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Spain
Spain Pedro Nueno,
LESE
Summary The last decade 1973-1983 has been a period of rapid and deep change in Spain. The advent of democracy gave priority to political issues over economic problems, in a period of worldwide recession. In a few years, Spain went from a continuous and controlled country to a complex, turbulent, heterogeneous environment, where management was constrained by a wide variety of factors. The result has been a deterioration of the business climate, pessimism and problems of adjustment to the new situation. Managers, as a reaction, seem to be focussing their capabilities on shortterm objectives. There is a lack of long-term commitment to products, companies and employees. A large number of managers feel defeated. There is, however, some hope. A younger generation of managers that have had access to management education seem to be accepting changes and there are signs that they could in the near future reverse the situation and exploit the opportunities available in the country.
These ingredients which can only be the result of a serious research effort, would be the basis of high-quality educational programmes with truly European personality. During the last decade in Spain the institutions had to be designed in such a way that they served the desires of most Spaniards and were set into operation by inexperienced leaders within a difficult context. As a result the weak and changing governments that inaugurated the democracy saw some variables going out of control (inflation, public spending), while organized labour and other segments of society requested all kinds of social benefits. As one could expect, the emerging leaders gave absolute priority to political issues related to institutional design and construction. The first official reaction to the energy crisis, for instance, was the National Energy Plan of Spain, and it appeared in 1979, six years after the problem was evident; even so, this plan needed immediate updating and corrections. The re-industrialization or restructuring programmes for industry - requested by industrial leaders from the early 1970s as a reaction to overcapacity - started to appear in the early 198Os, but in 1983 many industries had not yet seen their programmes approved by the government.
In addition to the changes that This may be a good time to renew the management practice worldwide European contribution to management the 1970s and 198Os, managers education and development (what is had to bear the impact on the peculiar to European management, what economy of the socio-political successful companies in Europe have in by democracy. In common, what they do differently from v brought summary, some of these changes American and Japanese companies). Shift From:
To:
A protective philosophy towards business A light taxation system with tolerance for tax evasion A regulation-free environment
A gradually
unprotective
affected during in Spain Spanish changes a quick were:
approach
A heavier taxation system with severe punishment for tax evasion A growing degree of consumer, pollution, etc. regulations, coming from a variety of regulating bodies: central government, autonomous governments, municipalities, etc.
89
Union
activity
forbidden
Aggressive unions, with CC00 (Comisiones Obreras) related to the communist party and ideology, and UGT (Union General de Trabajadores) related to the socialist party and ideology, as the most important unions
A long period of very fast growth (over 7 per cent)
Full employment Negative interest rates (below the inflation rate)
Positive interest rates (four to five points over the inflation rate)
A strong peseta (about 70 pesetas to the dollar at the beginning of the past decade)
A weak peseta (about 140 pesetas to the dollar in (1983)
Room for almost everybody in the market with healthy profits
Fierce competition bankruptcies
A good image associated business
A negative image associated with business. Business is blamed for social differences and economic problems
with
with
frequent
A uniform domestic environment: same regulations, same authorities
A heterogeneous domestic environment. (The autonomous government of one region, for instance, might decide to give economic assistance to a company, in order to protect employment in that area. But this company might be competing with companies located in other regions that might or might not receive comparable help)
A continuous ideology with certainty about environmental aspects such as laws, international relations
A changing, or potentially changing, ideology in power, with resulting uncertainty about the direction of laws and international relations
These changes were implemented by leaders with limited experience in government, administration (both at central and autonomous levels), municipalities, and unions, and an enormous growth of bureaucracy took place. Furthermore, many of the new political and union leaders and bureaucrats owed their prestige to their accomplishments pulling their organizations from underground fighting to legalization and then to power positions, but their ability as administrators had not been an important criterion for establishing them in their
90
A period of sta,gnation (or stagflation, since inflation never was less than 12’per cent, and reached a peak 27 per cent in 1977) One of the bigger unemployment rates within Europe
new jobs. As one could expect, some experienced bureaucrats and public administrators lost their jobs for political reasons. A few additional ghosts that contribute to make the picture gloomier are: the Basque terrorism, that has an anti-business component; the threat of nationalizations, resulting from the recent expropriation by the socialist government of the largest private group in the country; the possibility that a failure to get any progress in the negotiations to join the EEC might generate an arrogant walk away from an inexperienced and
shy diplomacy that seems to be more comfortable when dealing with lessdeveloped nations; and the current crisis in Latin America that is the natural area for international expansion of Spanish business. Within this environment, there is no doubt: today Spanish managers - both public and private - feel defeated. This feeling has immediate consequences: managers today tend to concentrate their efforts on survival, to avoid risks, and to look with scepticism at anything requiring a long-term strategy. Businessmen to a great extent have become speculators, their commitment to their companies, their products and their employees is surpassed by their interest in short-term profits, finding advantageous ways of selling their businesses, avoiding hiring employees and other than strictly necessary investments in plant and equipment. R&D expenses, at a 0.4 per cent of the GNP, are the lowest in Europe, and this is a clear sign of this lack of trust in the future. It is possible to expect, however, that the current feelings of defeat might not necessarily be shared by a second generation of entrepreneurs, business executives and political leaders that might play soon a relevant role in the Spanish society. As soon as the convulsions of the social change are over and the pessimism of those who are still hankering for the past as well as the feelings of retaliation of those who fought underground are tempered, and when the cool analysis of professionals having accepted the new situation plays a more important role, the prospects might change drastically. The fact that a few Presidents of large companies seem to be proud that most managers in their organizations have not received formal management training (nor university education in some cases), considering that plain experience is the key to success (most largest banks for instance could be included in this category) is an anachronism that is not accepted by a younger group that looks
with respect to the accomplishments of foreign companies, while trying to adjust to the Spanish environment management concepts and methods developed elsewhere. This younger group is openminded about the need to accept participative managerial approaches, management education and development (to which many have had access), open competition and international economic integration. Similarly, there are a growing number of people within political parties, in the administration, and in unions now convinced that to spend some time in jail during the forty years of dictatorship, for instance, is not enough qualification to manage today’s complex problems. It might still take a few years, perhaps as much as the rest of the decade of the 198Os, for this new generation to have its opportunity. A country with a young and educated population, a large market, agriculturally rich, with good entrepreneurial resources, with a peculiar culture and creativity, and with excellent international links in wide markets where its presence is relevant (Latin America), has challenges that once the deep changes brought by democracy are digested, might become the power that dissipates the current fog of pessimism and defeat. Unfortunately, if we consider only the current situation, the contribution of Spain to the overall European picture is very poor: Spanish management today feels defeated. Spanish managers, however, could learn a lot from Europe, now that the Spanish environment has come closer to other European countries. The period of rapid changes within Spain have forced management schools to adapt flexibly in order to serve the needs of domestic managers. The development of innovative approaches has been necessary and it is possible to say that the difficult times have strengthened the individual personality of the leading institutions. This may be a good time to review the European contribution to management education and development, what
91
is peculiar to European management, what successful companies in Europe have in common, what they do differently from American and Japanese companies. These ingredients, which can only be the
92
result of a serious research effort, would be the basis of high-quality educational programs with truly European personality.
LESE
Summary The last decade 1973-1983 has been a period of rapid and deep change in Spain. The advent of democracy gave priority to political issues over economic problems, in a period of worldwide recession. In a few years, Spain went from a continuous and controlled country to a complex, turbulent, heterogeneous environment, where management was constrained by a wide variety of factors. The result has been a deterioration of the business climate, pessimism and problems of adjustment to the new situation. Managers, as a reaction, seem to be focussing their capabilities on shortterm objectives. There is a lack of long-term commitment to products, companies and employees. A large number of managers feel defeated. There is, however, some hope. A younger generation of managers that have had access to management education seem to be accepting changes and there are signs that they could in the near future reverse the situation and exploit the opportunities available in the country.
These ingredients which can only be the result of a serious research effort, would be the basis of high-quality educational programmes with truly European personality. During the last decade in Spain the institutions had to be designed in such a way that they served the desires of most Spaniards and were set into operation by inexperienced leaders within a difficult context. As a result the weak and changing governments that inaugurated the democracy saw some variables going out of control (inflation, public spending), while organized labour and other segments of society requested all kinds of social benefits. As one could expect, the emerging leaders gave absolute priority to political issues related to institutional design and construction. The first official reaction to the energy crisis, for instance, was the National Energy Plan of Spain, and it appeared in 1979, six years after the problem was evident; even so, this plan needed immediate updating and corrections. The re-industrialization or restructuring programmes for industry - requested by industrial leaders from the early 1970s as a reaction to overcapacity - started to appear in the early 198Os, but in 1983 many industries had not yet seen their programmes approved by the government.
In addition to the changes that This may be a good time to renew the management practice worldwide European contribution to management the 1970s and 198Os, managers education and development (what is had to bear the impact on the peculiar to European management, what economy of the socio-political successful companies in Europe have in by democracy. In common, what they do differently from v brought summary, some of these changes American and Japanese companies). Shift From:
To:
A protective philosophy towards business A light taxation system with tolerance for tax evasion A regulation-free environment
A gradually
unprotective
affected during in Spain Spanish changes a quick were:
approach
A heavier taxation system with severe punishment for tax evasion A growing degree of consumer, pollution, etc. regulations, coming from a variety of regulating bodies: central government, autonomous governments, municipalities, etc.
89
Union
activity
forbidden
Aggressive unions, with CC00 (Comisiones Obreras) related to the communist party and ideology, and UGT (Union General de Trabajadores) related to the socialist party and ideology, as the most important unions
A long period of very fast growth (over 7 per cent)
Full employment Negative interest rates (below the inflation rate)
Positive interest rates (four to five points over the inflation rate)
A strong peseta (about 70 pesetas to the dollar at the beginning of the past decade)
A weak peseta (about 140 pesetas to the dollar in (1983)
Room for almost everybody in the market with healthy profits
Fierce competition bankruptcies
A good image associated business
A negative image associated with business. Business is blamed for social differences and economic problems
with
with
frequent
A uniform domestic environment: same regulations, same authorities
A heterogeneous domestic environment. (The autonomous government of one region, for instance, might decide to give economic assistance to a company, in order to protect employment in that area. But this company might be competing with companies located in other regions that might or might not receive comparable help)
A continuous ideology with certainty about environmental aspects such as laws, international relations
A changing, or potentially changing, ideology in power, with resulting uncertainty about the direction of laws and international relations
These changes were implemented by leaders with limited experience in government, administration (both at central and autonomous levels), municipalities, and unions, and an enormous growth of bureaucracy took place. Furthermore, many of the new political and union leaders and bureaucrats owed their prestige to their accomplishments pulling their organizations from underground fighting to legalization and then to power positions, but their ability as administrators had not been an important criterion for establishing them in their
90
A period of sta,gnation (or stagflation, since inflation never was less than 12’per cent, and reached a peak 27 per cent in 1977) One of the bigger unemployment rates within Europe
new jobs. As one could expect, some experienced bureaucrats and public administrators lost their jobs for political reasons. A few additional ghosts that contribute to make the picture gloomier are: the Basque terrorism, that has an anti-business component; the threat of nationalizations, resulting from the recent expropriation by the socialist government of the largest private group in the country; the possibility that a failure to get any progress in the negotiations to join the EEC might generate an arrogant walk away from an inexperienced and
shy diplomacy that seems to be more comfortable when dealing with lessdeveloped nations; and the current crisis in Latin America that is the natural area for international expansion of Spanish business. Within this environment, there is no doubt: today Spanish managers - both public and private - feel defeated. This feeling has immediate consequences: managers today tend to concentrate their efforts on survival, to avoid risks, and to look with scepticism at anything requiring a long-term strategy. Businessmen to a great extent have become speculators, their commitment to their companies, their products and their employees is surpassed by their interest in short-term profits, finding advantageous ways of selling their businesses, avoiding hiring employees and other than strictly necessary investments in plant and equipment. R&D expenses, at a 0.4 per cent of the GNP, are the lowest in Europe, and this is a clear sign of this lack of trust in the future. It is possible to expect, however, that the current feelings of defeat might not necessarily be shared by a second generation of entrepreneurs, business executives and political leaders that might play soon a relevant role in the Spanish society. As soon as the convulsions of the social change are over and the pessimism of those who are still hankering for the past as well as the feelings of retaliation of those who fought underground are tempered, and when the cool analysis of professionals having accepted the new situation plays a more important role, the prospects might change drastically. The fact that a few Presidents of large companies seem to be proud that most managers in their organizations have not received formal management training (nor university education in some cases), considering that plain experience is the key to success (most largest banks for instance could be included in this category) is an anachronism that is not accepted by a younger group that looks
with respect to the accomplishments of foreign companies, while trying to adjust to the Spanish environment management concepts and methods developed elsewhere. This younger group is openminded about the need to accept participative managerial approaches, management education and development (to which many have had access), open competition and international economic integration. Similarly, there are a growing number of people within political parties, in the administration, and in unions now convinced that to spend some time in jail during the forty years of dictatorship, for instance, is not enough qualification to manage today’s complex problems. It might still take a few years, perhaps as much as the rest of the decade of the 198Os, for this new generation to have its opportunity. A country with a young and educated population, a large market, agriculturally rich, with good entrepreneurial resources, with a peculiar culture and creativity, and with excellent international links in wide markets where its presence is relevant (Latin America), has challenges that once the deep changes brought by democracy are digested, might become the power that dissipates the current fog of pessimism and defeat. Unfortunately, if we consider only the current situation, the contribution of Spain to the overall European picture is very poor: Spanish management today feels defeated. Spanish managers, however, could learn a lot from Europe, now that the Spanish environment has come closer to other European countries. The period of rapid changes within Spain have forced management schools to adapt flexibly in order to serve the needs of domestic managers. The development of innovative approaches has been necessary and it is possible to say that the difficult times have strengthened the individual personality of the leading institutions. This may be a good time to review the European contribution to management education and development, what
91
is peculiar to European management, what successful companies in Europe have in common, what they do differently from American and Japanese companies. These ingredients, which can only be the
92
result of a serious research effort, would be the basis of high-quality educational programs with truly European personality.