The conduct of business in Germany, as in Japan, involves a lot of diplomacy and protocol. How you do things is as important as what you do. Although more and more Germans are recognizing that “life is too short” for some of the niceties of traditional business protocol, their foreign—mainly American and British—counterparts are constantly put at a disadvantage by their ignorance of particular aspects of German business practice.
Like Britain, Germany focuses on deals, data, and a moderately formal, reserved, and schedule-based business style. This is unlike the United States, which is less formal and more expressive in its business style.
We have already discussed hospitality and entertaining styles in Chapter 4, and we’ll be looking at communication styles in Chapter 9.
We have seen that German offices are much more formal than in English-speaking countries. People use surnames and really don’t show much interest in each other’s personal lives. On the other hand, visitors to German offices notice a highly informal style of dress, and the American and British “dress-down Friday” doesn’t really apply. For meetings and dealing with visitors, however, more formal wear is the norm.
German business clothes are practical with a preference for well-cut, high-quality clothing. The key is coordinated colors, styles, and patterns. “Business casual” in Germany may be taken to imply a casual attitude toward business. If in doubt, wear a dark suit or a sober jacket and tie. For women, conservative clothes are the best bet on first meeting; pantsuits are very acceptable.
Keep Your Jacket On!
A small point for men. If you are in a meeting or workshop with German managers, don’t be the first to remove your jacket. German meetings tend to be quite formal, and removing a jacket is seen as a sign that work is over and that a more relaxed attitude can prevail.
• Office etiquette and protocol
• Management styles
• Leadership and decision making
• Presentation and listening styles
• Meetings and negotiation styles
• Teamwork and managing disagreement
• Hospitality and entertaining styles
• Communication styles
If you go around a traditional German office you’ll notice that it is mainly “closed door” and pretty quiet. People keep office doors shut for privacy and for meetings. If you need to interrupt, knock on the door and wait to be invited in. You may be used to looking for photos and mementoes in offices to provide clues about personal interests that can help in small talk and creating good relations. In most German offices, family photos and personal mementoes are not encouraged, and the “clear desk” policy means that no papers will be left out at the end of the day. As we have seen, it used to be perfectly possible for Germans to work for years alongside colleagues without ever using their first names or knowing much about their personal lives.
One thing that surprises foreign executives is the educational attainments of their German counterparts. A German CEO is quite likely to have a doctorate in his or her specialty, and in more conservative offices may expect to have it recognized. It is estimated that some 40 percent of the bosses of Germany’s top one hundred corporations have doctorates. A man would be addressed formally as Herr Doktor Schmidt and a woman as Frau Doktor Schmidt. In extreme cases, where a CEO has two doctorates, they would even be addressed as Herr or Frau Doktor Doktor Schmidt (one for each doctorate).
Once again, in old-fashioned firms it is important to address secretaries and support staff by their surnames. Waltraud Schmidt is “Frau Schmidt” not “Waltraud,” or “Val,” as it might be in the USA or the UK. Some German executives, knowing American and British informality, will call you by your first name and invite you to use their first names, but in meetings be ready for the “code-switching” between German surnames and foreigners’ first names during the discussion. If you are speaking German in a German office, always use “Sie” until invited to do otherwise.
German office workers work from 8:00 a.m. till 5:00 p.m. Monday to Friday, and most conform to a forty-hour working week. To achieve this they may leave earlier on Friday. Offices open early, from around 7:00 a.m., and close around 5:00–6:00 p.m. Many switchboards close early, at 4:00 p.m., although you can still contact people on their direct numbers beyond that time. It is important to recognize that Germany sets store by having proper rest and relaxation periods and does not encourage long hours or weekend working. Unions may enforce this.
German holiday entitlement is a minimum of four weeks a year, rising for senior executives to up to six weeks. German workers often take their holiday in a block. If you add to this the twelve to sixteen legal holidays (depending on the state), and the generous sick and maternity and paternity leave, then you won’t be surprised that some German executives are more accessible on voice-mail than personally. These absences can cause delays in reaching decisions or responding to queries, as delegation isn’t common, due to the compartmentalization of German business. The main holiday periods in German business are May, June, July, and August.
A characteristic of many German offices is that overtime is frowned upon. If you can’t do your work in the time allotted, either you are personally disorganized or your job description is wrong. The admiration in some business cultures of overtime and “pulling an all-nighter to hit the deadline” is not shared by the Germans.
The Germans’ attitude to office space is very different from that of the Americans or British, and is dominated by the need for greater personal space and the need for privacy. It is important, therefore, not to invade a German’s office or personal space. Moving furniture around, for example, to get closer to a client, may be destabilizing for a German manager.
Appointments are made in advance and are adhered to strictly. Preferred times are 11:00 a.m. to 1:00 p.m. and 3:00 to 5:00 p.m. Avoid Friday afternoon as people often go home early. Punctuality is important, and you should shake hands on arriving and leaving with everyone involved in the meeting. Business cards are exchanged and will include academic titles as well as relevant business contact information. An accurate translation of your job title into German is necessary as it is important in Germany to match status with status.
When considering a relationship with a new partner, German companies very often begin with a small pilot deal. If this deal works, then it is the gateway to greater things. The worst thing a foreign contractor can do in seeking a relationship with a German company is to treat this small contract casually or to dismiss it as not worth their while.
The Germans believe in function more than relationships. Charming and agreeable business partners as they are, it is the wording of the contract and the fine print that matter most. Contract terms are considered “cast in concrete.” This is not a problem for most American and British companies, but it may be for more relationship-oriented cultures where a degree of flexibility is appreciated.
In German offices the management style is very direct. It is important to be the boss, to give and to receive orders clearly, and to carry them out to the letter. This, rather than imaginative interpretation, is the key to successful management and enables the Germans to coordinate complex projects and information successfully, albeit at the expense of flexibility. You’ll notice that they get to the point quickly with very little small talk. Avoid being over-expressive. The Germans appreciate contained body language and not too much smiling, which they see as a false mannerism in a business environment. Above all, it is important not to make jokes in a business meeting. Before and after is fine, but business is serious and the facetiousness and irony of British jokes especially are felt to be totally out of place in this context, and will lead at least to the feeling that your behavior is inappropriate and at worst to a reputation as a “cowboy,” and unreliable.
A characteristic of German management, in marked contrast to American and, to some extent, British practice, is the lack of praise. For Germans “excellence comes as standard” and you do not expect to be praised for doing your job. Praise for a German manager can seem patronizing, and staff appraisals, so important in American and British companies, are much less formal in the German environment, and may be carried out by supervisors rather than line managers and not at fixed times of the year. Reward for exceptional work may be a day off, to avoid extensive taxes payable on bonuses and other awards.
The key concerns for German managers are profit and the quality of the product or service. As you might expect, the Germans are very insistent on deadlines, but the one thing that might justify a delay in delivery would be if the product quality were not felt to be satisfactory.
High-quality product and service, however, does not equate to “service with a smile.” Although German service staff and product managers may be very personable and agreeable, it is axiomatic that efficiency and charm do not have to go together.
Women have equal rights under the constitution, and there is no discrimination on the basis of gender. There is legislation to protect the rights of workers who become pregnant and to encourage vocational and educational training.
Despite the fact that 60 percent of German women between the ages of fifteen and sixty-five work outside the home, only about 30 percent work in professional positions, and the number in management is even smaller. A 2016 law required that 30 percent of top board seats should be held by women. However, four years later, as in many countries, the “glass ceiling” seems hard to crack and even slower to dissolve.
For foreign female executives working with German companies it is important to ensure that your status and responsibility within the company are never in doubt, and that the members of your team uphold this. Your business card should clearly state your company position and you should be able to demonstrate clearly and simply your areas of expertise and responsibility.
As far as women’s dress goes, it is important to remember that the Germans are conservative dressers in business but very strong on clothes coordination. Do not dress sexily or wear ostentatious jewelry, especially at first. As you get to know the company better you may be able to adapt your clothes style as you wish.
German executives, particularly the older ones, will unconsciously adopt old-fashioned courtesies toward women—gestures such as standing up for you on entrance, opening doors, walking on your left or nearest the curb, or lighting your cigarette (or, in exceptional situations among the older generation, kissing your hand on greeting). Such gallantry should be accepted graciously. Not to do so may cause embarrassment. If you do take exception to this behavior it is important that you explain your position calmly and reasonably.
Women in business can easily avoid creating a sense of obligation by insisting on paying their own way. “Going Dutch” is quite acceptable and well understood in Germany society.
Leadership in German companies is quite hierarchical. This is a legacy of Germany’s relatively late industrial revolution, in the 1800s and early 1900s, when the social structure consisted of a very large number of workers supervised by a small number of managers. In addition, Germany still has many small and medium-sized family-owned businesses, with a strong controlling hand by the owner/founder and his or her family.
The Sony Center complex on Potsdamer Platz, Berlin.
German companies are controlled by two separate boards, the Aufsichtsrat (supervisory board) and the Vorstand (board of management). The Vorstand is responsible for day-to-day operations, and the Aufsichtsrat is responsible for ratifying major budget and project descriptions.
Unlike American and British managers, who tended to have degrees in business or accounting, German managers used to be engineering specialists. Technical qualifications are still generally more highly respected in Germany than “soft” skills, and MBAs and business programs are a relatively recent phenomenon. Today’s German managers are more likely to have degrees in the relevant discipline. The manager sets both the tasks and the standards for his or her team, and is expected to be a role model in his or her field.
A key feature of German management is the tight hierarchical reporting structure. German managers are much more “top-down” than their English-speaking equivalents. Many German managers in American and British multinational businesses have difficulty finding someone to report to and feel at a loss as a result.
In German companies the hierarchy is clear, and in reporting and seeking decisions you don’t jump levels of management; if you do, you risk making an enemy of your manager and embarrassing the superior you have jumped the pecking-order to appeal to. In a contract negotiation it is important to respect the status of the manager who is your prime contact and not to enter into discussions with other managers unless you do it through him or her.
More than the Americans but less than the Japanese, German businesspeople like to take time to reflect and consult on decisions. Since German companies are quite compartmentalized it is important to involve all the managers concerned and for them to discuss matters in some detail. The result is sometimes described as “analysis paralysis,” as decisions are delayed to allow for this process to take place.
This means that the ability to make decisions rapidly is lacking in Germany. It also means that you must locate and deal with exactly the manager who has the precise responsibility and status to deal with your project or proposal. This, too, can take time and often causes frustration. A final problem can be that a decision, once made, is immutable. It can be hard for some German companies to introduce corrections once problems arise.
A fundamental feature of German industrial relations is the company Works Council (Betriebsrat). The Works Council has the right of consultation on every aspect of company policy that affects the workers in that company. This includes hiring and firing policy, working hours, holidays, pay, and job descriptions. They also have the right of consultation on company restructuring. Therefore any German negotiator will have as a “background noise” the existence of and need to consult the Works Council representative on any major decision.
By law companies with more than five non-management employees must have a Works Council. Usually this is a voluntary post, but for companies with three hundred or more non-management employees Works Council representation is a full-time job for at least one person. Government and public organizations also have Works Councils.
The Works Council makes it quite difficult for firms to lay off workers. On the other hand, it creates a more integrated company. The German working environment tends to be more stable than in other countries, and company loyalty higher. It is certainly true that a German worker is more likely to stay in a job and to expand it, rather than to try to change jobs every two or three years to show a dynamic résumé, as is often the case in the USA or the UK.
If disagreement within a German company deepens to the level of separation, it is difficult to fire people. If someone is to be dismissed, the procedures must be carefully followed, including consultation with the Works Council, which can appeal against the dismissal if they wish. Appeals are made to a special labor court, which, if it disagrees with the grounds for dismissal, can demand reinstatement or impose a fine for wrongful dismissal. If layoffs occur because of economic downturns, once again the Works Council must be consulted and guidelines followed regarding layoff benefit packages. If this sounds like an employee’s charter, remember that there also exists a trial period on hiring that can last up to six months, in which either side can withdraw without problems.
The Germans respond well to thorough presentations, supported by detailed facts and specifications. They look for background information and history, and don’t always respond to all-singing, all-dancing visuals. They like to feel that what they are buying into has been well received elsewhere, so it is important to include references and testimonials where you can. Some foreign presenters can be disconcerted by the pointedness and detail of the questions following a presentation.
A logical, clear presentation backed up by clear and extensive detail is important. Even if you only offer the broad conclusions, German audiences will expect you to have backup evidence and to be able to produce it on demand. They will also expect you to be able to give chapter and verse for any references quoted, business models used, and data presented. By the way, typing and spelling errors are as much a giveaway of a sloppy approach as scuffed shoes, so always double-check your documents.
Q and A Grilling
One company representative, shaken by the barrage of questions and detailed interrogation and discussion that followed his presentation, said that he felt his presentation had been “torn to shreds.” “On the contrary,” said the German chairman, “If they hadn’t liked your presentation they wouldn’t have asked so many questions!”
Meetings and negotiations follow a formula well known to most businesspeople. There will be an agenda (followed without deviation), action points, next steps, and time frames. What may be different is the personnel. Your German colleagues will be specialists in their fields and will expect you to know your stuff thoroughly. “I’ll get back to you,” is not a phrase to use often. Unlike the Americans and British, the Germans expect to speak only on their specialization and may not take it well if questioned by a non-specialist during a meeting.
Although top-level executives may attend the first meeting, or look in on a meeting, you should expect the detailed negotiations to take place with the middle management executives concerned. However, top management will expect to approve the agreement, and this may take time.
The Germans, like the Japanese, prepare very thoroughly for their negotiations. They will think through their position and your position and prepare rebuttals for points they expect you to make. Once they have made their initial offer, they will stick to it in the face of pressure.
American and British negotiators often adopt a “high–low” range of bargaining tactics: start with a high entry point, and be prepared to exit at a fairly low point if they have to. They feel this is perfectly justified as they will go for a “what the market will bear” approach. The Germans prefer a much more realistic entry point and will bargain over a much smaller area. The rationale behind this is the German belief in “a fair price.” They prefer to negotiate, with toughness, over a narrow range. It is important to be realistic in your expectations.
The best thing about German negotiators is that in all negotiations they are looking for common ground, and when they find it, it is the area where the deal will be finalized and also the basis for any compromise. An important corollary of this is that when a German says, “This is my last price,” generally he or she means it. To push further may be to suggest that your German counterpart is cheating, and thus to lose the deal.
The use of lawyers also causes the Germans problems. In Germany oral agreements are considered firm, and most negotiations are conducted without lawyers until the point of drawing up the contract. The American habit of bringing lawyers in at the start of the negotiation can offend their German counterparts.
The German and American–British approaches to teamwork contain subtle but irritating differences, particularly at the level of team selection, problem solving, and decision making.
First of all, the Germans will choose their team members on the basis of specialization and seniority. The Americans and the British will take these into account, but give considerable importance to people who can get things done. These may be neither specialist nor senior, and this can be a recipe for friction if the relationship is not handled sensitively.
Another source of friction can be discussion styles. As we have seen, it is important for the Germans to understand the nature of the topic from which the solution will appear. The American–British tendency is to identify the problem and discuss the routes to solution. The length of the German ground-laying discussion can be frustrating for the English-speaking team members. Anything less, however, will be unsatisfying and not thorough enough for the German team members.
A third problem arises in the project planning and task delineation phase. Here again the Germans will want to go into detailed discussion in order to have a clear system and plan, and will exchange information in detail. The Americans and, to a lesser extent, the British will see this as part of the process of completing the task and will want to get straight down to business. The Germans dismiss this attitude as a “cowboy mentality,” shooting first and asking questions later. As far as they are concerned the important ground-laying discussion process allows the group to reach a consensus on aims and means, and permits a far more rapid implementation.
The fourth problem arises when each team member gets down to work. This is when the Americans and the British expect lots of informal team and group meetings. The German members, however, expect to go off on their own, setting their own aims and researching and completing agreed-upon tasks. For the Americans and British, learning by doing is a cardinal principle. For the Germans, an agreed plan with the work divided up to fit the skills of team members is the most efficient way to proceed. Suddenly the English-speakers are deprived of dayto-day contact with their German colleagues, and this is made worse by the German adherence to company conventions regarding written technical rules, standards, company norms, project procedures, and so on, which the German team members are expected to know and follow. The American and British outsiders may not even know of their existence, let alone be ready to apply them.
The Germans will tend to observe hierarchies and company structures within groups. American and British team members see these as restrictions “to be lifted for the duration.” They will take the decisions reached at the project planning meetings as guidelines to be modified through discussion as the need arises. The Germans are likely to consider them binding.
Teamwork offers the English-speakers the opportunity to be more personal outside the formality of the “big” meeting. Both American and British teamworkers complain about the unwillingness of the Germans to discuss issues outside the formal work setting. The Germans misunderstand their wish to build up a rapport by talking about the task in detail and accuse them of asking unnecessary questions, the answers to which have already been agreed.
However, we are talking of tendencies toward different ways of working rather than black and white differences. Significantly, many of these rigid structures and attitudes are dying out fast, and many small to midsized international firms staffed by younger people have a more personal and relaxed atmosphere than you would find elsewhere. There is a new generation of Germans who are encouraged more openly by management, address each other informally, develop personal relationships in the workplace, and attend after-work events together, and who don’t have to be as wary about certain issues as one might be under American management, which can be quite extreme.
German managers today are particularly sensitive to the needs of different nationalities in a multicultural team and of the necessity to accommodate them. The foreign team leader who takes these issues into account before the work starts, and who takes time to sort out problems as they arise, will ensure success. The team leader who doesn’t, risks failure. This is particularly the case with mergers and acquisitions. As the most powerful economy in Europe, Germany is a leading player in international mergers and acquisitions, especially in the areas of IT, chemicals, transportation, and forwarding. However, a number of mergers fail, and analysts increasingly attribute the failure to the fact that company operations management and workplace culture simply could not work together, causing frustration, disagreement, loss of productivity and profit, and, finally, divorce. It is important for managers and team leaders to do their “cultural due diligence” and find out how to blend the two management cultures.
Germany is seen as the strongest economy in Europe and the fourth-largest in the world by GDP (after the US, China, and Japan). German industry has been seen as a model of economic management and its high productivity and relatively low-wage economy have allowed it to weather the economic storms of 2008 better than most of Europe. However, there are signs that, like the rest of Europe, Germany, too, may be under pressure. Its strength still lies in its manufacturing and it is Europe’s largest exporter to China. However, it feels the need to develop its services industry, which is less investment intensive and far more lucrative. Also important, its famed transportation infrastructure is old and starting to creak, and Germans recognize that upgrading and investment is needed. In the labor market, Germany has an ageing workforce, partly compensated for by a fairly relaxed immigration policy. Finally, the apprenticeship system, which trains school leavers for technical and engineering careers without going to university, is beginning to fall out of favor with the younger generation, although as a solution for post-school unemployment it is much admired elsewhere in Europe. Germany recognizes these issues, but has survived much greater difficulties and no doubt feels that in the coming years it will surmount these as well.
Germany is a highly attractive business partner, but only if you understand the German way of doing things. A trusted colleague, such as an agent or a German business partner, can be invaluable in mediating between the two sides in a negotiation, and helping to smooth over potentially rough areas. Equally important is thorough preparation—not only for the presentation and the negotiation, but for the German ways of doing business.