Bao Partners

The current economic climate tends to produce numerous professional and personal situations that leads us towards a state of discouragement, and this discouragement is precisely one of the main causes of our inability to escape from the situation in which we find ourselves.

The result of this negative climate resides in its influence over us, in which me settle into a complacency comparing our own situaton with those that are passing through harder times and thus conform ourselves with the fact that we are in at least a somewhat better position. In the worst cases, our despondency carries us into a downward spiral that can affect everything, even our health.

It is not a question of maintaining a permanent state of optimism but neither is it a question of being one of the Four Horsemen of the Apocolypse of which unfortunately seem to abound in today’s environment. The macroeconomic situation may be outside of our control but not the microeconomic implications of which we are directly responsible and should be able to formulate an clear plan of action.

The first step is to know ourselves, whether it be on a personal or professional level – it is necessary to understand what are our virtues and defects, or in business terms, our strengths and weaknesses, in order to reinforce the former and minimize the latter – to continually concentrate our effort on recognizing how we can develop those strengths and use them to our advantage whether it be for a job interview or winning a new project or contract.

We all have problems but, with the exception of those that are health related, the solution lies in large part in our own hands, although to reach them we need to learn to accept sacrificies, whether those be in salary, changes in organizational function or responsiblities in the case of our professonal careers, and to do so we need, as I mentioned previously, we need to know ourselves to be able to establish to what level we are able and willing to make sacrifices.

For this task we need to be able to look inside ourselves and find the necessary strength to move forward which can stem from sources or varying nature; our families, our desire to progress, our survival instinct… they should form our motor, and at the same time our refuge, from which we find our inspiration to pick ourselves back up when we fall into that state of discouragement, because if we are not able to first support ourselves and self-motivate, then with dificulty we will find that support from our surroundings.

This is not an innate ability; it must be exercised, and only those that can to develop this talent will be the ones to overcome the dificulties presented in our day by day reality.

It is not an easy task, but our responsibility should propel us to try our best since we are not only motivated to help ourselves but also should be motivated to aid those arround us and this helping to achieve the goals that we set for ourselves.

Ignacio Bao
Chairman
Bao Partners / Signium International

The current economic recession is not only producing corporate winners and losers in the market as a result, among other reasons, of different management models previously followed, but also changes in the professional experiences and qualifications needed by corporate management. New professional profiles arise that are in increasing demand as this recession continues, and this very change should be one of the key factors that will, in the end, help contribute to the eventual upswing in the cycle.

So how are they changing from the profile valued during these last few years? Today, more than ever, organizations are looking for management with a strong capacity for leadership and negotiation that will help to restructure and reposition the company in its sector and different business lines, usually, although not exclusively, through acquisition, mergers or reduction. This also requires a higher level of specialty and concrete knowledge then in the past, in the area of costs as opposed to income. Clearly the motor that will power a company’s survival lies in rationalization and efficiency instead of expansion or constant pressure towards growth. Naturally no company asks its executives to ignore opportunities for Business growth that exist in the current context, but one must move ahead with the highest criteria of realism and caution. The irrefutable objective of maximization of fair and adequate profit must be attained today, more by controlling costs than maximizing income. Towards this end, executives need a very high capacity for change and integration in an economic environment radically different to that in which we have lived in the recent past.

The professionals that understand these changes and trends will emerge and adapt to the new sought after profiles in the market, for which they will most certainly have to make changes to their attitudes and mentalities molding them to closely fit with the business opportunities that arise. Among other things, this will mark a change in priorities and preferences giving more weight to factors such as institutional stability as well as in a company’s business model that will continue to favor professional development. Executives will also have to adapt to the emerging corporate winners, be who they may, understanding that in many cases these will not be the same corporate leaders as in years past.

Alfonso Rebuelta
Managing Partner
Bao Partners / Signium International

The current economic recession and the continued deterioration of the larger macroeconomic situation are playing havoc in a very significant and permanent way with the financial system, bringing many companies from varying sectors to bear critical situations. Not all of them will survive, and we are facing the continued corporate restructuring and market repositioning for those the strong ones, and a true battle for survival for those less so.

Yet all this also means opportunities, whether for investment as prices fall to new lows, or for mergers and acquisitions of both healthier companies and business models and thus able to lead this time of change. These companies are the “winners” of today. A common denominator between them has been a straight forward Management, without unnecessary complications or sophistications, and that have responded with policies of caution and efficiency. Curiously, and possibly with a somewhat pejorative intent, these companies have sometimes been branded in the past as conservative, insufficiently aggressive, or even outdated. However these same companies are the ones to emerge today with relatively robust business models or at least significantly less contaminated by the toxicity that plague many others. These others are the “losers” of today. Their future depends on their ability to transform or adapt as the case may be, which in all cases implies deep reaching processes of restructuring, sale or merger, or in the worst of cases, closure and liquidation.

The winners, with these aforementioned healthier business models, will be the ones to benefit from the opportunities that arise and will continue to do so for the foreseeable future. The benefits will be in terms of more business and new clients, with the corresponding rise in market share, and this of course comes in hand with a greater ability to attract the best professional talent. These companies will emerge stronger from the economic recession, and at the same time are already looking toward a new kind of professional profile that will help guide them in the complex rebuilding of the economic structure.

Alfonso Rebuelta
Managing Partner
Bao Partners / Signium International

For the last few years we have experienced an extraordinary growth in the global economy, in part due to the economic growth in the West and in part due to the significant development of economies in various other countries, which up until very recently were referred to as “emerging economies”.

What is certain is that the latter have had, and continue to have, much to do with the success of the former.North American and European companies have seen how, during recent years, unsurpassable opportunities have arisen to expand into new immense markets eager for new goods, services and technologies.It is clear that the world’s economy no longer hinges on the Old Continent and North America as it has traditionally.

The playing field has been redrawn and is infinitely larger; the number of players involved has also multiplied tremendously; and to add to the mix, the rules of the game change at a vertiginous rate due to the previous two factors.In this context, what are the strategies of “attack” in these new markets? How have corporations managed to take advantage of the possibility of launching abroad and implant their businesses in these new markets?

What have they done to become companies operating in various countries? Our profession gives us in many cases a privileged vantage point, from which, and at a certain distance far from passions and prejudices, we can observe, understand and analyze the approaches our clients take, especially in Human Resources. In many of these cases – if not to say the large majority – the decision to enter into a new market (country) is entirely opportunistic. That is to say, one of the departments of the company wins a relevant contract in a foreign country and thus decides to “open” there.

Among the many immediate decisions that follow, arises that of who to place at the head of this new project. Usually the company chooses to send someone internal that has demonstrated merits and relevant abilities in the position he or she currently occupies, with great knowledge of the company and its market.

Almost immediately an enticing expatriation package is extended to this individual with attractive conditions in salary, housing, schooling for children, etc. This example could be, allowing us to simplify all the peculiarities of each and every case, the “standard process” for any company in any country. This case repeated in each of the countries the company has decided to “open” comprises the structure on which the large majority of Multinationals are based today. Far from criticizing this model given that globalization has been, generally speaking, successful, we look to penetrate deeper into it.

Conversations with some of our clients led us to see that not only is it possible, but that it is necessary in today’s context to move towards a scenario that allows for a better optimization of these new markets. We are referring in this case to the transition from a multinational corporation to a global corporation. To further analyze the model we continue with our example.  Mr. X, who we will identify as “one of ours” for his proven merits in the home office, has been relocated to head our “new country”.

On the first hand, we have left vacant a position that was being excellently managed by our executive and we are now faced with the problem of replacing him for someone who normally will not be, at least at the start, at the same level as his predecessor.

On the second hand, we are faced with Mr. X in a new market, in a new culture, and in general in a little known or unknown context. Up to this point, we remind you that this is the model generally used, and most companies would rate them as a successful growth model. Although accepting this supposition, where our corporate identity is clearly insured, we should feel obliged to ask ourselves a few more questions. Are we really taking full advantage of this new local market?

Are we correctly adapting out message and goods or services to it and ensuring that it is reaching this market with its full potential? What is happening with the greater regional market? Does our position in this new country provide us with the ability to further expand in the region? If the executives of these companies seriously plant these questions, surely they would agree with us when we say that the traditional “recipe” is no longer the strategic choice and has become a mere tactical one.

The decisions made in this context to open in a now country were probably correct in the past, but today they require new analysis and a new approach. In response to this new context, in our opinion there is only one new “recipe” and this means having the correct mix of local and corporate human capital, which provides the talent necessary for the organization to respond optimally to the needs of this new market. We are convinced that a solid corporate strategy can only be constructed on a foundation of solid local strategies.

In the development at both the corporate and local levels, there should be active participation from local and corporate resources, making it vital to have the adequate combination of the two in all levels of the organizational structure. Only those companies that are able to integrate, as aforementioned, their local and corporate strategies, will be able to make a significant qualitative jump in their corporate evolution and truly call themselves Global Corporations.

This is not a phenomenon that depends on technology or the understanding of one sector or another, but in our opinion relies fundamentally on the most important asset a company has – its human capital and talent – and in this particular case, its executives. Finally, at the beginning of this article we mentioned these “emerging economies”.

For many years they have been referred to as such. Today, many of them have already grown out of this nomenclature and have become true motors in the world’s economy. We cannot know if the economic changes we are currently experiencing will end in what some call a New World Order – in our opinion this seems somewhat too apocalyptic in its outlook. Yet we can be sure that if we are not able to adapt our companies into true Global Corporations, not only will we lose the opportunity to continue to grow in this new Global Market, but we will wake up one day to find that companies from those new markets have beaten us to the punch and come to compete with us in our own markets.

Fernando Yarto 
Managing Partner
Bao & Partners / Signium International

The continued strength of the Investment Banking sector continues to stimulate a high demand for talent on behalf of the principal players, and therefore an increase in remuneration at all levels. In an attempt to attract and retain qualified professionals, companies are relying more heavily on intangible benefits.

Out of the companies studied in the Comparative Analysis of Salaries in Investment Banking in Spain, presented by Bao & Partners / Signium International this October, 95% utilize some type of fringe benefits as a form of non-monetary remuneration, which ranges from private medical or life insurance, meal tickets and parking spaces, to benefits such as company cars, mobile phones and retirement plans. This form of compensation is becoming noticeably frequent even for junior positions.

Pedro Herráiz
Associate
Bao & Partners / Signium International

The management of Professional Services companies, auditors, consulting firms or law offices has experienced great changes during the last few years, including the substitution of the Managing Partner for the figure of the Managing Director, in their attempt to look for better efficiency in management. But undoubtedly in the past few years, the American market has surprised us with a new tendency that will mark a different future. This consists on substituting the figure of the “rainmaker” (authentic kings of the company) for that of the “starmaker” whose values are centered on the team rather than on the individual. These are the values that today’s companies are looking for.

Of course, the generation of business is still important but what now matters most is the capacity to give clients continuous service by developing the talent of team members, not individual players that look for personal success. What is important now is that most people are motivated to work for a person whose main ambition is to develop their team and who has the ability to develop stars, a ‘genuine starmaker’.

Ignacio Bao
President, Bao & Partners
Worldwide Chairman, Signium International