Business Culture in Germany

Business Culture in Germany

Author: Flo Oberhofer,  “Der Indien Spezialist”

 

The target of this chapter is to give Indian startups a first insight into the German culture and its implications on business behaviour and attitudes . This guide does not have the claim to be a single source of truth and some facts are depicted in a slightly exaggerated way to cover extremes. The people startups will meet during a “business journey” into the German market are humans and every individual is different. So a general recommendation for the usage of this guide is to keep it in mind when interacting, but always approach individuals with an open mind and without prejudices.

When talking about the German culture, there are a couple of stereotypes which one comes across commonly. This guide will take up some of those and investigate their impact on business life. Additionally, this guide will give hints on specific topics where cross-cultural pitfalls might appear.

It has to be clarified that nowadays there are significant differences in how individuals approach work and their jobs. This guide will give an insight into both worlds, traditional enterprises (e.g. automobile manufacturers) respectively government entities as well as more progressive small-, medium- and startup-companies. The variances in attitude and behaviour are often based on company culture but can also be dependent on the differences between generations respectively ages.

Punctuality: There is a German saying “Fünf Minuten vor der Zeit ist des Deutschen Pünktlichkeit” which translates to „being five minutes ahead of time is a Germans sense of punctuality”. Indeed punctuality is a very important and critical aspect in German business culture. For Germans it is a matter of respect to show up to meetings (be it virtual or in person) on time. If a meeting is scheduled at 10:00AM, then someone who shows up at 10:05AM is frowned upon. There will be no direct consequences of being late but participants will have a negative impression of late-comers which can potentially harm the business outcome.

This punctuality remains also of highest importance in regards to timelines given. If someone promises to send a set of documents until a specific time and date, then people will keep this in their minds (respectively notebooks). If the documents do not arrive until the agreed moment – again a negative impression is left behind. In general it is advisable to always give a specific date and time to accomplish specific tasks. One should avoid “I will send this some time next week” or even worse “I will send this to you”.

This behaviour is based on multiple factors. First, traditional German business people tend to schedule their day to the minute. They will evaluate how long a meeting will take and that’s exactly the time slot they will put down in their schedule. If someone shows up late to meetings, this will jeopardize their schedule and create unrest, especially if it’s a meeting of a large group of people. Germans also value their spare time a lot, this is why most large traditional German companies have a specified limit to their working hours. Those have been negotiated by workers unions and are usually valid from the workers level to the mid-management level. The typical German work week is around 35-40 hours, Monday to Friday. Managerial level positions usually never work on Saturdays and Sundays. The typical office working hours are from 8AM to 5PM with a one hour lunch break. Business lunch is very common, while business dinner is more rare and usually happens only with long-standing business partners. Many traditional companies do ask people to avoid overtime and if people have to do overtime they will be asked to reduce the working hours in the subsequent weeks accordingly. Medium-sized companies and startups specifically are mostly not covered by the workers unions labour agreements.

In general it is not advisable to call German business people outside of business hours unless otherwise agreed. Especially in startup companies long working hours and overtime are not uncommon as timing is in general seen a little bit more flexible. The general attitude towards punctuality remains though. Due to the mentioned “tight planning” of German business people it is recommended to arrange appointments ahead of time and stick to meetings without short term cancellations. Those meetings should be held according to a previously shared and published agenda depicting all the individual points to be discussed. Germans tend to use those agendas to prepare themselves for meetings.

Sticking to ones word: Roughly falling in the same category as being on time is sticking to words given. Germans do give a very high importance to promises/commitments given or expectations risen by individuals or companies. They often base their level of trust and their willingness for cooperation on whether people deliver on their promises.

Germans are known to take a lot of notes during meetings in order to be able to record and fulfil verbal agreements, but also to keep in mind what has been promised to them. It is not obligatory, but in Germany taking notes during conversations and presentations is often interpreted as a sign of interest and care. Germans value detailed documentation and it is not uncommon that participants receive “Minutes of Meeting” after a meeting has been held.

Details: Most Germans are very much focused on details. Part of this focus is also tidiness. Germans do notice and judge negatively e.g. when there are typos in presentations. At the same time, most local business people expect to get a multitude of documents, charts, graphics, tables and calculations covering technical as well as business aspects when getting into negotiations. For them to enter a business deal, all the bits and pieces need to be in place, clarified and written down. German business contracts are often written in a very extensive way in order to include respectively exclude any possible scenarios. Often contracts are checked and rechecked by lawyers or attorneys so in order to minimize risks. After a contract has been signed it is self-evident for Germans that parties stick to the terms and conditions laid down in the contract. Retrospective alterations are usually not possible and people expect to “get” exactly what has been laid down in the contract.

Risk-Taking: The topic of being ready to take risks is one of the major differences between the Indian and the German culture. While taking risks is a fundamental part of the Indian DNA, in Germany potentially failing while taking a business risk is still seen as a taboo. This has to be kept in mind while approaching German business people and companies. Risks correlated with a deal, product or agreement should always be analysed beforehand and potential solutions to mitigate those risks should be elaborated. It is also advisable to support any claims raised with some kind of proof.

While “jugaad” solutions are an essential part of Indian business ventures, Germans give a high importance to profound and professional solutions to challenges. Usually there is always plan A, B and C for cases when things do not work the way they were expected to. Apart from this general observation, it has to be mentioned that there is a slowly growing fraction within the younger generations which are willing to take risks, because they know that even if one fails one can not fall too harsh due to the good situation in the German labour market and solid social security systems in place.

Those people are mostly to be found in startup companies. The general risk-aversion can also be found when seeking for startup funding. It is incredibly difficult for early-stage startups to find funding in Germany. German investors usually only start to get interested in a venture when there is already strong traction with a first steady revenue stream and most risks have been mitigated by the founders.

Corruption: One specific topic which needs to be mentioned briefly in regards to business ethics is corruption and bribery. While Germany “only” ranks 12th out of 180 ranked countries in global corruption evaluations (Transparency International, 2017), it is strongly advisable to not try to make any indications towards bribing individuals. Apart from being ethically not acceptable, there are many control systems in place which will uncover and punish such attempts. In line with above, business gifts are rather uncommon in Germany and should be avoided especially between parties which have never met before. If one insists to give a present, it should be something with no monetary value (e.g. an expensive pen) but rather something of idealistic value like a small box of Indian Tea (value should be below 5 Euros). Since business gifts are very uncommon in Germany it can not be expected that there will be a “counter-present”.

Relationships: Germans are in general very particular when it comes to separating business from personal life. While personal conversations between colleagues are quite common, usually Germans do not exchange too much personal and family stories with sporadic business partners. While in India there is a large focus on building personal relationships amongst business partners, Germans mostly base their business relationships on facts, figures and past performance. In general, Germans often appear sincere and distant with little humour. However, this is something that evolves with getting to know each other and some kind of rapport has been established. Again it has to be mentioned that in startups there might be a higher emphasis on building a personal relationship.

Straightforwardness: One of the points where foreigners struggle most is how direct Germans are. Especially when it comes to giving feedback, Germans tend to be very outspoken. Other cultures often tend to express criticism in a very soft and indirect way so in order not to embarrass any involved individuals. This is not the case in Germany and business people will be very straight forward to tell if something is wrong, if there is something they do not like or if there is something they do not agree with. This is not done so in order to humiliate or dupe individuals but purely due to the fact that Germans think that this way of approaching feedback will result in the best outcome and the fastest rectification of issues. This directness can also be translated to business negotiations, if Germans say “yes” they mean yes, if they say “no” they mean no and if they say they need to think about it and further evaluate it, then they will do exactly that.

Hierarchy: The speed with which business decisions in Germany are made is highly dependent on the type of company that is dealt with. While traditional companies tend to have an extremely strong hierarchical system, startups often have flat hierarchies with fast decision processes. This translates also to communication pathways. It is of high importance that communication takes place through the person responsible for the specific topic. People appreciate if they are kept in the loop in emails (CC) and some tend to react adversely if they are “left out”.

Communication: In regards to general communication it has to be noted that there is a formal and informal “you” in the German language. The “Du” is used for addressing each other on a more personal first name basis, the “Sie” for the more respectful surname basis. When a German introduces him- or herself by the first name then it usually is expected that communication is conducted on first name basis. Addressing by surname (Mr./Mrs. + Surname) is applicable for introductions on sur- or full name basis. As a rule of thumb can be said that dealing with traditional companies, people will mostly communicate on a surname basis. However, the usage of the first name is getting more and more common in the German business ecosystem, especially amongst younger generations and startups. Titles are also very important in Germany, so if communication is on “Sie” basis, titles like Doctor (Dr., PhD) and Professor (Prof.) should always be included in the addressing. No matter how the addressing is, it is a custom to shake hands when meeting each other.

Especially elder German business people might still have issues with the English language, so it is recommended to speak slowly and as clear as possible. For professional communication, Germans prefer to communicate via email or phone. In regards to alternative communication channels, Germans are very particular about their privacy, so contacting individuals via Facebook or WhatsApp should be avoided unless otherwise advised, as those channels are reserved for private matters. For professional networking, locals mostly use the website Xing which is a German equivalent to Linkedin.

Germans are in general very friendly and open minded with a great respect for other cultures. Most Germans will be glad to “forgive” any cross cultural mistakes if they see that the foreigners are interested in and try to understand the German culture. Most will be keen on sharing further insights into the German culture, but only if asked to do so. On the other hand – Germans are very curious to get to know more about foreign cultures even though they might not actively ask because they do not want to cause any discomfort to the foreigner. Most are very aware of cultural differences and will try everything to make foreigners feel welcome and comfortable. If there are any doubts or questions, one should use the “German straightforwardness” and just ask, no matter how irrelevant a question might seem.