German Business Structures

Germany:

Most of the power in German companies is vested in the hands of a few senior managers. Larger companies (AG & GmbH) have a Supervisory Board (Aufsichtsrat) which appoints the Management Board (Vorstand). The management board is the final decision-maker on policy matters which affect management.

The members of the Vorstand have shared responsibility for the overall management of the company and this means that the chairman of a company has considerably less personal power than in certain other countries — management at the top could be said to be collegiate.

However below Vorstand level, companies tend to have a strictly hierarchical approach within which individual's specific roles and responsibilities are tightly defined and compartmentalised. This results in a methodical approach to most business issues where procedures and adherence to well-defined rules are respected.

This methodical approach has both good and bad points. On the plus side, everybody knows what is expected of them and has a process to help them achieve clearly identifiable goals. On the other hand, a criticism that is often levelled at German industry as a whole and at German business people individually is that they are inflexible and slow to change to new situations.

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