Knowledge Center: Publication
Chief Executive Officer & Board of Directors
Germany's next-generation leadersSubscribe to Chief Executive Officer & Board of Directors 12/2/2016 Dr. Christine Stimpel
Generational change in Germany’s top business echelons is a work in progress. Even as we speak, younger top managers have moved into board positions and management roles. This elite group of future managers will take charge of running Germany’s largest public companies and family firms in a few years’ time. This survey concerns itself with this new generation of top managers.
Heidrick & Struggles has for many years focused on closely networking with and overseeing these exceptional talents. Eight years ago, we initiated an event series called “Unternehmertum im Deutschen Management” for this young generation of DAX board members. This event series serves as a platform for these board members to exchange ideas and experiences with each other and others. In numerous discussions with young board members and in the context of our recruitment and development activities pertaining to successful management teams, we noticed that the new generation brought with it into the top management ranks a changed view regarding many issues.
These changes enticed us to take a closer look at this group. We wanted to find out whether the top managers between the ages of 35 and 49 were pursuing new ideas and new approaches in their efforts to successfully manage companies. This survey thus aims to gain a better understanding of the next generation of top executives in German business and to grasp and explain why they think and act the way they do. How do they manage, what are their views regarding their careers and private lives, what are the topics that interest them, and what are their plans for shaping their future?
Many of today’s young board members will one day fill the most important positions in German business—in fact, some of them are already CEOs of large corporations.
We identified 131 men and women under age 50 who were board members or part of the management team in the largest German companies at the end of 2015. First, we analyzed this group’s progress (Part 1). What did the professional CVs of young board members look like? Which rules did those that progressed far and quickly, even while they were still young, apply? And what distinguishes the careers of the young, up-and-coming generation in Germany’s largest corporations from those of their more senior colleagues?
For Part 2 of our survey, we conducted structured interviews with 24 of these 131 young board members. This provided an opportunity to define and sketch how these young executives think and act. One of the aspects we inquired about was how young board members viewed the challenges of digitization, a trend that has generated heightened interest among German industrial companies over the past year. New business models are being applied and have resulted in Germany’s leading corporations establishing large numbers of start-ups, be it in Berlin, in Silicon Valley, or elsewhere. This digital transformation will also engulf top management, and in our hyper-networked world, new forms of management are coming about.
The interviews with the young board members and the observations we made at our meetings can be summarized as follows:
- The young board members communicate more openly and less hierarchically than their predecessors. Hierarchies are being dissolved, not least by digital communication.
- The members of the young generation have high aspirations in business, but also want to live a “normal” life; they tend to be unpretentious, and know that their board role is not God-given. They are in control of their own ego and utilize authority in moderation. They use power but don’t abuse it.
- Their approach to their work and their attitude at work are more casual and relaxed, and they are more friendly to others than previous generations have been. Interestingly, most young board members adhere to conservative values. Egos fall by the wayside—getting the company car with the most horsepower is not important to them.
- They take contemporary topics such as sustainability, environmental volatility, the flood of information, or the pressures exerted by a 24/7 working style very seriously.
- Leadership is considered more important than it was previously. Teams, transparency, and human association are important and ingrained topics. They are part of one's self-concept, but young board members still know how to pursue their targets assertively and tenaciously. They are pleasant, smooth, and intelligent, while always staying focused on the result.
- The succeeding generation is made up of board members sporting well-rounded, complete personalities. They are ready to take up the top positions in German business.
- They know that, in the end, the right decisions are vital. They are willing to accept responsibility for these decisions and are prepared to implement them rigorously.
- The most important question in the minds of young board members is how to make their business model viable. Digitization is their greatest challenge, which is why it takes center stage in their companies.
The young generation knows that the future of their companies will increasingly be decided by the US and Asian markets. German engine and plant construction, the automotive industry, German engineering prowess—all of this will not be enough to remain competitive in 20 or 30 years’ time. Following are some of the attitudes of this new generation of leaders:
- This generation of managers knows that the future is digital. Business models are being questioned more quickly and more rigorously than the previous generation of managers would have ever dared to do. Agility and speed are important to survive in the changing world. Young board members are living this attitude.
- They understand that a higher digital IQ is required to survive in the future. They are seeking answers to the question of how their companies can be attractive to Generation Y. The young board members exhibit great sensitivity for this next generation, who they have to inspire for the benefit of the economy.
- Despite this focus on performance, the young generation seeks balance. Fitness and family life are part of a well-rounded self-image. Family and children are valued more highly than by previous generations. Fitness is an indication of self-management to stay in shape for the mental and physical strains of work, and young board members lack an orientation around more traditional social activities and engagements—for example, being part of an association with a purely cultural mandate (such as the opera).
- The men we interviewed might attend a football match with their children on the weekend or go jogging, play tennis, or go to the gym—and golf is out. The women we interviewed spend their spare time a bit differently. Among their interests were activities such as singing, dancing, and even hunting.
- Their job is given great priority, but it is not superior to all other areas of their lives.
- The young board members do not approach their career with the same grim determination of their predecessors. A career is no longer the only aim in life. The elite of these young managers do not want to be perceived as a generation of “smooth careerists.”
- Despite this increased composure, young board members are still ambitious. This is demonstrated by the fact that they can see themselves moving right to the top of a company within the next few years. Young managers are passionate about achieving their goals by exhibiting a great willingness to perform.
- It is noticeable that this succeeding generation shows a basic respect for entrepreneurs, founders, and start-up pioneers and will say so.
In conclusion, we would like to summarize this survey’s two parts with three insights:
- The young generation of board members considers a broad, general background normal. They believe that, regardless of the professional makeup of a board, board members should exhibit solid finance knowledge, should be familiar with all processes in a company, and should have knowledge of the competitive environment and new areas such as digital or cybersecurity. This includes understanding tools such as quarterly reporting, assessments, and 360-degree evaluations, which today are commonplace.
- Young board members consider digitization of business processes, products, and sales channels an issue of overriding importance and one in which they are all personally and strongly involved. They are not only concerned about changing processes but also about how to get company staff on board for this journey. The young generation is thinking about how to execute change management in such a way that all employees will participate.
- The young generation is ambitious, and many future managers state more or less clearly and directly that they are aiming for the top spot in a company but that they will not try to achieve it at all costs. Cooperative, collegial interactions with employees; transparent communication and decisions; and a balanced lifestyle, including fitness activities and spending more time with family, are what shape this generation.
This executive summary has been translated and draws from the report Die Neue Generation. To read the original report in full, click the download link above.
About the author
Dr. Christine Stimpel (email@example.com) is a partner in Heidrick & Struggles’ Düsseldorf office and a member of the CEO & Board Practice.