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Business

The Next Generation for German Businesses

Fifty years after the economic miracle helped rebuild Germany, many companies that grew out of the war rubble are facing new leadership. But this change isn't always easy.

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The days are running out for aging post-war entrepreneurs

Following World War II, Germany faced the momentous task of disposing vast amounts of rubble, integrating over 10 million refugees and displaced persons, as well as reviving the economy.

But the so-called "Wirtschaftswunder" - or economic miracle - led the nation to be rebuilt out of virtually nothing into one of the top-ranking economies in the world.

The 1950s were a time in which practically anyone with a good idea and willing to work hard could achieve success. And many Germans were not scared off by low wages, as they felt they would reap the benefits once productivity rose.

The West German boom that began at the time was truly remarkable. The growth rate of industrial production was 25 percent in 1950. A decade later, industrial production had risen to two-and-one-half times the level of 1950 and far outdistanced production capacity achieved under the Nazis in the 1930s.

Passing the baton

Even if corporate giants like Adidas, Daimler and Porsche are much better-known internationally, it's actually the small and medium-sized, often family-owned businesses born during the "Wirtschaftswunder" that form the backbone of Germany's economy.

But 50 years on, many of these companies' founders are ready for retirement. A change of generation is on the agenda. According to a study from the Institute for Small and Medium Business Research (IfM) in Bonn, some 71,000 companies each year face the question: who will take over at the helm? Over 900,000 jobs are dependent on whether the switchover will succeed or not.

Many post-war entrepreneurs are not happy to address the topic of their succession, says IfM director Dr. Gunter Kayser. They don't want to let anyone else touch their life's work and they feel they know it all better anyway. They feel indispensable to the company through a very old age - often until it's too late.

IfM found that every year 18,000 companies with some 230,000 employees are ripe for handing-over because the owner suddenly becomes ill or has an accident.

Change requires time

Theoretically, bosses should allow three to five years to choose their successor and completely hand over the firm, Kayser says. This task, though, doesn't just need to be completed in their heads, but also in their hearts. Many bosses see the question of who will succeed them more as flirting with their death, and not as a simple management task.

"This ego aspect is, of course, a key issue in company succession," says Kayser. This was especially the case if there are no relatives to take over the position and someone from the outside needs to be found.

Kayser says these owners need to see the positive side of stepping down. "Handing over a company, whether to an heir or external personnel, is often connected to a great opportunity for a firm," he says.

Successors can bring in new ideas, target new markets and modify product groups. And often this is exactly what these small and medium-sized companies need to continue as the backbone of the German economy.

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