Europe

In this chapter we are going to study an interview that was made to Jean- Jacques Piette, the Abyle Finance´s president and expert in fusions and acquisitions from the German Trade Union Federation. In this article he described the main characteristics of the German management style and how is the interaction between the French managers and the German counterparts.

The German trade unions have an enormous power in the companies´ management dynamics, this system is based on the joint management, this means that manager has to share his/her decision power with trade unionists, indeed all type of decisions in Germany should be made by consensus, that´s why exists different management bodies, which sustain this method, the first one is the board of directors which is in charge of daily management , the second one is the supervisory board which is in charge of the company´s strategic issues, this latter body is generally composed by five shareholders , five trade unionists and an eleventh member who doesn´t have any linkage with the company´s capital and presents a clear capitalistic position, the body´s composition seeks to give power parity to the two interests groups. Between the two management bodies should exist unanimity, that´s why it is very common the double signature in any agreement that company wants to undertake, reflecting the consensus between the two management bodies. Also the works councils´ figure is compulsory in those companies who have more than 2000 employees. “The works council has the power of signing all agreements in the company”. This board  is elected for four years and doesn´t have a representative from the employers , if its members want , they can invite the representative of the company but he doesn´t lead the meeting, this initiative pursue that everybody in the company knows the main concerns of the  different interests groups have regarding the company´s performance. In Germany isn´t well seen that directors keep secrets to their employees regarding the company´s plans, indeed employees are such important  that inside companies exists a particular approach of manager- employees  relationship that focuses on a technical culture and states “each person is the master of his own specific activity”.

Also another characteristic that is highlighted in this interview is once Germans have made the decision, it is rigorously implemented, this sense of discipline allows to think that German staffs lack dynamism in their operations and it is a clear disadvantage for a company who copes in a changing environment.

This method works well when trade unionists and managers share the same perspectives about the company´s well- being; also this method allows the empowerment of employees and a major sense of responsibility among them. Nonetheless this method faces several challenges in the future that should be solved, one of them is half German population will be retired for the 2015 and also the high labor costs could threaten the competitiveness of the German industry.

As a conclusion the author suggests that any foreign company, who plans to develop business in Germany, should be aware of the trade unions´ interests.

There is a current discussion around the existence of the co-determinism principle in Germany. Select, define and explain 3 arguments in favor and 3 against such principle.

In simple words Co-determinism is a practice which employees have an active role in the company´s management; co- determinism allows them a decision- making structure that gives power parity to both interests groups, the owners and the employees.

The arguments that support the practice of co- determinism

1. 1.       The empowerment of employees because it gives an awareness of responsibility regarding the company´s performance.
2. 2.       Protect the employees´ rights and interests; their welfare is taken into account at the moment to develop strategic plans for the company.
3. 3.       Improve the communication among the company´s members and reduce the conflicts in all levels of organization.

Arguments against co- determinism

1. 1.       Co-determinism lacks flexibility and dynamism in the decision-making process and in the plans´ implementation.
2. 2.       It is a burocratic structure that brings high operational costs and it isn´t time efficient.
3. 3.       Co-determinism discourages partnership between foreign companies and German companies.

 Reference source:

Understanding Mangement  German- Style by Jean- Jacques Piette. l´Ecole de Paris

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