I H R M P R A C T I C E S I N G E R M A N Y

Schenken bei:

SP NageshChetan Sethi

Sahil BhushanAmit Kumar

Gaurav GuptaJagdeep Singh

Population: 82.34 million– Berlin (Capital) 3,404,000– Hamburg 1,754,00– Munich 1,294,000– Cologne 989,000– Frankfurt am Main 652,000– Stuttgart 593,000.

Currency: Euro

Founding member of the EEC

GDP Growth - real growth rate 1.8%

Inflation rate: 2.6%

Unemployment: 12.6%. However, the unemployment is high due to the higher unemployment rate in former East Germany (16.8% in East Germany vs. 8.4% in West Germany).

Germany Overview

1. Leading Economy: 3rd largest Economy

2. Global Player

3. High Productivity

4. Excellent Workforce

5. Innovative Power

6. First-Class Infrastructure

7. Inviting Incentives

8. Competitive Tax Conditions

9. Secure Investment Framework

10.Quality of Life

10 Reasons for Choosing Germany

Features of German business Environment

1. Economic Growth

2. Stable Economic Environment

3. Business Landscape

4. Foreign Direct Investment

5. Infrastructure

6. Workforce

7. Innovative Power

8. Trade Fairs

Since unification in 1989, Germany is Europe’s most populous nation and the continent’s largest economy. Situated at the heart of the European continent, and fundamentally shaped by Europe’s history, it is characterized by deep regional identities while at the same time also conveying a “national” German culture.

In today’s global business environment, developing successful business strategies and valuable business relationships, based on an awareness of this German culture, is essential for one’s organisation.

IHRM activitiesHuman Resource Planning

Recruitment and Selection

Training and Development

Performance Management

Remuneration

Repatriation

Employee Relation

1. Identifying top-management potential early.

2. Identifying critical success factors for future international managers.

3. Providing developmental opportunities.

4. Tracking and maintaining commitment to individual in international career

paths.

5. Tying strategic business planning to HRP an Vice-versa.

6. Dealing with multiple business units while attempting to achieve globally

and regionally focused strategies

Human Resource Planning (HRP)

Recruitment and SelectionEthnocentricKey management positions filled by parent-country nationals

PolycentricHost-country nationals manage subsidiaries and Parent company nationals hold key headquarter positions

RegiocentricHiring and promoting employees on the basis of the specific regional context of the subsidiary

GeocentricSeek best people, regardless of nationality, Best suited to Global and trans-national businesses

Employee Selection factors in Germany

Causes of Expat assignment failure

Major Reasons in Germany:1. Inability of spouse to adjust2. Manager’s inability to adjust3. Language Problems

Remuneration /Compensation

How to adjust compensation to reflect national differences in economic circumstances and compensation practices.

How expatriate managers should be paid.

The German firm - high uncertainty avoidance - rules settled everything.Expert based, need for education and certification, delegation, participative

management, extensive employee protection, somewhat risk averseFor non-managerial employees, international firms normally adapt their

compensation and performance appraisal systems to local laws, customs, and cultures.

While U.S. workers appreciate feedback from an appraisal system, German workers are resentful of feedback.

Some facts on IHRM in Germany

Co-determination In Germany, there is a statutory system for some form of employee representation

on the board of directors or supervisory boards of some types of company. Statutory works councils systems based on legislation or widely applicable collective

agreements exist in 12 EU members (primary is the German model of the betriebsrat)

Expatriates may face two tax bills for the same pay, one from the host country and one from the home country.

Most parent-country governments have devised regulations that allow the expatriate to minimize double taxation. Often, the expatriate may need to pay income tax in only one country.

In cases where additional taxes are incurred by the employee, the employer will usually reimburse the employee for this extra tax burden.

Tax Equalization

Headquarters Salary System

Headquarters pay scale plus differentials. The salary for the same job

at headquarters determines the base salary of the home country

national. The differential can be a positive addition to an expatriate’s

salary, or it can be a negative allowance to account for the extra

benefits that might be associated with the particular overseas

placement

Citizenship Salary System

The manager’s salary is based on the standard for the country of his or

her citizenship or native residence. An appropriate differential is then

added, based on comparative factors between the two countries

Types of Compensation system

Remuneration in GermanyTypically use balance sheet approach

Equalizes purchasing power to maintain same standard of living across countries Provides financial incentives to offset qualitative differences between

assignment locations.Pay for Schools, health care, etc.

Base SalarySame range as a similar position in the home country

Foreign service premiumExtra pay for work outside country of origin

AllowancesHardship, housing, cost-of-living and education allowances

TaxationFirm pays expatriate’s income tax in the host country

BenefitsLevel of medical and pension benefits identical overseas

German CultureKey Concepts and ValuesBusiness Etiquette

Appearance

Businessmen wear dark suits, solid conservative ties and white shirts

Women also dress conservatively, in dark suits and white blouses

Chewing gum while talking to someone is considered rude

Germans are strongly individualistic.

shake hands at both the beginning and the end of a meeting.

Age takes precedence over youth.

Punctuality is necessity.

When introduced to a woman, wait to see if she extends her

hand.

Appointments are mandatory and should be made 1 to 2 weeks

in advance.

Letters should be addressed to the top person in the functional

area, including the person's name as well as their proper business

title.

If you write to schedule an appointment, the letter should be

written in German.

Behavior in Business Situations

Germans are very private

Titles are very important

Shake hands at both the beginning and end of a meeting

Business decisions are not made over the phone

Communication

Germans value their time

As business men they work hard

They are under a lot of pressure

It’s considered bad etiquette to be late

Or too early!

It shows disrespect for their time

Punctuality

9 to 5 Monday-Saturday

Except a few business men 6 p.m. all the time

Sundays most jobs are closed

Unless they have a limited operating permit

Only a few business are 24 hours, i.e. Gas Stations etc.

Standard Work Schedule

Only 4% of women work in office management

Many women rights still very outdated

They believe women should be in the kitchen

taking care of the children

in the church

Many women don’t attend college or try to further their

education in any way

Women in the Workforce

Value order, privacy, punctuality

Are thrifty, hard working, industrious

Respect perfectionism

Have sense of community, strong desire for belonging

Appear reserved, unfriendly until you get to know them better

About German People

Shake hands with everyone present when arriving, leaving

Never shake hands with one hand in your pocket.

When introducing yourself, never use your title. Introduce

yourself by last name only.

Titles very important. Never use titles incorrectly. If unsure, err in

favor of a higher title.

Initial meetings are used to get to know each other. They allow

your German colleagues to determine if you are trustworthy.

Meetings adhere to strict agendas, including starting and ending

times.

At the end of a meeting, some Germans signal their approval by

rapping their knuckles on the tabletop.

Meeting & Greeting

Contacts vital to a business success. Use bank, German representative or Chamber of Industry and Commerce.

Rank very important in business. Strict vertical hierarchy. Power held by small number of people at top.

Deference given to authority. Subordinates rarely contradict or criticize boss publicly.

Decisions debated informally before meetings with compliance rather than consensus expected in meeting.

Decision making slow with thorough analysis of all facts.

Plans cautious with fallback positions, contingency plans, comprehensive action steps.

Corporate Culture

Being well, correctly dressed very important.

Gifts not exchanged at business meetings.

Give books, bourbon, whiskey, or classical music.

Dress & Gifts

Germans more formal and punctual than most of world. They

have prescribed roles and seldom step out of line.

Don't be offended if someone corrects your behavior. Policing

each other is a social duty.

Don’t lose your temper publicly. Compliment carefully and

sparingly.

Stand when an elder or higher ranked person enters room.

There is a strict protocol to follow when entering a room:

The eldest or highest ranking person enters the room first.

Men enter before women, if their age and status are roughly

equivalent.

The Bottom-line:When in Germany, do as the Germans do

• In comparison to a few years ago when the economy was a bit healthier, a new employee’s starting probation period is now really used by companies for what it is.

• No other reason could explain the results of a recent survey carried out by Germany’s Chamber of Industry and Commerce which show that in a sample of 21,000 companies, 50% of terminations took place during the probation period.

• One method that helps in the integration process is the mentor-model, which has long been known as a popular success measure for new CEOs and even the German Chancellor can also be helpful in orienting anyone new to a job.

First 100 days in German Organisation

The perfect negotiator: • having the patience of a clockmaker and not suffering from prejudices or stereotypes.• do not confront the other party immediately with arguments and demands. Take time

at the beginning of the negotiations to break the ice• Set up your goals and plan your negotiation time:• Genuinely communicate your own strengths: Make sure that you communicate your

own strengths, regardless of whether others have the same strengths or not.• Pick the right moment: which point in the negotiation process would be the best time

to use them. • Be fair and objective:

When negotiating, keep cool and do not let your emotions get the best of you. If your proposal or position leaves the other party annoyed, do not consider this to be a sign of success.

• Listen attentively, ask questions, repeat, and summarize: • "Visualize" your arguments:

Don't just make claims, but make your ideas clear with easy to follow steps• Use clever phrases: • Use of "I" & "We":

Negotiation in Germany

Power distance: status importance, hierarchy: Spain-Sweden

Individualism: group, socialization… vs. autonomy, personal challenges…USA-Japan

Uncertainty avoidance: risk, instability tendency: Italy-Hong Kong

Masculinity/femininity: rigid sexual stereotypes: Germany-Finland

Long-term/short-term orientation: China-USA

IHRM and National Cultural differences:Hofstede (1980)

“Diversity does not only makes Business Sense, It’s a Business must”Dr. Dieter Zetsche, Chairman of Board of Management, Daimler AG

Daimler’s Diversity management program has been in place since 2005. They aim to be one of the most highly respected companies in automotive industry for diversity and inclusion by 2010

Diversity management at Daimler: focused on implementation and are

currently working on the following activities:

Diversity awareness and in-depth training for managers

Performance evaluations incorporate diversity management criteria

Development programs: mentoring, staff rotation, international exchanges

Transparent placement processes

Flexible working arrangements

Marketing and recruitment initiatives for focused target groups

Germany’s commitment to diversity charter:Commitment along the following items:

1. Create a valuing Corporate Culture

2. Ensure fair and meritocratic processes

3. Ensure internal representation

4. Internal and external communication

5. Employee involvement

6. Yearly progress report

Benefits of Diversity to Daimler: It improves customer care and marketplace competition It enhances corporate image and reputation by maintaining ethics and values;

It helps becoming an employer of choice to attract and retain talent by improving people

management and development and being aware of labour market factors;

It has to do with complying with legislation; It plays a key role in recognizing corporate social responsibility to improve relationships

with communities, make economic activity more inclusive, and improve business markets.

Compensation PoliciesCompensation is performance-based and success-orientedThe same basic principles apply worldwideA large proportion of variable compensation.Geared to individual performance and company profits. A Daimler Group component for all executivesCompensation in the collective bargaining sectorEmployee Pension PlanConversion of salary to gain capital gains/benefitsDirect insuranceMutual funds & company share entitlementAdditional Benefits Employee sales Daimler company health insurance fund sports, cultural and leisure facilities

Staffing and Recruitment Policies1. The company attracts talented individuals from all over the world.

2. No discrimination between men and women

3. Consists for both locals and expats

4. New recruits and in house movement of staff for optimal use of workforce

5. Adequate training provided to maintain required standard

6. Known for its tough screening process

Wal-Mart Enters Germany

1997: acquisition of Wertkauf

1998: take over of Interspar

Appointment of US citizen, Rob Tiarks, as CEO Ethnocentric approach unsuccessful

No adaptation to German Culture

No pre-departure training

Denial of differences between Germany and the United States

Do It the Wal-Mart Way

Why Wal-Mart FailedLow price strategies did not work

Poor product qualities

Dirty stores

Service

Wal-Mart in Berlin

Refused to have labor unions

Does not comply with local labor laws: Co-determination

Faces huge strikes

Hours of work

Video surveillance

Employee relationship

Hiring and Firing

Wal-Mart and Labour Unions

Wal-Mart’s ethnocentric approach was a failure

Human resources failed to recognize cultural differences

Wal-Mart survival only possible if labor was allowed to participate in management

Good employee-employer relationship is the key to success

Concluding Remarks

DANKE !!