The underlying values of our corporate culture, the so-called Bertelsmann Essentials,71 are binding for shareholders, as well as for executives and coworkers. Our work is specifically guided by the values of partnership, corporate freedom, creativity, and social responsibility. Someone might say, “That’s just lip service.” But lip service is worthless. The meaningfulness of our corporate culture arises from its daily implementation: from the culture of togetherness that informs our day-to-day business, and that in the end makes it tangible and concrete. To achieve it, many tools were developed over several decades at Bertelsmann.
Our company’s corporate culture places much emphasis on dialogue with our coworkers. But how can you engage in a dialogue with more than 100,000 people? To do so, Bertelsmann developed its employee survey, the first one in 1977 in Germany, and it has been used internationally since 2002. Every four years the company’s employees hand in a detailed evaluation of their superiors, their working environment, and their firm. In 2010, about 85 percent of all employees worldwide participated in the last survey. In 2006, participation was equally high.
These numbers confirm the extraordinarily wide acceptance of this tool. The survey results are an important indicator of the state of our company and are thus taken very seriously by our management. In addition, the ongoing dialogue between leadership and employees is crucial for maintaining a partnership-based working environment. A feeling of personal worth is a big motivating factor. For giving personal feedback, we have developed a number of very specific tools. These conversations follow mandatory guidelines that were established for management.72 Everyone in a leadership position at Bertelsmann must follow these guiding principles. The main purpose of these personal conversations is the continued development, both professional and personal, of the employee; they also define his or her health care support. We consider the training and continuing education of our coworkers to be a significant contributing factor to the future success of our company.
Another important component of our partner-based corporate leadership is profit sharing with our coworkers. Material equality is a prerequisite for creating worker identification with a company. Commissions destroy any real partnership. So in 1970 my husband introduced the model of profit sharing to Bertelsmann. Bertelsmann AG became one of Germany’s originators of profit sharing—it was a groundbreaking pioneer.73 Over the last forty years, this model has been continually developed. Since the introduction of profit sharing, the company has distributed more than one billion euros net to its employees.74 Giving only lip service to the concept of corporate culture would look quite different.
These examples are only a small part of our company’s day-to-day life. The values that we have posited are constantly being put to the test. Our principles ensure coworkers that they have the right to participate in the decision-making process and thus have a substantial influence on the company’s future.
But a corporation is not just made up of noble goals and ideals. Even Bertelsmann can’t survive without financial success. But how does the corporate culture contribute to such success? How can we be so sure that our corporate culture not only implements the right values to create a partnership-based working environment, but is also a major contributor to its financial success?
This is a question that business leaders around the world are thinking about. Much research has been done on it. Bertelsmann has commissioned its own very detailed and thorough studies, which are supported by precise data. Our periodic employee surveys shed light on our coworkers’ attitudes about their workplace. Through these surveys, we can ascertain whether our employees identify with their responsibilities and whether they are satisfied. At the same time, we can analyze our corporate conditions and the de facto staff performance, for example, by looking at the number of resignations or sick days. Then we can compare these data with the financial success of each of our firms. Our analysis of the relationship between corporate culture and financial success came to the following conclusions:75
Clear-cut partner-based leadership goes hand in hand with a strong identification by the coworkers with their tasks and their firm. The extent of this identification is closely tied to the company’s financial success. Conversely, the financial success of a company has a strong positive influence on its corporate culture.
Strong employee identification with the workplace promotes productivity as well as worker health. A highly developed corporate culture is evident by fewer numbers of sick days and a comparably low rate of resignation. We compared firms that have a less developed corporate culture to top-ranking companies with the most developed corporate cultures. The result of this comparison showed that poorly led corporations have about two-thirds more resignations and twice as many sick days.
A strong corporate culture has a positive impact on financial success. Employees who are engaged and motivated do not just contribute to a company’s success in the short term. The financial impact of the corporate culture becomes especially evident when tracking a firm’s economic development over a long period of time. The success rate of companies that have a well-developed corporate culture is twice as high as that of companies with weak corporate cultures. In addition, during the time frame of the study, improving corporate culture led to a growth in financial success.
Our advocacy for corporate culture is more than just lip service. It is also more than just a “soft skill” that can easily be abandoned. At Bertelsmann, corporate culture is a major performance indicator.
A lot of companies consider corporate culture to be a pretty flower, an indulgence you can afford during times of economic growth, but something you would quickly abandon during a financial crisis. But actually the opposite is true. The economic crisis of the last years has shown what a strong corporate culture can accomplish. At Bertelsmann, we, too, were surprised by the extent of the economic crisis. The decline of all the markets pulled the rug out from under many corporations. Like all other companies, we were forced to take drastic cost-reduction measures. Many businessmen and executives told me that they had never experienced such a challenging time—it was the biggest economic crisis in eighty years. What was there to rely on, when everything was collapsing, and when planning became more and more difficult because nobody knew what things would look like in six months, in ten months, or in two years? What would we base our decisions on if everyone was fishing in murky waters? What would we orient ourselves by? My common sense and my intuition both gave me only one answer: our values. Trust in our collective work.
Bertelsmann has seen a lot of crises in its 175-year history. It survived two world wars. We faced great challenges during the oil crises of the 1970s and the world financial crisis that began in the late 1980s in the United States and reached Germany in the early 1990s.76 The breakdown of the new economy at the beginning of this century cost us dearly. Yet all our efforts were always geared toward the future. At the same time, we never lost sight of the basic values of our corporate culture. They are the building blocks of our stability and our confidence.
Bertelsmann’s very clear ownership structure accounts for its continuity and dependability. Our management, as well as our employees, know exactly what the shareholders’ values are. Our employees know that the owners are looking toward the company’s long-term development and security, and that they would not be tempted to make premature decisions for short-term capital gains. Bertelsmann is independent and can operate autonomously. This, too, gives management greater freedom. It’s no secret that a few years ago Bertelsmann bought back 25 percent of its shares for 4.5 billion euros from the Belgian group Bruxelles Lambert. I would like to take this opportunity to say in plain language: my family and I are not enemies of the stock market. But we believe in self-determination.
Naturally, good and bad decisions are made in every company, whether it is listed on the stock market or privately held. But corporate leadership will more likely decide in favor of company continuity and will more likely align its goals with the good of the workforce if responsible owners are in charge of corporate strategies. This has been proven internationally. The most recent crisis demonstrated that Bertelsmann is well equipped, even if the world’s economy gets into rough waters. Our values are what make Bertelsmann a predictable and reliable partner. Our coworkers, as well as our clients, business partners, and society as a whole know that they can rely on us. Our reliability during even the most difficult times creates confidence, which in today’s difficult times has become a valuable commodity. I am convinced that the value-based system that we practice daily can set an example for our society, for our politicians, and for other commercial enterprises.