My perspective on German business success and the influence of culture. An article published in The Edge Autumn 2017 (The Institute of Leadership and Management). #culture #Germany #leadership #management #business #trade #productivity

1. 66 Beyond Borders
hat pops into your mind when you
hear the word ‘Germany’? Probably,
if you’re anything like me, you think
of engineering excellence, the ‘Made
in Germany’ brand and, of course,
everything running on time and to
plan. You probably didn’t think of
German management and leader-
ship practices. If you did, however, then good for you since much
can be learned from current German business approaches.
All about Germany
Firstly, a few facts about Germany. It is the world’s third-largest
exporter and fourth biggest economy. It also boasts the largest
trade surplus globally, having overtaken China in 2016. Typically,
Germany ranks among the top three countries in the world for
productivity, even though its employees work fewer hours than
staff in most other nations. The German population stands at
more than 82 million, although it had been declining prior to the
recent influx of refugees, and it is the second-oldest population
after Monaco, with a median age of 46.5 years. Unemployment is
W
around 3.9% and projected to decline further as the population
ages and the economy grows. Today, the successful integration
of over one million refugees into the labour force is a major
priority for the German authorities.
German culture plays a significant role in organisational
performance and management practices. There is plenty of
research on these cultural norms that can provide insight into
important values and traditions. Personally, I think the need for
certainty and order, delivered through rational and fact-based
decision-making, explains part of the German style. In Germany,
the truth is vitally important, and should be supported by facts
rather than emotions. The German government’s response to
‘fake news’ is a good example of this. It strongly believes that
fake news must be eliminated, with social media providers
having responsibility for achieving this.
There is also a strong sense of future and sustainability
within German business culture. People are respectful of experts
and any decisions they make. They collaborate to achieve the
best, and nothing less, and take a win-win approach to compe-
tition. They do not believe in wasting commodities, including
time. Time has value and should not be frittered away on sense-
less or useless actions.
Work hard,
play hard
What can we learn from the business practices of
Europe’s most successful economy?
Writing
Chris Litherland

2. 67Germany
Another interesting consideration is the role of works councils
(employee-elected bodies) in German businesses and how they
influence – through co-determination rights – the running of the
organisation. They can have an impact on compensation and
incentives, dismissals, performance monitoring, recruitment,
training and development, and working time and practices.
Some 80% of large organisations have works councils, and their
presence seems to encourage good management practices.
Another contributing factor is that larger organisations have
been much more open and quicker to adopt global practices.
The powerhouse of the German manufacturing industry are
theSME‘Mittelstand’companies.Thesearetypicallyspecialised,
family-owned businesses that are world experts in their field. In
recent times, they have grown their international markets and
improved their access to global procurement networks, while
retaining their home manufacturing facilities. The strength
of the Made in Germany brand, together with specialisation,
has supported these advances. As Mittelstand management
teams are exposed to global practices and technologies, further
improvements should arise. Time will tell how quickly these
are adopted and what their impact on management quality and
productivity is.
Interestingly, Made in Germany labelling started back in
the late 19th century when the English wanted to distinguish
the then poorer-quality German products from their own
goods. The German response was to systematically work to
solve the problem of product quality by focusing on production
efficiencies, professional training and the introduction of
rigorous standards.
Work is a calling
At the heart of German business is the pursuit of excellence.
If it’s worth doing, it’s worth doing well. Work is a calling and
the better educated and more experienced you are, the greater
the respect you will receive. It is not so long ago that manage-
ment was not seen as a separate profession in Germany. It
wasn’t valued because it wasn’t perceived as fact-based. This has
changed thanks to improvements in data analytics and studies
showing the influence of management practices on business
performance. Now there is more acceptance of management as
a profession in its own right.
German managers continue to be highly educated – either
qualifiedengineersorprofessionalsfromsimilarsectors.Women
fill around 27.5% of all management positions, but despite
numerous diversity and inclusion initiatives, this percentage
has not significantly changed in recent times. Nevertheless,
the employment participation rate for women has increased
to 80.5% for individuals aged between 25 and 54-years-old. So
there is some opportunity to increase the percentage of female
managers in the workplace. Germany has sponsored diversity
dialogue and commitments through the W20, a gender equality
engagement group that operates under the auspices of the G20.
Overall, this is an exciting time for leadership and manage-
ment in Germany as the country continues to develop and
progress. Its success is the fruit of its ability to adapt to new
approaches while nurturing its traditional cultural strengths.
Chris Litherland is founder of organisational effectiveness consultancy,
Mariposa Consulting International, based in Germany
IN GERMANY,
THE TRUTH
IS VITALLY
IMPORTANT
Finally, there is a respect for formality in the workplace.
In Germany, business is serious. At the same time, informality
should reign with family and friends. The expression ‘work hard
and play hard’ comes to mind because it really does empha-
sise the strong separation between work and social life in
Germany. I once asked a German manager why they had two
mobile phones. The answer was: “One for work and the other is
private.” This separation of work and social life continues to be
important, even though technology is more invasive than ever
and work demands have increased with globalisation. Probably
the most publicised examples of employers safeguarding staff’s
private lives have been from Volkswagen, which blocked email
access to employees’ Blackberries after hours; and Daimler,
which took the step of deleting all emails received by employees
while on holiday.
Management matters
Research seems to indicate that quality of management in
Germany is a ‘matter of size’. Larger organisations (above 250
employees) tend to have higher management scores than smaller
ones. More productive organisations also have higher results.
Shutterstock