Unlike US, where the unionization rate declined substantially during the 80-ties, in Germany the unionization rate soared after the German unification. In present the share of German employees taking part in unions doubles that of the American. (2)
Although the employees’ representatives, who interfere substantially in the day-to-day operations, are generally unionized, they do act directly on behalf of employees and are voted by all employees, regardless of their union membership. (3)
Neither German nor American unions interfere on the political level. They primary role is negotiation of employment and pay condition on the industry and state level (not federal level). Nevertheless, German unions act on this issue coordinated and cooperative with employers´ representatives and pay attention to overall cost competitiveness of the economy, especially in export oriented industries. Consequently, wage is not used to poach qualified employees, leading to relative small pay difference within the economy and small annual inflation. 5. Organization
German management is considered to score high on formalization. But contrary to preconceived ideas, formalism does not necessarily mean centralization and bureaucracy as the German firm is more and more decentralized with each unit made to feel responsible for its results. With developed sense of order, clear job description and role definition matter at the workplace, but due to very low power distance and worker participation, such shared values do not prevent feedback and criticism and so do not lead to stiffness and long-term inefficiency. If the decision-making system is slow, it is due to perceived necessity to gather as much information as possible before coming to a decision. (3)
US management is known for deeply rooted sense of competitiveness and experimentation at all hierarchies, leading to increased actionability and propensity to implement change. Ignoring the hierarchy in search of improved efficiency is considered to be justified procedure. No wonder, managerial concepts of networked structures or flat organizations have they origin in US practice. In general, underlying factor in US way of organizing is getting closer to customer. On the other hand, German companies traditionally put more stress on technical perfection of solutions, leaving customer orientation behind. This attitude reflects organizing aimed primarily at cooperation, information flow within the company and optimal resource utilization. German, similarly as other European firms, are far less customer-oriented than U.S. firms.