Mr Sacra, hasn't HR management in German companies become far more professional over the past 20 years?
Certainly. HR has evolved from a largely administrative function into one that increasingly shapes and supports the core business. That development was right and consistent. Today's problems have less to do with missing tools or flawed processes. The weaknesses run deeper – in the national culture, which is naturally reflected in corporate policy and strategy, but also in hiring policy.
But aren't Germany's high level of education and its work ethic key competitive factors that have contributed significantly to the success of companies here? After all, Germany is one of the world's leading exporters.
The work ethic and productivity of German employees have historically been a success factor for the German economy that should not be underestimated, and have played a major part in keeping Germany competitive internationally. With the rise of several Asian countries, China in particular, the global economy has recently become ever more dynamic. Companies and their workforces face growing demands to hold their own in an increasingly tough competitive environment. If Germany does not want to lose its place as a leading industrial nation, its competitiveness must be secured for the future as well. This is where I see HR management in particular being called upon: to continue the success of German companies by selecting and recruiting the right minds.
What problems is HR facing, and how can HR ensure that German companies remain successful in the future?
Given the ever-growing shortage of suitable executives and specialists, the pressure to fundamentally rethink recruitment is increasing. It is a typical phenomenon among German companies to recruit candidates mainly from within their own industry. The reason lies in German culture – in uncertainty avoidance, if you take Hofstede's criteria from his book “Culture's Consequences” as a benchmark. The advantage is obvious: a shorter onboarding period and therefore lower costs. Companies also hope for a transfer of know-how from competitors, and the risk of a new hire failing appears to be minimised. What is underestimated, however, is the danger that industry-specific processes and routines are simply carried forward rather than put to the test. Routines are comfortable. It is convenient to keep doing things the way they have always been done. Organisational blindness creeps in, people do the bare minimum, and with it comes the familiar “we've always done it this way”. In the medium term, the company's capacity for innovation declines – market share is lost and is difficult to win back. A number of academic studies confirm this. Increasingly, companies are recognising the problem and taking new approaches. One of our clients, for example – a world-leading technology group – explicitly stated when awarding a search mandate for a multi-project manager (f/m/d) that they did not want anyone from a competitor, arguing that they wanted to refresh their own corporate DNA with new ideas and less conventional approaches. Instead, they were looking for candidates from fundamentally different industries – ideally including start-ups. Unusually, this technology-driven company also set no requirements whatsoever regarding the future post-holder's educational background. The only criteria defined were personality traits. Our client was aware that this involved a certain risk. In the end, the approach proved to be a stroke of luck: the new hire put a great many supposedly proven processes to the test and optimised them further. In German companies, however, requirement profiles like this are still the exception. Candidates are all too often still sought according to the old pattern. Other countries are considerably further ahead here – with consistently good results. HR departments and executive search consultants still have a great deal of persuading to do to give highly qualified individuals the chance to contribute their ideas and concepts in unfamiliar environments. In my view, this would be one way of successfully countering not only the worsening skills shortage, but also organisational blindness and the bare-minimum mentality – and of further strengthening the innovative power of German companies.
Thank you for the interview, Dr. Sacra!
Dr. Erik Sacra is a Partner at VESTIGA Consulting GmbH. Holding a doctorate as well as degrees in business administration and political science, he has 20 years of experience filling specialist and leadership positions in Germany and abroad. His main focus is on the automotive and industrial sectors. Thanks to his international background and expertise, he has repeatedly encountered problems that seem to be changing only slowly, even in the course of digitalisation and globalisation.