For one thing, there’s usually two of them per corporation. So if you’ve ever wondered why your Germany-based client seems, well, deliberate in all things, part of that is the built brake of a two-tiered governance. German corporation law requires all companies limited by shares or publicly-traded to have two boards: a management board (Vorstand) and a supervisory board (Aufsichtsrat). Germany is not alone. Fifteen other jurisdictions in Europe have similar structures.
The below summary is from a side-bar in an article by Stefan Stern two years ago we liked in the Financial Express on corporate governance forms around the world. The US, UK, Japan and Germany were covered. The summary below may help explain why some German management segments are slower than you’d think, as managers are genuinely consensus-oriented, with a “hurry up and wait” style in deals and disputes. Two-tiered boards add to the deliberate corporate style. The last sentence, of course, is a barely veiled post-war poke at Germany.
Germany: The post-war German settlement enshrined the “two-tier board” in German corporations-““a supervisory board and a management (or executive) board. The supervisory board includes worker representation, laying the foundation for “Mitbestimmung“ or “co-determination”, a consultative approach to managing the business. This model, too, is under pressure today, criticised for hampering organisations’ ability to change fast. That presupposes that changing fast is necessarily always a good thing, of course.