Author: Carina Knörzer

In times of economic crisis you can hear the term German Mittelstand as a reason for the relatively stable economy here in Germany. The small and medium-sized companies are a driving force for the growth of Germany’s economy. But why is that? What is so special about these companies?

Definition

Let us have a closer look at the phenomena German Mittelstand. Therefore, we first have to define the term. Here in Germany, small and medium-sized enterprises (SMEs) with up to 250 employees are called Mittelstand. But German Mittelstand implies more than just the size of the enterprises. There is a special spirit around these companies.

Here are some criteria which are typical for German Mittelstand companies:

• family ownership,
• independence,
• special company culture,
• lean management hierarchies,
• long-term policies,
• strong ties to the region.

Over 90 % of the companies of the German Mittelstand are independent family businesses which are often managed by their owners. In many large-scale enterprises, where CEOs and board members change frequently, the goals are mainly oriented on short-term profit. Compared to that, SMEs focus more on long-term policies like securing jobs and the business location. A close contact to customers and long-term business relations are other important characteristics.

People are the Most Important Resource

With lean hierarchies and a family-like company culture, companies of the German Mittelstand offer attractive working conditions for their employees. According to the results of a survey by the Institute of Leadership and Human Resource Management of the University St. Gallen, two thirds of the employees feel highly regarded by their superior and more than 95 % can identify with the values of the company they work in. You are more than just one of the crowd when you work there. As you can see on the following chart, SMEs encourage their employees to contribute with new ideas and to become actively involved in work processes.

By integrating all hierarchies in strategy meetings, the company can benefit from both, experience and innovation. Long-term employees bring in years of experience and their wide-ranging knowledge. On the other side, young and dedicated engineers with skills in new technologies contribute with their innovative ideas. A good mix of these two groups of staff members helps the SMEs to reach and maintain leading positions in their market.

Training Programs for Skilled Workers of Tomorrow

To keep this balance of experienced and innovative staff, it is very important to constantly get new junior talents. That is why most of the Mittelstand companies offer qualified training programs to supply their need for young professionals. After the years of training they know the processes and departments of the company. Most likely, the former trainees get offered a job afterwards. So, the German Mittelstand makes an important contribution to the fact that the level of youth unemployment is much lower in Germany than in many other European countries.

Regional Ties and International Success

Another fact that makes the German Mittelstand so special is the high commitment to the region where the company is located. Aside from the jobs the SMEs offer, they support their region by investing in different projects. Donations for charity organizations and sponsorships of several sport clubs or schools are just a few examples of how these companies show their social responsability.

In spite of their close connection to the region most SMEs are also doing business on the international markets. According to the German Federal Ministry of Economics and Technology the German Mittelstand companies are some of the most innovative in Europe. This can be seen by the number of hidden champions which exist. Germany is by far the country with the most hidden champions in the world. Especially in the sectors electrical engineering and capital goods, the SMEs have found niches for their products. And these companies are not only located in large cities. In Wertheim, with its just 24.000 inhabitants, where INDUSTRONIC has its headquarters, no less than eleven world market leaders are located. That is a respectable share of the total number of companies that are existing here!

INDUSTRONIC is a typical example for a Mittelstand company. What are your opinions about the German Mittelstand? Share your experiences by commenting on this post!

Sources:
www.make-it-in-germany.com
www.bmwi.de

For more information about the German Mittelstand please click on the links above!