Banking in Spain: The Cultural Impact - Essay Example

Banking in Spain: The Cultural Impact Table of Content Content Page No 0 Introduction 02 2.0 The Banking Industry-Background 03 3.0 HRM in the Banking Industry-A Study 04 4.0 Work Culture 05 5.0 Conclusion 09 5.0 Appendix 10 1.0 Introduction Spain is located south of France. It has a population of 39.2 million people, and occupies an area of 194,992 sq. miles. Madrid, Barcelona, and Valencia are the three major cities in Spain. Spain along with Portugal and the small state of Andorra make up the Iberian Peninsula. The majority of citizens are raised Roman Catholic, and family values are extremely important to the Spaniards. Spanish is spoken widely, but Gallegos which is popular in the northwest region of the country, and Euskera, the native language of the Basque region are the other languages spoken here. Catalan is popular in the regions of Valencia, Catalonia, and the Balearic Islands. Their laidback attitude not withstanding, Spaniards are known for their patience and this is reflected in their attitude to negotiations, which are usually long and arduous. This is a point that must be kept in mind at all times while doing business here. As Dr.Geert Hofstede said, “Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster."(Hofstede, Geert Hofstede Analysis). Being a part of the European Union, Spain enjoys the benefit of the Union’s policies. Consumer policy is part of the Union’s strategic objective of improving the quality of life of all its citizens. In addition to direct action to protect their rights, the Union ensures that consumer interests are built into EU legislation in all relevant policy areas. As the single market and the single currency open trading borders, the use of the internet and electronic commerce has grown as the service sector expanded. The Spanish citizens, like their other counterparts in the European Union, enjoy the same level of consumer protection. Legislation is but one means. The other methods include, co-regulating between consumers and business organisations; these consumer organisations are aware of an individual’s rights and play a prominent role in practicing them. 2.0 The Banking Industry -Background The late eighties saw the emergence of major changes that have affected both its structure and the nature of strategic interaction among banking institutions in Spain. Various strategies were adopted to tackle the demands of the emerging operating environment. One such strategy that found favour among the industry was consolidation via mergers and acquisitions. These major changes was an outcome of stiff and heightening competitive pressure exerted on all banks by processes such as deregulation, globalisation, technological advances, and the prospect of greater integration of the European financial markets. These mergers and acquisition could influence bank interest rates insofar as the increase in size and the opportunities for reorganisation involved. It could provide gains in efficiency that bear on marginal costs, or give rise to increases in market power, or both. Gains in efficiency would be obtained on moving onto a greater scale of activity, and/or owing to the possible reduction of X- inefficiencies, derived from inadequate management, and organisation of resources. Mergers and acquisitions could give banks the opportunity to re-direct their activity towards business areas that involve an increase in income greater than that in costs, thereby achieving an increase in profitability (Fuentes and Sastre, Mergers and Acquisitions in the Spanish Banking Industry). 3.0 HRM in the Banking Industry –A Study “Delery and Doty (1996) conducted a survey of senior human resource executives in U.S. banks in order to obtain information on the human resource policies used by the banks for their loan officers. Using a cross-sectional framework that ignored the role of bank fixed effects, they found a positive correlation between the bank’s returns on assets and equity and the existence of profit-sharing and employment security for loan officers, controlling for the size and age of the bank. It was shown by Frei, Harker, and Hunter (2000) how X-efficiency or management aligned technology and human resources, and other assets played an important role in the banking industry. It is important to note that both of these studies used cross-sectional data. The possibility thus remains open that a longitudinal study controlling for bank-specific fixed effects could produce different results. The use of cross-sectional data also characterised the other work that has been done on the impact of human resource management in the service sector. (e.g. Batt 1999, 2002; Banker et al. 1996)” (http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article). One study that used branch-level data is Schneider and Bowen (1985), who analysed data from employees and customers in 28 branches of a U.S. bank and tested the hypothesis that branch employees’ perceptions of organizational human resources practices are positively correlated with branch customers’ attitudes about service. Schneider and Bowen argued that a positive relationship existed between employees and customers because employees, who perceived their organisation as one that facilitates performance, enhances career opportunities, and provides positive supervision, would go out of their way to enhance their organisation’s main work of serving customers. The study was successful in studying customers’ attitudes about overall service quality at the branch. The research positively interconnected with employees’ ratings of the branch on the quality of supervision, work facilitation, and career facilitation. The limitation of this study was that it was conducted at a branch level and the accumulated data was cross-sectional (http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article). The banking system in Spain is well established and quite modern. There are many banks in the country, and all banking activity is controlled by the Bank of Spain (Banco de España). Bank of Spain has its central office in Madrid and branches in all provincial capitals. Banks are divided into clearing banks and savings banks, and several foreign banks also operate in Spain. Major Banks in the cities have qualified staffs who speak English, apart from Spanish. Most transactions are done in Spanish, but to cater to foreigners, these banks have English-speaking staff also on their payroll. Banks in resort areas and in large cities usually have at least one member of staff who speaks English, although one shouldn’t count on this. Banks in towns and villages in rural areas generally don’t have English-speaking staff. (Banks and banking in Spain, ideal-spain.com). 4.0 Work Culture Spanish life has changed dramatically over recent years and many of the strict religious customs are giving way to more modern ways. However, many old customs and traditions have not faded. Handshaking is the customary form of greeting and a kiss on both cheeks is normal. Smoking is widely accepted, even in banks and shops but not on public transport. Spanish men tend to maintain eye contact with females for longer, although this does not mean anything. Women are not treated on par with men. Not too many women venture into business because of this. The Spanish way of life is somewhat slower than the rest of Europe, especially in the south. This may be seen as lazy, but when the Spanish work, they work hard. They are a very happy people who enjoy life to the full. They love music, dance and food (Conformities, ideal-spain.com). People appreciate one making an attempt at the local language at the start of a conversation or interaction. The big cities, Barcelona and Madrid, are as ethnically diverse as anywhere, especially in numbers of Spanish-speaking immigrants. Tendencies and practices regarding discrimination in private and public companies are essentially the same here. Speaking English is a great advantage in any sector. Most people in banking, pharmaceuticals and information technology speak at least three languages well, including English. The pay is good, though the government takes a 30 percent to 60 percent bite depending on the tax bracket. The working environment here is different in that the Spanish are more gossip-mongers than their counterparts in Europe. The easy-go-lucky attitude does not appeal to the professional. However, there is a communal sense in the workplace, and coworkers tend to help each other out a lot more with professional and personal issues. There are a few traits that influenced cultural defiance in a country and at work. Like mentioned earlier in this writing, the men dominated women in Spain as a result, the growth of women to power and industry was limited. The men with their laid back attitude were not ready for the change. Language becomes a great barrier for negotiating and convincing. Thus, a High Masculinity ranking indicates the country experiences a high degree of gender differentiation. In these cultures, males dominate a significant portion of the society and power structure, with females being controlled by male domination. This is evident in Spain (Hofstede, Hofstede Cultural Consequences). Every organization has its own unique culture or identity. Most organizations dont consciously try to create a certain culture. The culture of the organization is typically created unconsciously, based on the values of the top management or by the founders of an organization. One finds that most company culture is based on: Respect for others A sense of community Work ethics (Fortune Magazine, May 15, 1995) In the larger interest of a company it is imperative that employees are taught the nuance of the trade. Personnel with positive attitudes and can lend themselves to the causes are what organisations look for. HRM is all about this. Employees are taught to be positive, deliver quality work, have a sense of humour, and work as a team. Employees should be interested in performing as a team and take joy in team results, rather than individual accomplishments. The work of HRM is to identify people with such qualities. Building a team with members with such exemplary qualities mitigate the work of an organization and they can build a work force that is prepared for the culture one desire (Corporate Culture, Auxillium West –The HR Manager). There are a lot of ways to enhance employee attitudes. It is quite a common to see customers rebuked and unattended in large and medium-sized banks. This is noy what a customer requires. Such an attitude will only bring rebuke and admonition from customers. Banking should be made enjoyable and satisfying. After all, it is these people who ultimately decide the fate of a bank. What good is it to run a bank without customers. The viability is close to none. To encourage banking, HRM must introduce innovative and proved theories into practice. What are these practices? A popular trend is for banks to "reengineer" themselves, which involves an attempt to change their culture, usually to a team orientation. As reported in the ACA News (September 1995), studies indicate that the following are necessary for a bank to change to a "team culture:" Common and consistent goals Organisational commitment Role clarity among team members Team leadership Mutual accountability with the team Complementary knowledge and skills Reinforcement of required behavioural competencies Power (real and perceived) Shared rewards The importance of corporate culture is growing as the result of several recent developments. Companies are encouraging employees to be more responsible and act and think like owners. In exchange for more flexible work schedules, employees are expected to always be "on-call." This means that whereas the company will accede to the demands of its employees for adjustments, the company expects its employees to return this favour by being more receptive and warm to their client. We see that more and more HRM training is imparted to their staff on customer etiquette. This will help meet the customer’s needs and at the same time create a more professional and pleasing demeanour. With the demise of more traditional communities, companies are filling employees need of belonging to the community, and at the same time companies are encouraging teamwork and the formation of teams. Therefore, HRM shouldnt ignore corporate culture. Rather, it should be addressed in the organisations mission, vision, and goal statements, and emphasised in company sponsored training and communication. The statements should include the following: To be financially successful To accept cultural (ethnic) diversity To encourage employees to socialise. We can therefore interpret the development of HRM on the skills and training imparted to its employees to counter any semblance of lethargy and coldness. It is in the interest of the bank to provide their esteem customers the best of service with a smiling face. The warmth and humour will only bring joy and success in this highly competitive and personal industry (Corporate Culture, Auxillium West –The HR Manager). A good HRM practice also involves engaging its employees in dialogue. Management must spend time with their employees and communicate with them in different ways. The art of dressing and the way one acts are forms of communication. Good HRM believes in oneness. “We want our people to feel fulfilled and to be happy, and we want our management to radiate the demeanor that we are proud of our people, we are interested in them as individuals and we are interested in them outside the work force, including the good and bad things that happen to them as individuals." In short, Human Resource Management (HRM) is a planned approach to managing people effectively for performance. It aims to establish a more open, flexible and caring management style so that staff will be motivated, developed and managed in a way that they can give of their best to support the concerned departments. Good HRM practices are instrumental in helping achieve departmental objectives and enhance productivity 5.0 Conclusion Spain is perhaps one of those countries that take its business quite easily. The lazy demeanour portrays its culture. The people are more inclined to be native and will not accept new initiates easily. The present scenario in Spain is such that new initiatives to propel output and customer service will be welcome. Good HRM practices that involve all sects of the organization will only benefit them. The idea to involve employees in conversation and activities will enhance their attitude and result in quality output. A flexible and caring management style will help motivate, develop and manage the staff in a way that they can give of their best to support the concerned departments. Pleasing personality and a sense of humour will go a long way in building the reputation of the bank. The management and its employees should develop the image of oneness. This way an employee will only be too happy to respond to eventualities and situations positively and comfortably. However, given the nature of the Spaniards to work, the majority of personnel may not welcome new initiatives. The business hours are very flexible and this may not sound too encouraging for the professionally inclined. Because of their attitude, new methods to improve quality and output may not be welcomed. The custom of the land is so embedded in the minds of the people that to innovate might be met with strong resistance. 6.0 Appendix Dr.Greet Hofstede, Greet Hofstede Analysis, www.geert.hofstede.com Ignacio Fuentes and Teresa Sastre, Mergers and Acquisitionsin the Spanish Banking Industry, http://www.bde/es/informes/be/docs/dt9924e.pdf Banks and banking in Spain, Spanish Banks, Banks in Spain, Banking in Spain, http://www.ideal-spain.com Don McQuillen, Culture Guide: Spain, http://www.workabroad.monster.com Dr.Greet Hofstede, Hofstede Cultural Consequences, www.cyborlink.com Corporate Culture, Auxillium West –The HR Manager, www.auxillium.com http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article Read More