Part 2. German Khan on Leadership, Business, Apprentices and Himself

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Talent Equity Exclusive: Tell us about your managing approach. How do you deal with all the business processes, procedures and meetings involved?

German Khan: There are some processes that I see as extremely bureaucratic. On the other hand, I believe that it is necessary to have a reasonable balance between entrepreneurship and bureaucracy. The most important skill is being able to find this balance and build on it in a way that suits those involved. I am a pretty flexible person anda team player. I believe that if we have agreed on certain rules, we need to follow them, regardless of whether you are a shareholder oran employee…

I try to apply one simple principle: I say, hey guys, let’s try to structure these processes in a way that makes them as natural for everyday life as possible. If someone evaluates his success by the amount of profit his company has made, then let’s build a compensation system that coincides with his frame of mind. You could of course come up with a complex key indicator performance system, but he wouldn’t see this as conforming to his frame of mind. The simpler one’s management systems are the fewer conflicts and imbalances there will be.

«I began to organize processes my way and was convinced that this worked very well.»

In my work I have various task forces. There are issues related to my position as an owner of this company and other Alfa-Group businesses. We have a large number of connections, contacts and people, so if someone turns to me for advice or help, I always find time for them.

Then I have my responsibilities to the company as executive director. Even if my direct participation isn’t needed, my advice or approval on a certain position may be. This is at my colleagues’ request and always in the context of discussion in a personal meeting.

The second set of issues involves running the company through the executive management, which consists of five people. Company management here is done in a relatively democratic manner, which has both benefits and shortcomings, not to mention demands time and involvement. If people’s positions don’t coincide with each other, you need to find and push arguments, hear others out, and in the end come to a compromise. In this I believe I speed up the process.

Third, there are issues related to our global strategy: where the company needs to go, what it needs to do and how it needs to do it. This requires entrepreneurial skills because these are projects concerning start ups, entering new regions and new products. This requires a relatively complex negotiating process, since when you start something, there is never a shortage of criticism such as “I don’tbelieve it,” “I don’t know,” “it won’t be like that,” etc. You need to overcome this opposition, find the right people, ask the necessary questions, get the right answers, come to an agreement and show how and what needs to be done. You won’t see any results if you are just to sit in the corner and give orders.

«One of the most important qualities that an executive can have is knowing how to pick out the right people for your business.»

At times I am forced to influence issues that aren’t among my responsibilities. For example, I fully realize that our company is long over due for some serious changes in upstream management to improve efficiency with new internal resources, a more distinct focus on economic viability and searching out a typical decisions. I am currently spending a lot of time on this, talking with the upstream and production assets management, as well as external consultants. Work on this issue may not directly concern me, but I believe that it is relevant for the entire company. Having said that, I don’t offer ready solutions right off the bat. Everything I say is more in the spirit of, “let’s look for a solution together, and let’s not be afraid to say that there may be a problem that we don’t know how to solve.” This is obvious because there are no standard algorithms, rather selections, like a selection of soup – and you may not be able to prepare what your family needs from this soup selection. I am spending a lot of time on this since I see it as an important priority.

Talent Equity Exclusive: What do you see your priority responsibilities to be as an executive?

German Khan: First, my role is to speed things up. Moving is something I love and that I think I do well. Second, providing solutions to development issues and, in part, making judgments on how to move forward with the company’s global growth strategy.

Talent Equity Exclusive: How do you decide what you are to do yourself and what your subordinates are to do? Many TNK-BP employees believe that of the entire executive management, you are most involved in details and always in the know about everything going on in the company.

German Khan: I would say that this is based on pure instinct. I just try to understand what is most important at each stage and concentrate on that. Some minor issues naturally come up along the way that I mostly delegate and return to periodically. I’ll give you an example. No one doubts that security for a company like ours is very important. When our company was only taking shape 10 years ago, I had to take on this issue, primarily when searching for employees. My main goal at the time was to find someone who was the right fit for us. As fate would have it, I was lucky enough to find mister Kondrashov, who has now been heading up this initiative for 8 years now. He was one of the youngest generals in the Ministry of Internal Affairs, having created and headed Russia’s court bailiff’s service. He and I had a good talk when we met after he had come to our company as an advisor and made some sensible suggestions. He then became an executive. He and I worked pretty close together for three years putting together a system. Now we have several thousand people working in our security service. We meet up about 2 times a week and I keep out of his business since he has an autonomous subdivision. He understands what the company’s goals are and makes internal changes.

Generally, I think knowing how to pick out the right people for your business is one of the most important qualities that an executive can have. A team always needs new blood. Having said that, trust is an important element as well. In Russia people always say “I can’t appoint him to such an important position because I don’t know him, I have never worked with him before and I don’t trust him. ”What does that mean? If someone is professionally fit for the job, you need to take him on. There are certain select methods for finding out whether you can trust this person or not.

Talent Equity Exclusive: How do you hire employees? What do you pay attention to?

German Khan: A person’s resume, a selection of necessary professional qualities and an understanding of how intelligent someone is and how much he reacts to certain things during an interview. It’s all pretty simple. For example, the applicant and I have spoken for a bit and I make him an offer, to which he responds “how much time do I have to think?” I respond by saying “I don’t know. As much as you want. ”This is a test in itself, for if he thinks for 2 months, this is a shortfall, whereas if he thinks for 2 days, this is better. I think that manager positions should be taken up by relatively strong, independent people that move independently and don’t need daily direction from me. They should definitely be professional and have remarkable leadership skills.

Talent Equity Exclusive: How far do you have to go to be confident that business processes will begin to work?

German Khan: I understand when it is time to stop. This happens when I feel satisfaction that a straight forward framework has been set up. When experimenting, I also use one simple principle – anything and everything difficult is simplified as much as possible while trying to build up processes that are the most natural to everyday life. Only then will conflicts and imbalances be brought to a minimum. Not too long ago some consultants approached me and said “for the entire month we analyzed the situation, did questionnaires and took seventy interviews…” “Great, is that it?” “Not at all. Now we need a month to prepare proposals.” Let me tell you one thing: that’s not how things work. If you worked for a month and interviewed seventy people, then you should have a certain hypothesis.

Talent Equity Exclusive: What’s more important for an executive: natural inclination to being a leader orfunctional knowledge? To what extent can someone operate marketing, finances, afactory, etc.?

German Khan: I think that leadership qualities are absolute priorities, in which case one should also have a certain functional knowledge base, especiallyin a large company.

Talent Equity Exclusive: How has your leadership style changed over 20 years?

German Khan: I can’t say it has changed dramatically. I don’t feel this is the case. My employees say that my style has become more soft and calm. Thisis most likely influenced by the environment I am in.

This publication is part of the interview with German Khan from Talent Equity Exclusive "German Khan on Leadership, Business, Apprentices and Himself".

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