The fact that Germany has survived the post-2008 recession well is a testimony to the underlying strength of the German economy and, more interestingly, the strength of its much-vaunted manufacturing base.
Interestingly, unemployment rates in Germany are now lower than they were pre-2008 and exports are considerably higher.
For a number of years, people were warning that the German model was unsustainable – both labour and social costs were said to be way too high – and that the country would need to make radical policy changes to withstand the growing competition from low-wage economies such as China and India. Yet, despite these challenges and despite the cost of the post-cold-war integration of the former East Germany, the country’s economy seems in rude health.
It is, therefore, worth re-assessing the German business model to see what can be learnt from it – especially as post-war German success was achieved without too much attention being given to the science of business management which had been the vogue in the U.K. and even more so in the U.S.A.
In Germany, much greater attention has been paid to academic, technical education and its value to business in general. Therefore, companies tend to be run by technical experts rather than lawyers and accountants and this is reflected in the high regard in which engineers are held by other Germans.
Diligence and competence are characteristics which are held in high esteem by colleagues and are seen as the key indicators of performance. Appraisal systems based on the softer competencies as favoured by many U.K. and U.S. firms are still not common in traditional German companies.