How to do business in Spain - a guide

Doing Business in Spain

“Old catholic Spain, dominated from Madrid, its face turned away from Europe to Africa and its old colonies in the new World, dominated by church and state and bankers and bureaucrats and old families who counted their names, has been pushed aside. It has by no means disappeared, but is inhabited by a superannuated generation bewildered by change.” 1

1.0 Introduction

When a foreigner is doing business in Spain, there are many cultural aspects to be aware of. Spain is a collectivist country, with emphasis on family and friends. Business structures are hierarchal and friendship is more important than experience when selecting new staff. The leadership style is autocratic, and the leader is treated with respect. The Spanish behaviour is informal, and being a moderately high context culture, non-verbal language is very loud.

This paper is discussing the cultural dimensions and social and ethical issues in Spain. It continues to develop how to communicate effectively, followed by negotiating. The last parts talk about how to work in teams, and how to select expatriates for an assignment in Spain.

¹ Mole (1995)

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2.0 Cultural dimensions and the management of social and ethical

issues

Spain, situated in the very south of Europe has a culture that is very diverse from the cultures of its northern European neighbours, not only due to its Arabic occupation for more than 800 years. This time has left its trace in Spanish every day life and in the way they do business. Spain is deeply rooted to its history, customs and culture. Foreigners, no matter if they are businessmen or just tourists must have respect for this culture if they want to be successful in their ventures.

2.1 Regionalism

Spain consists of 17 regions, and the most important players are Catalans (northeast), Galicians (north - northwest) and Basques (north - northeast). Each region has an own capital, flag and legislature, but their grades of autonomy vary. The Basques are allowed to collect their own taxes and to control their own police, whereas the others are independent from the capital Madrid virtually in name only. Galicia can be compared to Ireland: green, wet and poor. ² Catalonia thinks of itself as more cosmopolitan and industrious than the rest of Spain

and has managed to retain its individual character despite a very high number of immigrants. The south of Spain is more concerned with the quality of life than its earnest and solid northern counterparts, which reflects the Arabian influence of more than 800 years of occupation.

² Mole (1995)

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Spanish people are very sensitive to regional differences. Separatism and socialism were important issues in the Spanish civil war (1933 - 1936), which led the aspirations for autonomy of Catalans, Galicians and Basques to ruthlessly be driven into the ground. ³ Making misinformed comments about a Spaniards region of origin is therefore considered a grave insult (ie mistaking a Catalonian for a Basque). 4

2.2 Attitude towards governm ent

In Spain and other Mediterranean countries a community is based on personal relationships and family ties (collectivism). This is also reflected in the attitude toward authorities and the treatment of the government. What may appear as favouritism and corruption is only the exercise of mutual obligations. As a foreigner one should be prepared for a different attitude to the authorities compared to the rest of (northern) Europe. 5

2.3 Business organisation and structure

The private sector is full of well- managed companies. Most of them are family owned and some of them with foreign investment. This plays an important role in a country solely lacking from professional skills. ⁶ Even though most of the Spaniards are very receptive and open to foreigners they must not have the feeling of being patronised. They are looking for a partnership and not a client relationship, which works even better on a personal level than on a corporate level. In traditional Spanish companies the traditional way of management can be found, which runs on highly compartmentalised, bureaucratic and authoritarian lines. Newer

³ Mole (1995)

⁴ The Webmaster (2002) (a)

⁵ Novas & Silva (1996)

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management practices, especially of American nature often create conflicts and stress between generations due to the very widespread, hierarchical system. 7

The traditional Spanish organisation is built on the concept of personal hierarchy. An organisation chart, if one exists, is a social rather than a functional system. Companies are normally run by passing down orders a chain of command. The idea of teams is different, they exist under a strong leader and individuals are working independently, so that they do not interfere with each other, especially across different teams. ⁸ Rules, systems and mechanisms

are seen as the resort to stop things from falling apart. This reluctance of trust in systems means that there is a constant atmosphere of crisis and emergency and being good at coping with it is a source of pride.

2.4 Planning

Planning does not exist, nobody knows what happens tomorrow. This is partly a question of culture and mentality and partly has its reason in the low state of development in planning mechanisms. “In an environment where accounting for yesterday is rudimentary, accounting for tomorrow is a luxury.” ⁹ The chief executive has the responsibility to fix a strategy and he is expected to give clear and achievable tasks and targets. ¹⁰ Systematic

planning is seen as a waste of time, the appropriate way to gather information in Spain is to talk to as many people as possible without giving away any own information. 11

⁶ Mole (1995)

⁷ The Webmaster (2002) (a)

⁸ Mole (1995)

⁹ Mole (1995)

¹⁰ see next paragraph “Leadership“

¹¹ Mole (1995)

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2.5 Leadership

The ideal leader is a benevolent autocrat and the quality most admired is having courage - “estar valiente”. ¹² Sharing decision making with subordinates is regarded as weakness, as the boss is expected to have all answers to all problems. Authority is determined by the quality of personal relationships with subordinates and loyalty is to people, not to institutions. 13

As in most directive cultures, the problem is not to make decisions, but to reach the commitment to implement them. Therefore delegation should be concrete and specific, based on realistic short-term targets, accompanied by detailed instructions how to reach them. Criticism and feedback are a privilege of the boss - “el jefe”, without the right of reply, as it is his privilege to assert authority, it is an exercise of rank. Due to this hierarchy, status and status symbols are very important items in Spain. According to this we can classify Spanish society as a high - ascribed status culture, where titles are important and a high (male) authority leads the way.

Positive feedback would be a surprise, as people are not very anxious to know how they are doing as they presume that they are doing fine and if not it is someone else’s fault. ¹⁴ The lack of forecasting and reporting system mentioned above make control in an Anglo-Saxon sense very difficult. “Instruments of control are regarded as instrument of control over people rather than blueprints for action.” ¹⁵ Internal controls and auditing are regarded as a lack of trust and in a culture where personal relationships are very important this is a very

¹² Adler (1996)

¹³ Mole (1995)

¹⁴ Novas & Silva (1996)

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sensitive issue. The special difficulties connected within meetings and teams are elaborated on a later part of this assignment. ¹⁶ At this point it is only to be mentioned that Spaniards like to be independent and to make decisions on their own, they do not have meeting culture.

2.6 Upward mobility

Spain has never been a success culture; people were very content with the station, rank or job they were entitled to. ¹⁷ Job security has been more important than advancement, but within the younger generation this has changed especially in cities like Madrid or Barcelona. For them leaving one position for better pay is not unusual, but generally people will not leave to a different location, e.g. from Bilbao to Malaga for a better job. Family ties still prevent migration. ¹⁸ These family ties are also the reason that in many companies family is still more important than intelligence, because personal loyalty, friendship and ability (in that order) are the most important qualifications in recruitment and promotion.

2.7 Competitiveness

Even though loyalty and relationships within families are very important, there is almost no sense of collegiality. Working relationships are vertical rather than horizontal. ¹⁹ Success is generally viewed as a matter of luck and influence, not ability or as result of effort. Promotion is therefore often seen as a step up to privilege and an easy life rather than greater

¹⁵ Mole (1995)

¹⁶ See “Developing Teams“

¹⁷ Mole (1995)

¹⁸ The Webmaster (2002) (a) and Mole (1995)

¹⁹ Adler (1996)

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