Having just got back from Munster in Germany I read with interest the Sunday Times In Focus piece this week “So how did Germany become the new champion of Europe?”
The reporter was based in Bestwig, about an hour from Munster in Westphalia, a region where, according to the strap line, firms thrived because of innovation and good labour relations.
Citing VW as the world’s most profitable car company, German football teams dominating the Champions League whilst being mainly supporter-owned (and with the lowest ticket prices but largest attendances in Europe), and workers enjoying pay rises, Germany clearly stands out in the EU.
The essence of the report was that when the UK was creating wealth through super-banks and light touch financial regulation and the US was into dot.coms, Germany stuck with its industrial roots and engineering excellence. At the Max Planck Institute for the Study of Societies they put it down to Germany’s history and culture as much as the way the economy is managed.
Old- fashioned it might have seemed sticking with its industrial heritage, employers having obligations to the workforce and the community (imagine that!) and unions and employees having the right to influence decisions and sit on the board. But it’s turned round Germany’s fortunes since the 1990s when it was called the “sick man of Europe” and was dealing with re-unification.
There is also the tradition of Mittelstand companies, similar to our SMEs but with up to 500 employees, often family owned, and specialising in high quality products. In fact across all companies competing on quality seems to have been a more important consideration than price.
Sennheiser the audio company is a good example of these type of businesses which employ 70% of the workforce and over 80% of apprenticeships with strong links to the communities. They typically give grants to send apprentices to university so they can go back to the company when they graduate and also provide in-house education.
Competition from cheap labour has put a premium on quality and innovation and it seems to have paid off. There is also the respect for craftsmanship and engineers which we have largely lost in the UK. And our relationship with Trades Unions is different from what happens in Germany.
When I was in Munster I visited the BASF coatings factory nearby in Munster-Hiltrup with a group of Work and Organisational psychologists (I remember buying BASF audio-tapes back in the day, now they produce high quality paint finishes for cars).
There we learnt about the way workers are employed in teams of 10-16 like autonomous working groups. They have a group coach appointed by management and a group speaker (Gruppesprecher) selected by the employees. Twice a year they all sit round together and agree which targets and objectives they have achieved and these are presented to management. The workers are awarded bonuses as a team so they rely on the group process and peer pressure to motivate all members of the team to contribute.
They also use IDEA management to produce innovatory ideas. At the plant I visited they had 40,000 suggestions a year from the 4,000 plus staff of which 20,000 were acted upon. All the teams are given an hour each week to discuss these ideas.
In addition there are spaces for meetings in the now disused parts of the plant which have been renovated for this purpose including an outside In Forum area for meetings where this photograph was taken.
I wrote previously about how German company BMW had dealt with an ageing workforce. It’s just another example that shows that collaboration between management, unions, and employees can work in effective and positive ways.