What determines who holds power in the boardrooms of Germany’s biggest companies? Is it performance? Or do factors such as social background play a bigger role?
The sociologist Michael Hartmann, an emeritus professor at Darmstadt University of Technology, has studied Germany’s executive class as it evolved over the past 150 years, trying to figure out who ends up in top corporate positions and why.
Hartmann told DW that the results surprised him. “To this day, more than four-fifths of Germany’s economic elite come from the top three to four percent of the population,” he said.
Hartmann said there was a slight shift between 1907 and 1927, with more Germans from lower classes managing to climb the social ladder. “But, in the nearly 100 years that followed,” he said, the share of those from lower social backgrounds who made it to the top increased by only about 2 1/2%.”
The ‘right ones’
Over the past decade, companies have introduced diversity, equity and inclusion (DEI) programs to create a level playing field for labor market participation for all.
According to a recent survey by the technology-sector lobby group Bitkom, two-thirds of German companies with 500 or more employees now have formal DEI goals, and roughly the other third are planning or discussing such initiatives.
Still, when it comes to influential leadership positions, the elite tends to stick to its own. But, in recent years, more women have entered executive roles — thanks in large part to legally mandated gender quotas, Hartmann said.
The German-Swedish AllBright Foundation has criticized the continued gender imbalance in its latest report.
“Personnel decisions for top management levels — especially supervisory board and executive board chair positions — are still almost entirely in male hands. In general, the higher the position, the fewer women are represented,” the report stated.
And those women who do reach the top often come from even more exclusive social backgrounds than their male peers, Hartmann said — something that would also apply to people with migrant backgrounds.
“My assumption is that if you already have one ‘obstacle,’ like, for example, gender or migration background, then your social origin has to be even more elitist,” he said. People “can’t afford to have two obstacles,” he added.
Does class count more than merit?
In Germany, class bias begins early, namely with the type of education. Children of academics have a far easier time accessing resources and support than children of working-class families.
According to a Germany study by British specialist recruitment firm PageGroup, about 80% of children from academic households go on to attend university, compared with just 25% or so of children from nonacademic homes.
Without a university degree, Hartmann said, it’s nearly impossible to reach the highest levels in the business world. But even when elite offspring achieve the same academic qualifications, their career path tends to be quicker and smoother than those with other backgrounds.
After analyzing multiple cohorts of Germans with academic degrees, Hartmann has found that children of business executives who hold PhDs were 17 times more likely to make it onto the board of one of Germany’s 400 largest companies than working-class children with the same degree.
Moreover, additional factors would help determine who rises to the top — for example, how someone speaks, how they present themselves, and even their hobbies can play a decisive role.
“People like to surround themselves with others who share their interests, who think like them, who speak like them,” Hartmann said, and that’s true for the executives making hiring decisions, as well.
Working-class children advance
There has been one positive development in Germany in recent decades, Hartmann said, as the share of top leaders from working-class backgrounds has increased noticeably — though from a very low base.
This progress has come at the expense of children from the middle class, Hartmann said. “Put simply, when a working-class child achieves a high level of education and becomes a contender for a top business role, they often displace someone from the middle class — say, a teacher’s child.”
Overall, the proportion of children from elite backgrounds in top corporate roles in Germany has remained the same.
Can quotas overcome social mobility limits?
When social origin largely determines career success, it affects more than just individuals: It slows economic growth, PageGroup found, calculating the cost of the lack of social mobility in Germany at about €25 billion ($29 billion) in GDP growth each year.
A McKinsey study found that GDP could increase by 9% — or €1.3 trillion — in the 27 EU countries if social mobility were improved.
There are, of course, stories of individuals from modest backgrounds who make it to the top — like, for example, the oftecited example of former Siemens CEO Joe Kaeser — the son of a factory worker.
Although regularly highlighted in the media, such stories, Hartmann said, are featured so often that “people start to believe they’re common.”
So how can the dominance of elites in Germany be challenged? Hartmann said the answer could only be legally binding quotas to overcome all sorts of discrimination and class bias. These may be unpopular, he said, “but, in my experience, nothing else will work.”
This article was originally written in German.
