Boardroom diversity

''In the upper echelons of German business management there are only white men. 600 of our highest-ranking managers are white German men. It’s too homogenous,'' lamented Siemens CEO Peter Loescher last year. But what about this year? Did Loescher’s bold comments help make the ranks of Germany’s business elite any more culturally diverse? Simon-Kucher & Partners, a consulting agency in Bonn, investigated the issue and reported some interesting answers.

Though Loescher’s portrayal of diversity in the German upper management echelon was dismal, his facts were at least right, according to Simon-Kucher.

The executive boards of German chemical giant Bayer, energy company E.ON or steelmaker ThyssenKrupp are comprised entirely of German males. In fact, Simon-Kucher found that 10 of the 30 companies listed on the DAX have no foreign nationals on their executive boards at all. If one looks at the remaining DAX companies that do employ foreign executives, the picture is a little more diverse: about a quarter of those companies’ top positions are filled by foreigners.

German firms still measure up well

Christoph Lesch, a consultant at Simon-Kucher, recognizes that there is a cultural imbalance in some of Germany’s boardrooms, but says German firms still measure up fairly well when compared to their European counterparts.

Lesch says some nations that appear to have very multicultural management communities are actually less diverse than they first appear. The high number of foreigners in top management positions in Luxembourg, for example, has less to do with diversity than it does with a single Argentine firm that set up its headquarters there.

German business depends on exports

In other European countries similar in size to Germany, Lesch says, it is considerably more difficult for foreign nationals to secure top managerial positions. And while the United States of America may be known as the land of opportunity ¾ it certainly is culturally diverse ¾ the vast majority of top executive positions are occupied by white males.

“Many German firms are prepared ¾ often at a moment’s notice ¾ to conduct business in English. Other countries like Spain and France lag behind in this department,” Lesch says, adding that it’s more difficult for managers who haven’t learned these languages to succeed at a high level.

Progress over the past year

Filling top management positions with foreign nations was once a rare concept at German companies. In 2000, for example, only 13 percent of DAX company executives were non-Germans. In the following six years that percentage rose considerably to 24 percent. Since 2006, however, the percentage of foreign nationals holding executive posts hasn’t risen much: this year it was 26 percent ¾ a figure Lesch believes should be higher.

“If all the German companies that so far haven’t filled some executive board seats with foreign nationals begin dong so, we will see that this number can rise over 30 percent,” he says.

Lesch, however, doubts that the number will ever rise past 40 percent. While cultural diversity can boost a management team’s productivity, a company that brings together too many different mentalities and viewpoints risks diluting that team’s effectiveness.

“Think of all the synergistic power possible if a cool, analytical German teamed up with a visionary American and a vivacious southern European. Sounds great, right? But then what do you do when the mix becomes too diversified, when mentalities and cultural beliefs are too strikingly different? Reaching a consensus on the simplest matters might prove too difficult.”

Executives from likeminded cultures

It is little surprise, then, that half of the foreign executives working in the highest levels of German business come from Switzerland, Austria or the United States ¾ countries whose laws and beliefs closely reflect German values.

Still, in 2009, German DAX companies hired three top managers from emerging regions in Asia and South America: Beiersdorf hired James C. Wei from Taiwan, Deutsche Bank hired Anshu Jain from India, and MAN Ferrostaal hired Antonio Roberto Cortez from Brazil. All three, it’s important to note, had previous work experience in the United States.

One of the few DAX companies that has managed to incorporate a large number of foreign nationals into its executive ranks over a sustained period is Fresenius Medical Care. But the company refused to release an exact percentage, saying company policy does not allow it to comment on executives’ nationalities.

Auther: Insa Wrede (cs)

Editor: Sam Edmonds