Tom Kadala on the Hispanic Consumer

Opinion: Have Hank Paulson and Tim Geithner become part of the Problem?

The difference between the hurricanes that devastated the Gulf shores (Gustav and Ike) and the financial meltdown on Wall Street is that one was a natural event while the other was self-inflicted.  Both disasters came at a hefty cost but the latter was not only avoidable but altogether a reflection of our changed society.  Some economists refer to the $700 billion bailout as the tip of a $55 trillion iceberg, a figure that hovers over 50% of our current GDP.  For some these numbers are so large and so beyond comprehension that one can only pray that the ultimate consequences will eventually disappear.  But how can a problem of this magnitude find resolution among a close-knit group of bankers?

When I envisioned Hank Paulson behind closed doors last year, I couldn’t stop thinking of George Orwell's’ novel, ‘Animal Farm’.  In this book the pigs took charge of governing the other farm animals in a manner that favored a select few.  Whenever democracy got in the way of the ruling party’s wishes, the ’pork-barreled’ fanatics rewrote the rules to meet their personal needs.  Is that what we’re seeing happening with today’s financial meltdown?  What can one reasonably expect from the Obama administration, short of a miracle?  ...more changed rules?

This disconcerting scenario also reminds me of the Venezuelan elections in the mid-90’s when a charismatic candidate who connected well with voters won the national elections. This individual had an extraordinary gift to communicate effectively with his constituents. Sounds familiar?  Over the next four years, he single-handedly did away with deregulation and essentially rewrote the rules for his newly minted democratic government to favor his complete dominance of the private sector.  Today his government owns and operates the Bolivar Republic of Venezuela. 

Could the United States fall prey to a conveniently redefined democracy that looks and feels like a dictatorship?  Can our current constitution navigate our ailing economy to safer waters?  …or will President Obama’s team fail to resist the temptation of taking over the private sector?

One part of me wants to believe in the American system and its leadership; however, my less optimistic side struggles with the recent rounds of bailout packages.  If Paulson or Geithner were truly looking to solve this self-inflicted crisis, they could have done so months ago by relaxing the ’marked to market’ rules imposed on banks.  It worked during the Savings and Loan crisis in the ’80;s, why wouldn’t it work again now?  Rather than force banks to absorb artificially, severe ’write downs’ on a daily basis, they could set asset prices at a five year average for the next three years; a solution that would save jobs while buying the time needed to rewrite the long and overdue, corrective lending legislation and banking policies. 

This solution is so obvious that one can only wonder if Hank Paulson and now Tim Geithner may have another agenda in mind.  Similar to Venezuela’s Hugo Chavez, could President Obama eventually become part of the problem rather than the solution?  Time will tell.

Tom Kadala is the president of ResearchPAYS, Inc., a strategic business consulting firm dedicated to the development and expansion of Hispanic consumer markets. - (www.researchpays.net). Mr. Kadala can be reached at tom@researchpays.net.

Opinion: Supplier Diversity Programs Need Effective Mentoring

For decades Supplier Diversity initiatives have been designed to help minority-owned companies penetrate corporate coffers by granting them direct access to lucrative vendor contracts that otherwise would be awarded to a close-knit group of established suppliers. Although Supplier Diversity has succeeded in highlighting minority entrepreneurial potential, most corporations still struggle with developing effective ways to integrate minority-based vendors into their supply chain.

For over 40 years, corporations have spent millions of dollars funding fully-staffed Supplier Diversity departments designed to attract qualified minority-owned companies into their roster of approved vendors. By now, one might expect to see tangible progress such as expanded Supplier Diversity departments within corporations, an increase in the number of approved minority vendors, and ultimately a positive return on investment. Instead, Supplier Diversity departments at most corporations have been either drastically reduced in size or eliminated all together. What remains today is a mere shell of what existed in the early and mid ‘90’s, prompting one to ask, “Why did Supplier Diversity fail and how can we learn from these experiences?

A recent exchange among the Supplier Diversity Officers allowed us the unprecedented opportunity to explore solutions to these problems. One such solution was the formation of mentorship programs that would allow young minority-based companies to perform at a more controlled pace. By matching vendor capacity with corporate procurement needs, minority-based vendors would be assigned to jobs where they could gain the knowledge and confidence needed to become larger vendors. Rather than equating the success of a program by the total dollar value of contracts awarded, a company would measure success by both the number of successfully completed contracts and the rate at which vendors acquire larger contracts.

This proposed program would require coordinated efforts between a non-profit organization hired to profile qualified minority-based vendors and match them with appropriate corporate procurement offerings. The corporate procurement department would work closely with their respective Supplier Diversity officer to carve out contracts into manageable segments that selected minority vendors could handle successfully. As minority vendors complete their assignments, they would automatically qualify for more business and in return be asked to mentor the next crop of minority vendors. This perpetual relationship among minority vendors would encourage cross-cultural cooperation while allowing corporations to harness and leverage minority entrepreneurial enthusiasm to their long term competitive advantage. All the pieces of the Supplier Diversity puzzle already exist. Now what we need is new leadership to modernize Supplier Diversity to meet our changing requirements for the 21st Century.

Tom Kadala is the president of ResearchPAYS, Inc., a strategic business consulting firm dedicated to the development and expansion of Hispanic consumer markets. - (www.researchpays.net). Mr. Kadala can be reached at tom@researchpays.net.

Opinion: Young Hispanic Ad Agencies are Redefining ‘Business-as-Usual’

A recent article in Advertising Age dealt with an interesting paradox. Despite a ten-fold growth in Hispanic advertising in the last ten years, most major corporations have yet to see a positive return on their advertising investments. Having surged from $500 million in 1996 to $5 billion in 2006, corporate Hispanic advertising continues to weigh on the minds of marketing directors who frequently struggle with allocating advertising funds to Hispanic ad agencies rather than to traditional general market ad agencies.

Some Hispanic ad agencies justify their less than stellar results on harder-to-measure factors such as language preference and rates of acculturation. Others tell a different story claiming that the $5 billion ad spend in 2006 was actually not enough to properly address the rapidly growing Hispanic markets and that the appropriate amount should have reached three times greater or $15 billion by 2006. They derived this figure by matching the 15% of Hispanics represented in the total US population with the approximate $100 billion total ad spend for the US.

If increasing the ad spend is the answer, why is it that so many marketing directors have done just the opposite by reducing their budgets and redirecting funds away from Hispanic ad agencies? Is it because department heads believe that Hispanics will eventually acculturate and meld into the general market thus reducing the need for Hispanic ad agencies?

This downward trend has caused many talented Hispanic agencies to fold. Those that have survived have been forced to compete head on with general market ad agencies who produce solutions that are more in line with general market strategies and less with culturally-specific solutions.

This younger crop of Hispanic ad agencies argue that corporations should be more willing to give them a chance, since more established Hispanic ad agencies have seemingly lost their touch with emerging markets. They claim that many of these older Hispanic ad agencies cannot come up with ‘home-run’ ideas since they consistently source the same talent year after year. Just as emerging Hispanic markets are constantly changing so to must their creative teams change. Given a chance, these younger ad agencies could eventually carve powerful niches based on timely out-of-the-box creative solutions. Their determination to survive will inadvertently redefine how corporations will eventually view Hispanic markets.

Tripling ad spend may be one way to reach Hispanic markets, but what if the results continue to trail expectations as they have for the past decade? At some point corporate leaders will have to seek out alternative solutions by giving a younger crop of Hispanic ad agencies a chance to prove their talents and skills with more culturally-specific marketing strategies. It is only a matter of time!

Tom Kadala is the president of ResearchPAYS, Inc., a strategic business consulting firm dedicated to the development and expansion of Hispanic consumer markets. - (www.researchpays.net). Mr. Kadala can be reached at tom@researchpays.net.

Opinion: Job Seekers will favor Hispanic-friendly Employers

Every career-minded executive must follow a personal plan to ensure that their skill sets are always in line with the future requirements of their preferred employers. Otherwise, choosing to remain complacent could be risky, potentially leading to a demotion or unemployment. What are some of the key warning signals on the job market today that executives should recognize, and what can they do to keep their career advancement on a steady course for years to come?

According to PEW Hispanic Center (www.pewhispanic.org), 47 million Hispanics currently live in the US and by 2050 their numbers are expected to reach 129 million. Furthermore, the Census Bureau states that in the next 20 years over 78 million baby-boomers will retire, vacating over 35 million job positions. The White House has acknowledged that unless Congress takes action soon, by 2030 only one wage owner will be available to support six pensioners.

These statistics suggest that the American labor force may potentially suffer from a severe case of underemployment where the talent pool needed to fill key positions may become insufficient. That may be bad news for the retiring baby boomers that rely on wage earners to support their pensions, but it does open a window of opportunity for experienced executives. Companies looking to fill entry level positions with Hispanic candidates will need plenty of assistance to properly welcome, manage, leverage, and retain this burgeoning workforce estimated to surpass 27 million by 2016. How then can executives prepare to make themselves more marketable to an employer?

First and foremost, career-minded executives should favor companies that are seriously preparing their employees to absorb a younger Hispanic talent pool. Key initiatives to identify should include comprehensive training programs taught by qualified instructors who have experience teaching Hispanics, mentorship programs designed to move Hispanic candidates up the corporate ladder, and meaningful scholarship funding efforts with local Hispanic non-profit organizations.

In the meantime, executives should consider brushing up on Spanish culture by traveling to Central or South America. Sampling local Hispanic dishes, listening to local music, and watching local television programs are all good ways to start. If traveling is out of the question, one can still gain a similar experience by getting involved with non-profit organizations that serve Hispanic neighborhoods such as the Boys and Girls Club of America.

Just think! The young Hispanics that you may one day be asked to manage or train, are probably living right around the corner from you today. Learning to mingle with them now, while they are still young, could teach you language and cultural skills that can be applied in the workplace for years to come; hence, helping you become a more desirable candidate.

Tom Kadala is the president of ResearchPAYS, Inc., a strategic business consulting firm dedicated to the development and expansion of Hispanic consumer markets. - (www.researchpays.net). Mr. Kadala can be reached at tom@researchpays.net.