Organizational Structure in Germany

The traditional form of organizational structure among German companies has been quite hierarchical with the duties and responsibilities of each role or job within the hierarchy clearly and strongly defined.  The preference for defined roles leads to situations where employees are reluctant to deviate beyond what is expected of them and employees tend to simply follow the rules and directives established and communicated by senior management.  The hierarchical organizational structures are accompanied by a “top-down” chain of command in which the major decisions are made by senior management and passed down to lower levels of the hierarchy for execution.  Senior management makes the strategic decisions and middle and lower management are responsible for day-to-day operations.  However, “teamwork” and “consensus-building” are important factors in making and implementing decisions within German companies.  As explained by Gorrill in Doing Business in Germany: Communicaid, which was published on February 16, 2006, the desire among Germans to achieve their own goals and successes is coupled with a keen sense of responsibility for the communal good and this explains why business decisions are based not only on financial factors but also on how they might impact employees and the community in which the company is operating.  The desire to reach consensus also means that it takes longer to reach decisions in German firms.

In the early 1970s Peterson and Garrison argued in an article published in The Academy of Management Journal that German companies were highly structured and that great deference was given to those in authority, thus creating an organizational and managerial structure characterized by a larger number of organizational levels with close supervision; many formal rules and regulations, including highly specific job descriptions and requirements; highly centralized decision-making; and a strong emphasis on position-based authority.  Gorrill agreed that German business culture followed set rules and had a well-defined and strictly observed hierarchy with clear responsibilities and distinctions between roles and departments, low degrees of flexibility and spontaneity, and rank and status allocated on the basis of individual achievement and expertise in a given field.  Gorrill also observed that decision-making in Germany relies heavily on objective facts, logic and analysis of information, rather than on intuition and opinions collected from well-developed personal networks.

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