Diverse recruitment bottleneck hinders German engineering
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It is loud, it is filthy and you get your hands dirty. That was the damning verdict of 1,000 German teenagers when the VDMA, the industry lobby, asked about mechanical engineering as a career.
The youngsters’ attitude to the sector, which produces more than €220bn of goods a year, is a cause of concern in boardrooms across Germany.
With unemployment at record lows, manufacturers of all stripes struggle to attract talent. More than 300,000 science, engineering and technology positions were unfilled in April, according to the IW Institut in Cologne.
This bottleneck could cost the Mittelstand — small and medium-sized businesses — €65bn a year in lost revenue, says the professional services group PwC.
The figures have concentrated minds. With Germany’s workforce growing older, companies have to look at a more diverse pool of applicants. They also need managers who can refresh the Deutschland AG brand, which is still associated with rooms full of older white men.
Germany’s leading companies got their first female chief executive in October, when Martina Merz took over at Thyssenkrupp, the MDax-listed steel-to-submarines conglomerate. Since then Jennifer Morgan has become co-chief executive at software maker SAP, which is listed on the flagship Dax index.
German attitudes towards gender roles remain conservative. A survey published this week by market research group Kantar shows that, despite Angela Merkel’s long tenure as chancellor, just 31 per cent of Germans are very comfortable with having a woman as head of government, and 33 per cent a female chief executive.
Even so, two Geman companies — chipmaker Infineon and car-parts supplier ZF Friedrichshafen — are leading efforts to increase diversity and both are in the top 10 of the FT ranking. Sabine Jaskula, board member for human resources at ZF and formerly a manager at automotive supplier Continental, recalls her early days in manufacturing. “I’ve been in the business for almost 20 years,” she says. “When I started, we were not talking about leadership, about corporate culture, about diversity. The successor was always the second in line, waiting for the boss to retire. It was not about social skills or bringing different opinions together”.
ZF now works with Femtec, a programme that brings women interested in technology or engineering to the factory floor. Last year ZF revamped its advertising campaign. Its posters, which pop up at university job fairs and on billboards, feature case studies of Dhanashree, a Pune-born product purchaser; Ahmed, a Michigan-educated engineer, and Sun Peng, a recruit from Shanghai.
Ms Jaskula says they sum up the realisation at ZF, and in other German boardrooms, that “there is an undeniable correlation between the level of diversity and business performance”.
Until recently this conclusion was not shared by most German companies. A 2016 report by EY and the Diversity Charter organisation found that more than half of German groups felt there was no need for action to increase diversity.
“The reason the public organisations are starting to address diversity is because we have a tight labour market,” says Aletta Gräfin von Hardenberg, director of Diversity Charter.
The organisation, founded in 2006, boasts 29 large corporates among its 3,500 signatories, which include Infineon and ZF. More than 13m employees are under its umbrella. Each company pledges to “[foster] a corporate culture characterised by mutual respect and appreciation of every single individual” but crucially there are no concrete targets for hiring or spending. Such commitment has been slow in coming. “I tried to talk to Moody’s and other rating agencies years ago [but to no avail],” Ms von Hardenberg says.
Not much has changed since then as far as investors are concerned. “At least in Germany, the capital markets are not too interested right now. Some ask: ‘Do you have a woman on the board?’ but that’s it.”
A focus on the supervisory boards of public firms, which are mandated to meet a 30 per cent quota for women, obscures the lack of progress lower down in companies, where an influx of talent is desperately needed.
“We have very diverse customers. We need innovation power, and that you can only create if you have a diverse workforce,” says Ms Jaskula.
“Female engineers are a very scarce resource,” she adds. “The quota of female engineers may never be equal to the male quota but for us diversity is much more than gender.”
Infineon has a higher proportion of women in non-managerial posts, at more than 45 per cent, which shrinks to just 15 per cent at senior levels.
The company, which is at the heart of Germany’s “Silicon Saxony”, is committed to increasing female talent and has started flexible working.
Such arrangements, says Thomas Marquardt, global head of HR at Infineon, “are [becoming] more important to balance career goals and private needs”. He adds: “We are supporting this with options like home-office, telework, sabbaticals and part-time.” His company, for example, has “a part-time share of 13.6 per cent and it offers child care at all bigger sites”.
Flexible working is less likely to be on offer at smaller manufacturers, such as HAWE, a third-generation, family-owned hydraulics group that employs just under 2,500 people in Munich. Its products can be found on robotic production lines worldwide and even in the mechanics of solar farms, such as the array in Chile’s Atacama Desert.
HAWE has a majority-female supervisory board, which includes Alexa Haeusgen and her husband Karl, a former chief executive. Beyond the boardroom is more complex, and this mirrors the picture in German manufacturing in general. While a third of HAWE’s digital team is female, few women are to be found on the shop floor.
“Working on shift in manufacturing is just not something that attracts a lot of women,” says Mr Haeusgen, citing the hours and physical effort. While HAWE benefits from being based in a city, the situation is worse for Mittelstand groups in more remote areas, to which few women would consider moving.
A lack of progress is even more pronounced in terms of geographical diversity. “I see a real deficit in integrating non-German people,” Mr Haeusgen says.
“The question for companies should be: ‘Do you have someone from China, the US or Italy in your management?’. The answer, invariably, is no.”
However Mr Haeusgen sees a slow but steady shift within the conservative Mittelstand, particularly with succession. “Fifteen to 20 years ago, business owners wouldn’t consider their daughter,” he says, “but now that is beginning to happen”.
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