Room for improvement in leadership and corporate culture
The field of mechanical engineering is currently undergoing great change: A global economic slowdown and weak investment, escalation of trade conflicts, Brexit, the structural upheaval in the automotive industry, the unexplained implementation of the energy revolution and digitalization. These burdens are mutually reinforcing and challenging companies in Germany’s industrial sector with the greatest employment. After a two percent drop in production in 2019, the VDMA expects a decline in production of this magnitude also in 2020.
The industry must strive to overcome the growth pause and master the challenges posed by new price-intensive competitors, digitalization and climate protection. Companies have to therefore adapt their strategies and processes. But where are the levers for a sustainable transformation?
Sustainable organizational design and lean processes
German mechanical engineering is an innovation-driven industry. Technology and innovation management play a central role. Technology trends have to be recognized at an early stage, evaluated and appropriate measures initiated.
Companies must promote an internal innovation culture. The ideal means for this are a sustainable organizational design – from the formal organizational structure to the design of individual roles – and lean processes. However, they are not sufficient to transform into an agile company that is oriented towards the needs of customers. It is just as important to motivate and qualify employees to bring about the necessary changes and be willing to get involved. In addition to consistent leadership, this requires a corporate culture that promotes motivation and innovation.
However, there is still much to be done, especially in the area of leadership and corporate culture. This is shown by the results of the Change Readiness Index (CRI), which Staufen AG assessed for the second time in 2019. On a scale from 0 to 100, the CRI records the ability of companies to change and reflects the adaptability of companies in the categories of structures, processes, leadership and corporate culture as well as employees and qualifications.
Developing corporate culture towards innovation
With 53 points, mechanical engineering companies in 2019 consider themselves to be even less prepared for the challenges of change than in 2017 (57 points). The collapse of the economic slowdown, geopolitical risks and adjustment processes in the automotive industry certainly plays a role here. But it also shows how urgent action must be taken to master the challenges of tomorrow. After all, 87 percent of those surveyed state that their company will change significantly or very significantly over the next five years.
While mechanical engineering companies have made great efforts in the areas of structures, processes, employees and qualifications, there is still a great deal of catching up to do in terms of leadership and corporate culture. Companies are advised to implement Lean Management. As the study on the CRI has clearly shown, this concept and economic success are joined together. Shop Floor Management and an innovation-oriented leadership culture strengthen the adaptability of companies and prepare them for the challenges of the years to come.
Over 30 years experience in Mechanical Engineering at ANDREAS STIHL AG & Co. KG, TRUMPF GmbH & Co. KG and as Managing Director of VDMA Baden-Württemberg (support and representation of 800 companies). Throughout his career he consulted many engineering companies in the areas of corporate strategy, corporate succession and industrial relations. Dr. Ulrich Hermani also implemented new forms of working time organization (mobile and agile working) and advised the board in Mechanical Engineering companies.dr. ulrich p. hermani I senior advisor I economist (Dipl.-econ.)