
per Becker, B., & Gerhart (1996) the workforce determines the growth rate, the overall performance
and competitiveness of business. In the contemporary market conditions, there is a constant increase
in competitiveness between the Russian and foreign oil and gas organizations for recruiting talents.
Under the USSR, the vacant positions in oil and gas organizations were directly filled in good faith by
the fresh-outs from state high education institutions. Nowadays, young graduated specialists are self-
determined in the choice of their employer. Failed recruitment or errors made during the recruitment
process may have the following consequences (tangible financial losses):

1) Loss resulting in poor efficiency of the workforce: low output, subcompetitive return, reduced
quality of the provided service or production.
2) Loss of credibility and reputation for the organization, unfavorable image for customers,
suppliers, clients. Decrease of the competitive capacity of goods and services, which result in
lower profit margin.
3) Penalty costs due to industrial accidents, absenteeism.
4) Expenses related to trainings and for dismissal of unsuitable employees.
5) Expenses related to low recruitment quality, substitution of unsuitable employees, costs for
sourcing, selection and training of new employees.

In addition, indirect costs may occur, which are more difficult to evaluate. Among them - low morale,
lack of motivation and complacency of employees with their provided work. Finally the increase in
employees’ turnover.

CIPD (2013) definition regarding recruitment describes the following:

Recruitment is the process of having the right person, in the right place, at the right time. It is crucial to
organisational performance. Recruitment is a critical activity, not just for the HR team but also for line
managers who are increasingly involved in the selection process. All those involved in recruitment
activities should be equipped with the appropriate knowledge and skills.

This definition underlines endpoint of recruitment process but does not include the social constituent
of the process. More accurate for this research is the definition provided by Weiner (1982):

Because a particular type of person is more likely than others to develop commitment toward an
organization, policies and practices of recruitment and selection may have an impact on the ultimate
level of members' commitment. Commitment-oriented recruitment relies strongly on expressive
communications and appeals to values and beliefs. Similarly, commitment-oriented selection focuses
on assessment of values and beliefs, and on the degree of their congruency with organizational values.
(p.424)
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In the analysis of the recruitment process from a social approach (employer and employee point of
view), the following points have to be included:

1) Comprehensive study of the labor market (data collection regarding the unemployment level,
records on average wages, competitors in the analyzed industry)
2) Resourcing and talent planning by taking into account the changes in internal and external
business environment.
3) Examination of candidates’ personality (psychophysiological, psychodynamic, personal and
professional aptitudes) in order to identify their capacity to execute the required tasks.
4) Decision making on recruitment.
5) Feedback from the recruited employee to the employer.

The aim of these practices is to create the harmony between individual qualities of candidates and
corporate interests. The recruitment procedure is influenced by the HR strategy adopted by the
organization. The table in annex 2 dress up a summary of hard and soft approach of HR in business, as
it is viewed by Riley (2012), Henderson (2008), and Feather (2007) and classify them into different
types of organizations.

The contemporary Russian oil and gas organizations are actively employing in their human resource
strategy the experience of foreign organizations who are performing on Russian market (Denisova-
Schmidt, 2011). They are demonstrating their transparency and capacity to anticipate the issues
concerning the recruitment procedures.

Foreign organizations are wide open for recent graduates. In contrast to Russian organizations, they
already have recruitment programs, which were developed and already tested in other countries. As a
concrete example, the multinational company specialized in oil and gas services and operating in
Russia, Schlumberger. The organization recruit graduates from diverse branches of studies: IT,
humanities and applied sciences, technical and engineering.

The selection process is divided into several steps: filling-out of the application form, completion of a
test, assessment center, which can be located in Russia or Europe, interview with personnel managers.

All the selection process may last up to six months. After successful completion of these steps, the
candidate is selected to work in headquarters in Moscow or Tyumen - if he applied for a position in
marketing, human resources, and finance department or if he applied for a field position, he will work
in Novy Urengoy, Khanty-Mansiysk, Tyumen or Sakhalin. After three years, field specialist has the
opportunity to move to an office position. The initial hiring salary for graduates starts from $1000 and
includes benefits package.

16
The prime analysis of the concepts and available data aiming the research to consider that active,
transparent and preventive methods of recruitment are orienting the oil and gas industry towards a
social aspect of management, as they point out the importance of recruitment of qualified specialists.
However, considering the soft HR strategy of recruitment as the optimal strategy is not accurate. Lot
depends on the character of the organization and the condition under which it performs.

Under unemployment rate of 5.3% in July 2013 (4.1 million of people) (Fontes, 2013), the transition
to very open recruiting mechanisms can have a negative impact on regional oil and gas organizations:
the number of people wishing to work in the sector will skyrocket, pressure increase on HR department,
discontent for people unable to find a position.

These consequences allow assuming that the most effective recruitment strategy for the Russian oil
and gas organizations is hybrid. The recruitment in this industry is most commonly working under
“succession” principle; even nowadays relevant are hiring actions performed via kinship network,
friendly recommendations.

Despite this, Russian organizations settle partnerships with field-specific universities in Moscow and
regions (Gubkin Russian State University of Oil and Gas, Saint Petersburg Mining Institute, Tyumen
State Oil and Gas University, Ufa State Petroleum Technological University). These partnerships allow
the best students from a range of faculties to do their internships in one oil and gas organization: on-
campus recruiting process.

Russian oil and gas operators companies are showing a mixture of strategies concerning the recruitment
processes, on one side there is still a passive, closed and reactive strategy and on the other side, they
try to adapt to new social realities of the market. As an example, Gazprom until the mid-90s were
committed to non-public HR strategy oriented on recruitment within the internal environment
(Dyatlov, 2000). At the beginning of the 21st century, “first manager” of Gazprom was appointed from
outside the organization (Alexey Miller, CEO since 2001) and the same was done for the subsidiary
companies. These changes were mainly responsible for the organizational transparency. However, as
it was the case with Gazprom, appoint on top management positions people who do not know the
specificities of the industry, might put the recruitment mechanism at risk. Risk in implementation of
transparent HR strategy in an organization, which was operating under closed strategy and all its
attributes: reserve of staff for promotion, system of constant professional training, adequate system of
motivation, social benefits (pension, healthcare) and was oriented on life-long staff recruitment.

Concerning the Russian oilfield service organizations (Eurasia, Permnefteotdacha, MeKaMineft and
other), their social oriented gears of personnel recruitment are under development. Recruiting processes

17
depend on the invested budget, number of available vacancies and on the available time to fill the
position.

Another relevant issue is the insufficient interaction in the recruiting procedure between the companies
and recruiting agencies. Domestic industry often needs to deal with recruitment using its own resources
and mostly by using a checklist of formal requirements: education, skills, and experience.
Organizations are not focusing on ethical, acmeological (Semenova, 2007) and axiological aspects
(Connor, 2006). This research establish several procedures necessary for social oriented recruitment
model and which take into account afore-mentioned aspects:

1) Accounting procedure regarding external business environment and realization of pre-

established human resource strategy. It supposes an acquisition of information on the resources
of an organization, information regarding changes in the external environment (oil prices,
changes in the labour market, etc.). It helps to predict in advance crises, non-payments,
downtime, and of course to plan the needs in the workforce, to determine the appropriateness
for searching new experts, and minimize the possibility of hiring professionals that do not meet
the requirements of the enterprise.
2) Compulsory diagnostic procedure of candidate’s personal-functional profile and its comparison
with the position requirements (acmeological principle (Semenova, 2007)). The basis of this
procedure is the theory of acmeological approach, which analyses personality and professional
abilities of an individual. This approach is an antipode for traditional methods for the evaluation
of competencies, which do not take into account the personality of a candidate. Nowadays, the
employees are one of the factors among technology, financial investments that are able to
increase profits of an organization (Kanter, 1996). Another argument states that a vast number
of available vacancies in Russian oil and gas organizations are distributed “through the buddy
system”.
As consequence, low efficiency in terms of self-fulfilment for the employed individuals. The
study realized by Mugtabarovna (2009), demonstrate that personal-functional profile of
candidates is rarely taken into account during the recruitment procedure:

18
 37.7%

62.3%

No, not included Yes, included

Graph. 1) Are assessments and evaluations of candidates’ personal-functional profile included

as compulsory steps in your organizational recruitment procedure? Survey realized among 1570
employees of Bashkir oil and gas organizations in 2008 (Mugtabarovna, 2009).

3) Evaluation procedure of candidate practical utility towards the organization. The aim is to
understand if the candidate suits the organizational needs.
4) Ethical procedure, which requires the respect of assessed candidate and “primum non nocere”.
Failing to do that will generate a bad image of the organization for future potential candidates.
5) Procedure of optimal timing for taking the final decision. The organization should not endlessly
interview candidates in order to find the ideal one. In the situation of hard competition, the most
successful candidates will be solicited by other organization. Again, the impact on the image
will be considerable, as the potential candidates may imagine that whole processes in the
organization require a lot of approvals.

The majority of oil and gas companies-operators on Russian market have a right approach and start
their recruitment process by forecasting and planning the organizational needs and by analyzing the
current market situation. This strategy has the advantage to be flexible if the situation of an organization
changes regarding the internal and external factors. The existence of this strategy can be noticed in the
publications: “About recruitment policy of “Transneft”” (Nesterov, 2006), “Human Resource Policy
of OAO Gazprom” (Kuzmin, 2003), annual Russian Oil & Gas Outlook surveys published by
“Deloitte” (2013), which not only describe the current situation of the Russian oil and gas industry but
also provide future estimations.

The particularity of the Russian oil and gas industry is that it uses only few available recruitment
tools:

19
1) Recruitment of young graduates from universities, which is one of the most difficult, expensive
and risky methods. However, it stays one of the most efficient. The candidates are usually very
well prepared in terms of theory and practice. As an example, “OOO Vostoknefteprovod”
(Nesterov, 2007) has developed a dedicated program, the aim of which is to recruit local
students for the installation of pipelines in the Far East of Russia. The organization is the main
sponsor of Tomsk State Technical and Arts College. OAO “Transneft” has partnerships with
numbers of vocational colleges, which are preparing specialists for the organization. 800 hours
academic program is divided in two parts – 400 hours of theory and 400 hours of practice. The
company has also partnerships with specialized universities in order to recruit engineers and
high-qualified specialists. According to a recruitment agency Cornerstone (Byhanov, 2007), in
2007 among 15 thousand students profession-oriented to oil and gas, 90% have found a job in
the industry and 30% of whom were employer-sponsored students. The remaining 10%
continue to work in another sector or do not work at all.
2) Selection of candidates who apply for a position in the organization. This method represents
marginal financial expenditures, but its disadvantageous feature is the restricted number of
candidates and the necessity to maintain regularly in reserve the database of potential
candidatures. It also requests many personal data from the candidates, which may be useful in
future. Unfortunately, due to lack of transparency in recruitment procedures in Russian oil and
gas organizations, it is difficult to evaluate the impact of such method.
3) Recruitment via advertisement in mass media outlet. It is one of the most simple and successful
methods of recruiting for vacant positions. Among the advantages - the possibility to receive
numerous responses. According to the studies, each advertisement can generate from 5 to 7
potential candidates (Pass et al., 1999). This tool is mainly used by foreign organizations
present in Russia, joint ventures of foreign and Russian organizations (Fey et al., 1999) but also
by small local oilfield service organizations. Job offers in media from major organizations-
operators are very rare. The reason why the foreign organizations are very active in terms of
recruitment of Russian specialists are:
- Good financial situation, which allows them to use the services of recruitment agencies and
massively inform the targeted audience.
- Excessive costs of expatriate employees.
- The average cost for an expat in Sakhalin or Moscow is $30000 per month only for salary,
without taking into account the car and housing benefits (Borisov, 2006).
- The presence in Russia of a sufficient number of highly qualified specialists whose salary
exigencies are much lower than expats.

20
 - The necessity to know English at the professional level. The foreign organizations experience
much more difficulties in this aspect than Russian organizations. The responsibility for the low
level of linguistic knowledge of the candidates, who apply for technical positions. There are a
number of specialists who worked for Ioukos, Surgutneftegaz or Transneft but only few have
the required level of technical English (RKA-Consulting, 2006).
- Large number of business trips, which require employees to travel very far – Tyumen, Sakhalin.
The passive character of Russian organizations can be explained by the predominance of closed
methods of recruitment. Russian Personnel Association emphasizes that it would be difficult
for a man of the street to be recruited. The majority of Russian oil and gas organizations recruit
through “the buddy system” (RKA-Consulting, 2006).
4) The recourse to recruitment agencies is impractical. Usually their services are used in order to
hire middle and top management or highly qualified specialists. The data shows that 25% of
middle and top managers are recruited via this procedure (Yevtushenko, 2004). The Russian
oil and gas market experience a critical need in managers 30-45 y.o, with a good record of
service and work experience in international projects. These employees are very difficult to
find and they are usually lured away from rival firms. In this case, invaluable help is provided
by recruitment agencies. The research data “Employment market of oil and gas industry,
chemical industry, iron and nonferrous industry” argument this finding. In 2009, with the help
of recruitment agencies, were hired 7.5% of top managers, 27.8% middle managers, 47.2%
qualified specialists, 17.5% are not part of any category mentioned (Rumyantseva, 2006).
5) During the last 5 years, another method of recruitment has exploded – Internet resources.
Nowadays, all major organizations have a webpage where the information regarding the
available vacancies is published. Despite this, the companies are not using on maximum the
opportunities offered by Internet.

The staffing problems for the Russian oil and gas operators companies are also solved via
internal resources. The most commons are the following social methods:

1) Internal reserve of employees ready for promotions. As an example, in 2006 Transneft has
adopted the standard “Charter of activity with the employees reserve”, where is described
in details the selection process for executive positions. Information on candidates for
managerial positions is collected in one unique database from all the subsidiaries
organizations. When it is necessary, the CEO can refer to it and offer the position to the
most suitable candidate (Nesterov, 2006).

21
 2) Incorporate transfers, combination of roles and incitation for overtime. These methods are
seen as an alternative for recruitment of additional workforce. It helps to minimize the
hiring and selection costs and provide a complementary revenue for existent employees.
The shortcoming of this method is the fatigue increase, the lost in productivity, and the
increase of accident injuries related to work.

Alongside with the restricted number of available methods for selection of newcomers, it is important
to notice that recruiting process in numbers of Russian oil and gas organizations is experiencing a lack
of any regular pattern. Lack of procedures is inherent during the selection process and the hire decision
taking.

Important to notice that more and more, the oil and gas organizations are using contemporary methods
of recruitment: participation in exhibitions, conferences, career fairs; by means of its employees (refer-
a-friend), mergers and acquisitions, deployment of advertisement banners. In the study from
Mugtabarovna (2009), the analysis of the corporate documentation and interviews with professionals
has demonstrated that a potential candidate for a role of executive director in Lukoil’s subsidiary has
to demonstrate a relevant work experience of 7-10 years, has to succeed in multidisciplinary testing in
order to evaluate his competencies and provide at least two references. Only after successfully
completing the previous points, he will be admitted for an interview.

The surveying (Mugtabarovna, 2009) also demonstrated that the oil and gas market in Bashkortostan
is conservative in terms of recruitment procedures and social schemes. Shortage of personnel issue in
Bashkir fuel and energy organizations is mostly solved via internal resources, such as employees
themselves or their relatives.

This operating process handle both benefits and disadvantages at the same time. Among positive
aspects, it is important to notice the reduction of spendings for recruitment to minimal level, presence
of organizational citizenship behavior, and decrease of adaptation period duration, employee turnover
and casting errors. At the same time, this recruitment procedure is accompanied by stagnation in new
ideas and the risk of potential accumulation of sinuous mutual relations between the employees.

External recruitment helps to get over these deficiencies. It can be performed in different ways (more
details will be explained below). Currently, the regional oil and gas organizations are employing the
external recruitment only when it is not possible for them to fill an available position with someone
within the organization. It is performed via two main ways: recruitment of graduates from universities
and selection of candidates who applied to join the company. Recruitment through the universities is
done in accordance with the cooperation agreements. For example this type of agreements is set up
between Ufa State Petroleum Technological University and the organizations owned by the investment
22
fund “Sistema” (Bashneft, Ufaorgsintez, Novoil, Ufaneftehim, Ufimskiy NPZ, Bashkirnefteprodukt,
Bashkirenergo).

External recruitment in Bashkir fuel and energy companies has its own specificity – it also includes
traits of internal recruitment methods. For all available positions, the priority is given to the employees’
children or to people recommended by the management. By these means, the oil and gas organizations
on the territory of Bashkortostan employ a limited number of researching and recruitment methods. It
also influences the process of evaluation of candidates’ personality and the final decision.

The recruitment procedure is formal and do not include any proper method for evaluation of individual
aptitudes of candidates. It includes the filling-out of personal data form, interview, medical check and
the final decision. As it can be noticed in the data provided by the survey realized among the personnel
of Bashkir oil and gas industry, very often it is reduced to only two main steps: interview and decision-
making.

23
 Health examination interview 0.4

Recommendations from senior 0.4

management
Introduction to the management 0.4

Intraductory training 0.7

Decision-making on hiring 59

Assessment of test results and final decision 43.9

on vocational aptitude
Medical control 63

Professional suitability assessment (testing) 44.7

Final interview 69.5

References analysis and background check 37.8

Formalities and paperwork 60.7

Graph. 2) Stages of recruitment process in oil and gas organizations (in % of number of
respondents). Survey realized among 1570 employees of Bashkir oil and gas organizations in
2008 (Mugtabarovna, 2009).

The paper work and the health examination do not have any impact on the final decision. They can
even finalize all the hiring process. This is not a contingent probability, as it is mainly due to the focused
specialization of human resource department, restricted recruitment processes and domination of
internal recruitment in regional oil and gas organizations.

The recruitment procedure in Russian regional oil and gas organizations can be qualified as restricted,
reactive and passive HR strategy. It can be confirmed by the lack of informational transparency in
Bashkir fuel and energy companies. Information regarding available vacancies that exist within the
organizations, about personnel reserve and about changes in corporate structure (except for the top
management) is impossible to obtain from HR department of concerned organizations, neither from
regional employment offices nor from the online and regional media. It was already reported and
highlighted in media and other researches: “insufficient management decisions, disaffection towards

24
minority shareholders, and lack of transparency in communication have for consequences the
capitalization of Bashkir fuel and energy companies” (Razuvaev, 2007).

The regional Russian organizations abjure to communicate any information regarding their compulsory
reporting requirements and regarding their activity (Baranova, 2009). As it indicates Mugtabarovna
(2009) - the fact that majority of HR personnel have declined to participate in the surveying regarding
the recruitment strategy employed by their organizations, certifies the lack of transparency in Russian
oil and gas industry.

The second point is the lack of a clearly developed planning and human resources strategy in the
organizations of Bashkir fuel and energy complex. These organizations are mainly oriented on
economic growth and their survival is the priority, because of the instability of oil prices on the market.
The competition is rude against foreign MNCs. The industry was hardly hurt by the crisis in 2008-
2009.

Important factor during the recruitment process is the career planning, which takes into account the
lateral reassignments and promotions for the employee. An employee needs to know his short term and
long-term perspectives, but also the expected performance from him in order to achieve career
progression. Career planning is one of human resources aspects. These axiological preferences include
the supremacy of Unitarianism on Pluralism, compatibility of managerial interests with the employees’
interests. In this framework, conflict situations are explained by external circumstances and are
assimilated as an attempt to challenge the authority of management in the enterprise. The distinguishing
features of human resource management methods imply the following:

1. Usage of scheduling method in order to solve business problems.

2. Integration of human resource management systems in global corporate strategy.
3. Integration of human resource management strategy with current business strategy.
4. Attitude towards personnel as to a strategic resource, which helps to reach a preponderant
position in front of the competitors.

According to the data provided by the survey among the employees of oil and gas organizations in
Bashkortostan, 69.9% plans to be promoted.

25
 30.7%

69…

No Yes

Graph. 3) Are you expecting to have a career progression with your current employer? (In % of
number of respondents) Survey realized among 1570 employees of Bashkir oil and gas
organizations in 2008 (Mugtabarovna, 2009).

26
Recommendations based on the findings:
Following these observations, it is decided to provide recommendations concerning the optimization
of recruitment process in Russian oil and gas organizations.

First, it is advised to reinforce, further develop and work out in detail the human resource planning in
Russian oil and gas organizations. On the recruitment stage, it signifies the necessity to consolidate the
process via adequate standards, methods, decisions and documentation, which will help to recruit the
employees who are able to solve the issues and have necessary level of theoretical and practical
knowledge. The second proposition concerns the reinforcement of recruitment lanes. The adequate
model is provided by foreign organizations, which are employing their own methods combined to the
ones usually in use in Russia:

- In “Sakhalin Energy” works the program “refer-a-friend”. The employees, who are
recommending their friends to the employer, are receiving a reward incentive. This is much
cheaper than to advertise in media or work with recruitment agencies. The efficiency of this
method is confirmed by the data survey among 300 managers from different American
organizations. The most efficient methods are classified as following: recommendation of
friends (24%), recommendation of recruitment agencies (23%), advertisement (21%), other
sources within the organization (13%), self-requesting letters (7%), self-requesting calls (7%)
(Kibanova, 2002, pp 311-313).
- Utilization of Mergers & Acquisitions transactions, with the intention of acquiring technology
and talents. Mergers and Acquisitions are popular methods for competitive growth in oil and
gas business and increase the chances of access for reservoirs. These processes are widely used
by Russian and foreign organizations. M&A Predictor, provided by KPMG (2010), reflects the
dynamics of the market worldwide in accordance with the industry sector.

Graph.4) Exploration & Production sector M&A activity 2005-2010 YTD. Note: includes only
oil and gas E&P transactions; only for deals from $100 million to $1 billion (KPMG, 2010).

27
 - The main specificity of Russian M&A is that organizations are mainly using it in order to
reinforce their own economic positions. The aims and targets for foreign organizations vary.
“Mergers & Acquisitions” are used also to attract highly-skilled specialists, regarded as
essential component for economic growth of the organization (KPMG, 2012).

- Large scale use of Internet. The main advantage of this tool is its relative cheapness and capacity
to communicate to a large audience. Nowadays, each foreign oil and gas organization has a section
on its website, regarding the available vacancies (Shell, 2013; ExxonMobile, 2013). These sections
include information for graduates or experienced professionals;

- Internal job offer posting in internal communication Medias;

- Participation in career fairs, conferences, exhibitions in order to identify potential candidates.

Third, it is urgent to take steps in the application of methods concerning the evaluation of candidates.
In the Western organizations as it notices one of the Junior Recruiters of the oilfield service company
in Russia:

There exists three-tier recruitment system, which includes test of abilities and interview with the
management. This approach helps to evaluate professional and personal competencies of candidates and
generate an overall mark. In other words, to analyze their knowledge, competencies, abilities,
intelligence, affection, interpersonal relations, management behavior and stereotypes that will help them
to deal with their future professional duties.

Foreign oil and gas organizations do the evaluation process already at the research stage. In the
advertisements for vacancies, the expected level of education, working experience and level of English
are mentioned as well as the required personal qualities. They are as important as the other
competencies. On the Shell’s website (2013), the candidate can read the following:

“You’ll be evaluated on your capacity for analysis, decision making and creating workable solutions.
We value your drive and enthusiasm, resilience and confidence. Equally important is your ability to
develop positive relationships and communicate well at all levels.”

The analysis of the data from Mugtabarovna’s survey (2009) among the oil and gas organizations
shows that the main expectations from oil and gas industry employees are: accuracy (51%), absence of
harmful habits (37%), efficiency (23%). For technical engineering positions is important leadership
(62%), communication skills (54%), ability to work and take decisions in critical situations (33%),
specific skills and abilities (28%), analytical skills (21%).

28
Assess the candidate level of qualification is quite difficult by using only one of the methods.
According to the research, the use of the following methods is strongly recommended:

• Preliminary selection process (collection and analysis of the personal data: CV, certificates,
starter form, etc.).
• Collection and analysis of the references regarding the candidate (previous employer, teachers,
etc.).
• Realization of individual assessments in order to evaluate professional aptitudes.
• Collective selection processes.
• Experts’ evaluation.
• Individual interviewing (case study, biographical)

The Selection process should depend on position the candidate applies for. The adequate methods have
to be selected in order to identify if the candidate suits the position and the corporate interests. The
management and the HR personnel need to be sure the selected candidates fully corresponds to the
adopted selection criteria and satisfy the organizational needs.

The last recommendation concerns the decision-making regarding recruitment and the feedback
between employees and employers. The feedback provided by the recruited employee will help to
evaluate his degree of satisfaction regarding the workplace, the nature of the coincidence of wants
between the employee and the organization and to develop an incentive program with the aim to retain
the most qualified and ambitious employees. If an organization decides to take into account all these
findings, it will be collateralized with the most skilled workforce.

Concerning the incentive program, the research based on the survey realized by the author, provides a
financial analysis and advises Schlumberger Limited Russia on the salary strategy to adopt. During the
study it was found that 35% of the respondents consider their salary too low. The policy of the company
is to take the position on the middle of the market. However, as per arguments of this research, the
majority of companies operating in oil and gas industry risk to experience a shortage of skilled
workforce. Schlumberger is an oilfield service company that means it does not generate its revenues
from the oil price on the market. For this reason it cannot propose the same type of salaries for its
operators as per Graph. 7. However, in order to lead on the oilfield services market it has to consider
an increase from 10 to 20% for the key field positions in order to attract talents (Graph. 8).

29
 Schlumberger Russia
146 400
55 900 103 200
47 400 42 100 121 800
81 500 89 666
23 80021 100 23 100 34 700 65 714
24 700
25 600
Product development engineer
HR Administrator
Junior Manager
Office Administrator
Trainee

Geophysist

Secretary

Sales Manager

Mechanician-cementer

Field Engineer

Senior Accountant
Repairman

Operator

Senior Engineer

Junior Engineer
Average salary in RUB

Graph.5) Average salary among key positions in Schlumberger Russia, 2013 (Source: data
survey from the author).

The next chart represents the average wages for the employees of companies-operators performing on
Russian market:

30
 141 400
56 350 58 100 98 150 99 150 98 100 99 000
55 800 80 541
23 800 51 400
23 000 25 100 34 540 42 600
Product development…
HR Administrator
Junior Manager
Office Administrator
Trainee

Geophysist

Secretary

Sales Manager

Mechanician-cementer

Field Engineer

Senior Accountant
Repairman

Operator

Senior Engineer

Junior Engineer
Average salary in Russian oil and gas operator-companies (In RUB)

Graph.6) Average salary among key positions in Russian operator-companies, 2013 (Source:
http://gderabotaem.ru/).

Proposed salary increase diagram for Schlumberger Russia

146 400
121 800
103 200
89 650 98 632
55 900
52 140 72 285
46 310
41 640
23 800
21 100 23 100 29 640 30 720
Product…
HR Administrator
Junior Manager

Mechanician-…
Office Administrator
Trainee
Geophysist
Secretary
Sales Manager

Field Engineer

Repairman

Senior Accountant

Operator

Senior Engineer

Junior Engineer

average salary in RUB proposed salary in RUB

Graph.6) Average proposed salary among key positions in Schlumberger Russia.

31
Conclusion of the research:
From the theoretical aspect of the humanistic approach, the essential factor of human resource
management is the individual. For this reason the research aims to understand the human resource
management as a social-oriented activity with a deliberate and conscious impact on the employee. It
takes into account motivation, interpersonal relations, and system of values of the employee, who is
the social constituent of an organization and needs to be thoroughly developed in order to achieve
strategic goals of the company. Nowadays can be observed the development of humanistic “soft” HR
strategy in Russian oil and gas organizations. However, the development speed and intensity are clearly
insufficient. The reason lies in the barriers present in the oil and gas industry and the personnel,
employed in this sphere. Personnel Departments and HR Managers of Russian oil and gas organizations
are not developing the systems such as career planning, learning and development and retention of
personnel; not clearly built motivational policy in the oil and gas industry; significant part of top and
middle managers of oil and gas companies have only technical education.

The lack of transparency in Russian system of human resource management complicates the
implementation of social mechanisms, as well as the intensive changes in the external environment,
the increasing competition and the instability of market prices for oil and gas. The above mentioned
issues indicate that modern Russian oil and gas companies need a new philosophy of management and
have to transit to a socially-oriented model of HRM. This model adds transparency to the organization,
focuses on the motivation of the employees and improves the working activity.

Recruitment is considered as an interaction between two large and complex social systems
(organization personified by the employees on one hand and the candidates who bear the unique
personal and professional aptitudes.

Nowadays, the Russian oil and gas companies are actively using the mix of their own and foreign
experience in their recruitment strategy. It is demonstrated in this research that open, preventive and
active strategies in the recruitment are responsible for the recruitment of qualified personnel. However,
consider only these strategies is not the ideal solution. The strategies should be developed in accordance
with the specificities of the organization. It allows to make an assumption that hybrid mechanisms of
recruitment and HR management are the most efficient and viable.

Social oriented methods of recruitment include a comprehensive study of the labor market (collection
of data regarding the unemployment rate, average wages in the sector, competitors); planning of
recruitment process needs to be in accordance with changes in internal and external environment;
headhunting process of the most deserving candidates; analysis of individual personality of candidates;

32
decision-making on the recruitment and realization of this decision; feedback from the new hire to the
employer.

Systematization of modern recruitment methods in oil and gas organization made possible to
distinguish two concepts. External recruitment: recruitment of graduates from universities and
colleges, selection of candidates who apply for the job, recruitment through advertising campaigns in
mass media and recruiting agencies. Internal resources: utilization of internal employee reserves for
promotions, company-internal transfers, working more than one job and incitation for overtime.

The most efficient methods of recruitment in oil and gas organizations are: preliminary selection
process (collection of data regarding the candidate); reference requests and background checks for the
potential employee (previous employer, teachers, etc.); evaluation of competencies; collective
interviewing process; experts evaluations; interviews.

The study revealed that the policy of HR management in Russian oil and gas organizations needs to be
improved and adjusted. In accordance with the proposed set of measures mentioned previously in order
to improve the efficiency and the productivity of the organizations

Concerning the retention and motivation factors regarding the employees, their social impact can be
analyzed with another research.

33
Reflective statement:
The aim of this project is to develop the understanding of HRM practices in Russia. The choice of oil
and gas industry has nothing random. The revenue from oil and gas represents around 30% of Russian
GDP (Aron, 2013) and the country is one of the largest oil and gas producers in the world. However,
the outdated soviet management principles persist in the Russian organizations. The free market
economy adopted by the country in the beginning of 90s make these methods of management
inefficient. The organizations have to handle extra responsibilities, which were previously ruled by the
government. From the practitioner perspective, in order to increase productivity and efficiency of
Russian oil and gas organizations it is proposed to adopt an approach to human resources management
from the sociological point of view, where an employee is considered first as an individual. The
expected results of this approach is the increase in employee motivation, involvement, and quality of
output. From an academic perspective the aim is to share knowledge and findings realized by Russian
academics concerning the HR practices in Russia and especially in oil and gas industry, with other HR
theoreticians, as the majority of studies are only available in Russian.

The aim of the literature review was to combine the Western academic researches concerning the
humanistic approach to HR with the field work made in Russia. However, the lack of concrete
examples of theory applied into practice has added an extra difficulty to the realization of this critical
analysis. Another extra difficulty was concerning the interpretation of available data. Some available
sources were too old and not relevant any longer, but still indispensable for the logic structure of the
research. It required to chase the information from other sources in order to have the most recent data.
The access to internal corporate information from oilfield services MNC facilitated the research.

Being physically located in Russia would also facilitate the research. The surveying and interviewing
could be directly conducted from the concerned individuals. It will provide more accurate results than
interpretation of 3rd party data. Unavailability of relevant documents in electronic format was also
penalizing. The core of the research was built around the survey realized by Mugtabarovna (2009)
among 1570 employees of oil and gas industry in Russia. The large survey panel and the wide range
of covered topics by Mugtabarovna, was very helpful for the interpretation of theoretical findings.

In the future, this research should be done internally within one organization, in order to see the real
practices and results. This will help to have the better understanding on why certain things are done as
this and not in a different way.

34
APPENDIX A – MANAGEMENT PRINCIPLES APPLIED IN SOVIET ORGANIZATIONS

Principle Subject-matter of the principle

Democratic centralism Centralized management of the national economy and hands-off policy for
the cooperatives.

Individual Severe discipline in the labour process, absolute subordination to the

responsibility and management
collective character Cooperation based on the extensive participation of the employees in
controlling
processes.
Cohesion between Political targets are determined by the economic situation, its level of develop-
political and facilities ment and ruling legislation. The management is subordinated to the realization
administration of
the plan.

Branch and spatial Production, which generates economic conditions for people is mainly
approach managed
at branch level.
Infrastructure, which determines the quality of people’s life – principally by
territorial bodies.

Planned management Determination of directives, cadencies and proportions on extended period for
production development.

Materialistic and moral Satisfaction of employees needs with materialistic and moral incentives,
incentives regarding the quantity and the quality of their work.

Scientific character Science-based production management

Commitment Each employee has to know his rights and duties but also his individual liability
to the processes.

Personnel Each employee has to be recruited in order to perform the given tasks with
administration maxi-
mal efficiency.

Cost effectiveness Effective conjunction of human and non-human resources results in

optimisation
of costs and production process.

Continuity of business The conjunction of economic processes forms the basis of variation in quantity.
decisions

35
APPENDIX B – HARD AND SOFT HR MANAGEMENT STRATEGIES APPLIED TO THE
RECRUITMENT PROCESS
Hard HR Management Soft HR Management

Closed organization: Open organization:

Organization is oriented on recruitment of the Organization is transparent for potential
workforce only from the bottom level. employees at any level.
Replacement of the available managerial It is possible to join any position within the
positions is done only from the available staff. organization.
Little empowerment or delegation. The organization is ready to employ any
specialist who has the required qualification
Minimal communication, from the top down.
without taking into account his past working
experience.
Strong and regular two-way communication.

Passive organization: Active organization:

The management does not have an agenda The organization has an agenda and tools,
regarding the personnel. which are able to influence the scenario.
The organization does not use the evaluation The human resource department is able to
of recruitment needs. develop anti-crisis programs, permanently
conduct a monitoring of the current situation
Appraisal systems focused on making
and orient the programs in accordance with the
judgements (good and bad) about staff.
external and internal environment.
The management works in urgent reaction
Employees are empowered and encouraged to
mode in order to deal with conflict situations,
seek delegation and take responsibility.
often without worrying about the
consequences. Appraisal systems focused on identifying and
addressing training and other employee
development needs.

Responsive organization: Preventive organization:

The management controls the symptoms of Diagnostic tools in order to evaluate the
adverse conditions, the causes and the further situation on a middle term.
development of the crisis in the human
The development agenda of the organization
resource procedures.
includes short and middle term estimates for
Make steps in order to identify the point of staffing requirements.
origin of the conflict.
The main issue is the development of
Oriented on etiological cue. dedicated career-oriented projects.
Short-term changes in employee numbers Strategic focus on longer-term workforce
(recruitment, redundancy). planning.

36
LIST OF REFERENCES:
Ageev, A. I., Gratchev, M. V., & Hisrich, R. D. (1995). Entrepreneurship in the Soviet Union and post-
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