Is There Distinctive European Management Style: German, English, French… or Cross-National?

“Europe has never existed. One must genuinely create Europe.” ~Jean Monnet

Management styles are characteristic ways of making decisions and relating to subordinates. This idea was further developed by Robert Tannenbaum and Warren H. Schmidt, who argued that the style of leadership is dependent upon the prevailing circumstance; therefore leaders should exercise a range of management styles and should deploy them as appropriate.

Even though there are clear differences between individual European regions, there is a set of common underlying tendencies to observe and thus we speak about European style of management.

In the article Are We Entering an Era of European Management Leadership? by James Heskett writes:  Antonio De Luca describes important differences between American and European management leadership this way: “If one has to generalize, it is fair to say that Americans pursue risk and Europeans seek stability … (leading) to fewer opportunities with more limited financial rewards, but possibly more balance for Europeans. The solution, as usual, is a sensible convergence of these two nuanced cultural approaches.”

Roy Bingham points out that “American management seems to work best when the key needs are speed, aggression, last-minute genius, and take-chance, inspiring leadership. In boom times when it’s ‘expand at all costs’–pick the American style. At other times the more deliberate, consultative European approach is your ally. Maybe this is why we are hearing more from the Europeans these days.”

Jose Pedro Goncalves takes issue with the idea of a “European” style of management; pointing out that there is no one style. In some parts of Europe “(As a manager) I’m a human being.” In others, “I’m just a number.” In general “we (Europeans) are more human, but less flexible, and this ‘leadership’ is only temporary.”

Dr. B. V. Krishnamurthy picks up this theme by commenting; “to argue that Europe might be snatching the lead in management is a little far-fetched. When one looks at the very successful organizations anywhere in the world, one discerns striking similarities—emphasis on efficiency, innovation, quality, and responsiveness to customers—even as one also finds adaptations to cultural differences.”

Heskett writes: I have sat in on several meetings with heads of major European companies in which questions about American leadership have been raised. What’s new, at least in my experience, is that the questions aren’t confined to political leadership; those are perennial favorites among our European counterparts. Instead, the questions deal with issues of business leadership.

They prompt the question of whether the highly-touted American style of management of the 90s is giving way to a new and different European style, just as Americans replaced Japanese management style as the ‘sine qua non’ among the world’s managers just a little more than a decade ago. In a word, the Europeans are acting as if they know something we in the U.S. don’t.

“If one has to generalize, it is fair to say that Americans pursue risk and Europeans seek stability” ~ Antonio De Luca

In the article “Comparison in German and French Management Styles and Business Meeting Etiquettesby Vaobhav Misra writes:  Managers in Germany are expected to be technically capable in their respective areas and to show strong, clear leadership. Although disagreement with a superior will rarely be seen in public this does not mean that Germans are ‘yes’ men. Subordinates tend to respect the technical abilities of their superiors and this will impact on their willingness to implement instructions.

People from cultures where managers are expected to develop a closer, more intimate ambience can see the German manager-subordinate relationship as distant and cold. The higher up the organization people rise the more a sense of the ‘dignity of the position’ becomes apparent. Socializing tends to be at peer group level rather than up and down a hierarchy…

In contrast, most senior management in most French companies was educated at the ‘Grandes Ecoles’ which are the elite schools of France. These colleges champion an intellectual rigor in their students, which is rarely matched elsewhere in the world. This produces a highly educated management population, which approaches management with an unusual degree of academic precision.

‘Intellectualism’ is something to be cherished rather than sneered at and a comment once attributed to French management was that; “this idea seems alright in practice but will it work in theory?” Thus, according to the French, management is an intellectual task to be mastered and thought about in terms of detailed analysis, the complete mastery of complex concepts and information and the eventual application of rational decisions.

More pragmatic issues of employee buy-in, motivating staff, etc. are not as prominent in French management thinking.  Decisions, once taken at senior levels, will be passed down the chain to lower management for implementation. This directive approach can be seen, especially by those from a consensus oriented, non-hierarchical background, as being overly authoritative and lacking in the necessary team-building elements…

In the article “German vs. U.S. Business Mentality” by Geschrieben von Gudrun Smith writes: German style of competition is rigorous but not ruinous. Although companies might compete for the same general market, as Daimler-Benz and BMW do, they generally seek market share rather than market domination. Many compete for a specific niche. German companies despise price competition. Instead,  engage in what German managers describe as Leistungswettbewerb, competition on the basis of excellence in their products and services.

They compete on a price basis only when it is necessary, as in the sale of bulk materials like chemicals or steel.  The German manager concentrates intensely on two objectives: product quality and product service. He wants his company to be the best, and he wants it to have the best products. The manager and his entire team are strongly product oriented, confident that a good product will sell itself. The watchwords for most German managers and companies are; quality, responsiveness, dedication, and follow-up. 

The business practices that might be termed a German management style have the following characteristics: collegial, consensual, product- and quality-oriented, export-conscious, and loyal to one company and committed to its long-term prospects. One could legitimately conclude from this that the German system could stifle change because it is not as innovative, aggressive, or results-oriented as U.S. management style.

That, however, would not be correct, for change can and does take place. It occurs gradually, not always obviously, under the mottoes of stability and permanence, with the least dislocation possible, and often under competitive pressures from abroad. German managers themselves occasionally speculate that change might come too slowly, but they are not certain whether or how to alter the system and its incentive structures.

In the book “Rethink: CEO series: “Europe Shows the Way! The Case for a Superior Management Model” by Professor Burkhard Schwenker writes: The recent financial and economic crisis showed that the European management model is superior to the American one. Weaknesses in the American style of management include a bias toward short-term gain, an inordinate focus on capital markets and finance, a misunderstanding of the concept of shareholder value and a systematic tendency to underestimate complexity.

Europe’s strengths, on the other hand, are rooted in a long-term mentality, excellent manufacturing skills, the ability to set products and services apart and the ability to translate diversity into creativity… According to Schwenker, the forceful economic upturn that has followed the crisis is due in part to the buoyancy of China and India, but also – and primarily – to the strengths of Europe and its superior management style.

The key attributes of this style include; a long-term strategic focus, the ability to set products and services apart, and what is already a very international and decentralized footprint. Schwenker states that the strength of Europe’s economy and the success of its companies are eminently measurable: A comparison of the world’s 3,000 biggest capital market-oriented companies from 1998 through 2008 found European firms to be the true global players.

Of the 3,000 companies analyzed, 27% are European, accounting for 34% of total revenue and 42% of total profit in the defined corporate universe. Schwenker sees these numbers as proof positive that European enterprises grow faster and (above all) more profitably, have a more international footprint, and have a more long-term focus.

In the book “The World We’re In” by Will Hutton writes: Work less but work smarter. French productivity is up; some would claim it is now higher than the U.S., just as is productivity in The Netherlands, Belgium, and the former West Germany. Volkswagen’s market share is climbing even though its highly unionized, highly paid work force puts in an average workweek of 28.8 hours. To this we add a second and related practice; balance work and personal life.

Many would claim that the quality of life (bolstered even by traditional measures of standard of living) in Europe is much higher than in the U.S. In addition, money that would otherwise be paid for management mega-salaries and mega-incentives are invested in technology. These developments seem to be providing the fuel to help Europeans work smarter.

Further, European companies rely more heavily on operational improvements and the contributions of employees rather than mergers and acquisitions to build value. This philosophy seems to be gaining some credence in well, with recent research on the high proportion of U.S. merger and acquisition activity that has actually destroyed value. Do the Europeans have it right? In the long run, will their management philosophy produce superior results? Combining all this with what is now the world’s second currency, the Euro, is the baton being passed from American to European management?

In the article “How European is Management in Europe?” by Markus Pudelko,University of Edinburgh and Anne-Wil Harzing, University of Melbourne, write: “Are there sufficient similarities among the management approaches of European countries to justify the term European Management?” Given Europe’s diversity this question seems justified.

Europe has a population of roughly 800 million, which is divided into 45 nation states, and is home to some 70 languages. Germany’s population is 82 million; Luxembourg’s a mere 450,000. The GDP of Germany is about 2.7 trillion US$, whereas that of Poland is only 180 billion US$. GDP per capita runs from a high of about 50,000 US$ in Luxembourg to a low of 4,000 US$ in Albania.

To understand why European management has many differences, one has first to study the dissimilarities of the legal frameworks in Europe. There are four different legal backgrounds to distinguish from their origin: the civil laws of French, German, and Scandinavian origin and the common law approach of the Anglo-Saxon countries.

In addition, one also finds very different corporate governance codes in Europe. Some European countries emphasize cooperative relationships and consensus, while other countries focus on competition and market processes in their corporate governance frameworks.

Europe is not a monolithic bloc of countries. Its strength and weakness at the same time is its variety of management styles and cultures. European managers are still facing very different business environments, cultures, and corporate governance issues. Being successful in Europe therefore depends very much on the knowledge of these differences. Management styles that work in Germany may not work in France, Italy, or The Nordic countries. Management cultures of the Middle and Eastern European countries and Russia are difficult to identify, because there Western style management has never existed.

In an increasingly multi-polar world in which it becomes ever more complicated to define what “best practices” actually are, allowing for pluralism seems the better strategy than the search for  “one best way”. The ability to integrate opposites and deal with inconsistencies are features for which Europe should have a natural competitive advantage, given its internal diversity which far exceeds that of the United States or Japan.

Given the likely increase in importance of European management practices, one conclusion seems certain: research on European management in an international context will become increasingly important…

  “Europe’s strength is its diversity, not its uniformity.”  ~Sir John Harvey-Jones