business Archives - Page 51 of 92

Board Portfolios

Under § 77 of the German Stock Corporation Act, the members of a management board run the company together: sämtliche Vorstandsmitglieder nur gemeinschaftlich. The articles or the board’s own rules may provide otherwise, and in practice they assign portfolios to individual members. The member who holds a portfolio is then fully liable for the decisions in it.

The other members keep their part. In the words of one law firm, the principle of overall responsibility nicht durchbrochen, sondern vielmehr modifiziert, is not broken but rather modified.

Organized Irresponsibility

In 1988, the sociologist Ulrich Beck published a book with the title Gegengifte. Die organisierte Unverantwortlichkeit, Antidotes: Organized Irresponsibility. A journalist in the weekly der Freitag paraphrases the idea this way. The causes of disasters are attributed to complex structures and organizations, and in the end those organizations no longer have to answer for how they managed the risk.

Wirecard and the Gap Between Supervisors

Wirecard filed for insolvency on June 25, 2020. Three days earlier, the company itself had said that balances of 1.9 billion euros in trust accounts most probably did not exist. A committee of inquiry of the Bundestag then asked who had been responsible for supervision. The financial supervisor BaFin is responsible for banks, insurers and financial holding companies. In BaFin’s view, Wirecard was ein Unternehmen aus dem Bereich Informationstechnik und keine Finanzholding, an information technology company and not a financial holding. For money-laundering supervision of other companies, the state authorities are responsible. In Wirecard’s case, the authority in Lower Bavaria took up its responsibility only when suspicion grew. An official of the finance ministry told the committee: Wenn keine Zuständigkeit vorliegt, gibt es auch nichts zu koordinieren. Where there is no responsibility, there is nothing to coordinate.

Management by Job Description

The Harzburger Modell was taught at the Akademie für Führungskräfte der Wirtschaft in Bad Harzburg, founded on March 26, 1956, by Reinhard Höhn. Its motto was Führung durch Delegation, leadership by delegation. Responsibility was delegated to the level of the hierarchy that held the authority to decide. Each employee’s area of tasks was in Stellenbeschreibungen fest umrissen, firmly outlined in a job description. By Höhn’s death in 2000, about 600,000 managers and junior managers had been trained at the academy. From around 1972, American management systems gained ground and the model lost importance. Critics said it favored an authoritarian and bureaucratic style. Höhn was a former SS-Oberführer, and his prominent role in the Third Reich also damaged the model once it became known.

Applications Without Names

In November 2010, the Federal Anti-Discrimination Agency started a pilot project with companies, public authorities and municipalities. Applications arrived without the applicant’s name, photo and similar details. Invitations to interview were to be made ausschließlich aufgrund der Qualifikation, solely on the basis of qualification. The study that went with the pilot found positive effects. According to press reports, the participating companies saw no additional benefit in the method. The German employers’ federation rejects it. The town of Celle still uses it.

Vitamin B

Vitamin B is the joking German term for connections. The B stands for Beziehungen, relationships. The DWDS dictionary of the German language marks it as colloquial and humorous. It means personal contacts through which someone gets preferential treatment in a career. The contacts are common too. A survey by the Institute for Employment Research found that 32 percent of all new hires in Germany in 2016 came about through personal contacts. In small companies, the share was 47 percent.

The Moose Test

On 21 October 1997 the new Mercedes A-Class tipped onto its side in an evasive maneuver test by the Swedish magazine Teknikens Värld. Daimler-Benz stopped sales, and production stopped on 11 November 1997. The company then fitted the electronic stability program ESP as standard equipment. It also retrofitted every car already built with ESP and a modified chassis.

Care in the Name of the Law

The Lieferkettensorgfaltspflichtengesetz, the Supply Chain Due Diligence Act, took effect on 1 January 2023. The word Sorgfalt, care, is in its name. The law obliges large companies to observe due diligence duties in angemessener Weise, in an appropriate manner. On 1 January 2024 the threshold fell to companies with 1,000 employees. In September 2025, the federal cabinet approved a draft amendment. Under the draft, the annual reporting duty would be dropped, and fines would apply only to serious violations. The basic duties of care would remain. On 14 January 2026 the Bundestag debated the draft for the first time and sent it to its committees.

Filing for Insolvency on Time

When a German corporation can no longer pay its debts, or its debts exceed its assets, its directors must file for insolvency ohne schuldhaftes Zögern, without culpable delay (§ 15a InsO). The latest deadline is three weeks after the company becomes unable to pay, and six weeks after it becomes over-indebted. A director who does not file, or files late, faces up to three years in prison or a fine. The offense has its own name, Insolvenzverschleppung, delaying insolvency. The uniform rule has existed since 1 November 2008.

Hidden Champions

The management thinker Hermann Simon introduced the term Hidden Champions in a study in 1990. It describes companies that rank first, second or third in the world market in their field, or first on their home continent. Their annual revenue is usually below three billion euros. The public has hardly heard of them. The exact number in Germany is unknown, but three surveys each found more than a thousand.