German Corporate Structure

The basic German business structure is highly hierarchical with strongly defined roles. Responsibility within a firm is clearly defined: so much so that, from top to bottom, you’ll often encounter workers who choose to close themselves off into the roles designated to them. This is often literally true. Just walk along the corridors of most German office buildings – you’ll be struck by the fact that all or almost all the doors are closed. The Germans, in general, are rather averse to the “open-office” principle that has become popular in North America and some other societies.

Once Germans have their roles within the company context, they endeavor to stay within those roles – and adhere to the rules. That is why it is so difficult to get workers here – from salespeople in a big store, guards at a building, tellers at a bank, clerks in an office, all the way up through those in middle or even upper management positions – to perform some activity that falls outside their defined roles. Germans certainly have no problem with moving up to a higher job, but while still within a specific job, they don’t like to move outside the parameters of that post.

Also, command in German companies is still much more a top-down than a bottom-up affair. Senior management makes its decisions and passes them down the chain of command; those below are generally empowered to carry out policy rather than formulate it. Or to put it another way, senior management makes the strategic decisions, while middle and lower management are responsible for operational day-to-day management. And then the work teams carry out these operational decisions. But we don’t want this to sound too rigid, as if it were a relentless one-way-traffic process. While those sturdy hierarchical structures do command a great importance in the majority of German firms and the chain of command typically moves in a resolutely vertical direction, a sense of “teamwork” is also very important within the German business world.

The proper term for German “teamwork” is probably “consensus-seeking”. While many Germans have a strong sense of individualism, this is usually coupled with a keen sense of responsibility for “the good of the community or group.” Many business decisions, for example, are evaluated not only for their financial benefits to the company, but also those of its employees. The structure of much German business decision-making requires consensual input from both employers and employees – which is another factor that can render decision-making comparatively slow.