Should the Portuguese be more Germanic?

Understanding what divides and unites us is becoming increasingly relevant, especially as the economic models of wealthy countries like Germany seem to dominate European Union policies.

By Maria Jo?o Alexandre (translated from the Portuguese version, 2016)

You can read the original Portuguese version here: Os portugueses devem ser mais germanicos?

Pode ler a vers?o original portuguesa aqui: Os portugueses devem ser mais germanicos?

Why are Germans so focused on rules and savings? Why does the same need for rules lead to excessive bureaucracy in Portugal? Where does Germany's tendency towards austerity originate? Culture might be the answer.

These questions are more pertinent than ever as some praise the German economic model and argue that the rest of Europe should follow suit. Meanwhile, critics like journalist and former advisor to the President of the European Commission, Philippe Legrain, accuse Germany of using EU institutions to reshape Europe in its image.

Michael Schachner, operations manager at Finnish consultancy ITIM International, put his finger in the wound and highlighted this issue in a 2016 article: "Members of the eurozone have complained about the German policy of austerity even in times of crisis, especially about forcing other countries to do the same."

Germany rebounded quickly after the 2008 financial crisis, which began with the collapse of Lehman Brothers. Eurostat figures show that Germany's GDP grew by 8% between the first quarters of 2009 and 2011. Many are asking: what drove this growth? While countries like Portugal were drowning in debt, Germany was saving, reveals Philippe Legrain, author of European Spring: Why Our Economies and Politics Are in a Mess - and How to Put Them Right (2014). But what makes Germany special (or not)? Is it a good model for the rest of Europe?

With these questions in mind, I embarked on an extensive investigation into the cultural differences between Portugal and Germany. Seeking answers beyond cultural stereotypes, I spoke with international management experts, economists, consultants in national and organizational culture, and managers of German companies operating in Portugal. To my surprise, there is a scientific model that explains many of the differences (and similarities) between these two nations.

Rules that don't work

The tone of our conversation shifted dramatically in the last quarter of an hour. Professor Manfred Perlitz's previously monotonous German-accented English became suddenly agitated. The trigger was a memory: three years ago, a clerk at the tax office in Lagoa, Algarve, had repeatedly insisted, "No, it's not possible."

Professor Perlitz, from the University of Mannheim, arrived in the Algarve with his German wife on a Saturday in 1997, and by Monday, they had bought a house in Carvoeiro. He initially came to play golf but ended up relocating to Portugal with his family. His children attended state kindergarten and then the German School of the Algarve in Portim?o. Despite the bureaucratic frustrations, he acknowledges the benefits of living in Portugal, especially the healing properties of seawater for his daughter's skin condition.

"Dealing with public services in Portugal requires countless visits to the same office, and the first answer is always no!" he laments. He recalls a particular instance in 2012 when he had to endure a 12-hour wait at the town hall to change his address, after more than five trips back and forth. "I used to hate German bureaucracy, but after experiencing Portuguese bureaucracy, I now appreciate the bureaucrats in my country." In Germany, he says, you always get a clear answer, even if it's negative, and you know exactly how to proceed.

With his extensive experience advising the German government on various projects, he suggests that the Portuguese government cut red tape. "It is not possible to implement the best management models in Portugal as long as this bureaucracy persists. To maintain a competitive economy, state organizations need to function efficiently."

As an international management specialist and consultant for German companies operating in Portugal, Professor Perlitz observes that the Portuguese lack a strong focus on business and industry. "This would be the last country I would choose to work in." Yet, after a brief, dramatic pause, he adds, "I have never encountered a country with such honest people who work tirelessly during long working hours."

However, he cautions that working long hours does not necessarily equate to greater productivity. He notes that Portugal is not unique in this regard; during his time in the United States, he observed both managers and workers often pretending to be busy. In contrast, German workers, he says, focus intently on their tasks and get the job done. "If you're at work, you'd better be working."

Working like crazy

Efficiency and productivity rates in Germany are very high, argues Portuguese consultant Miguel de Almeida of Coverdale Germany, who has over 13 years of experience with multinationals. He attributes this to the fact that time spent in the workplace is entirely dedicated to work. "There is no such thing as spending office hours just sitting around," he says. Moritz Koppensteiner, founder of the Aveiro-based consultancy Koppensteiner Technologies, concurs. "In Portugal, there are people who leave work after ten o'clock at night and come in early the next day, but that doesn't increase productivity."

Indeed, OECD figures for 2014 show that the average weekly working time for a main job in Portugal was 40 hours, while in Germany it was 34.7 hours. Within the European Union, Portugal is one of the countries with the lowest productivity per hour worked. In other words, we work long hours but produce little.?

"In Germany, children are at the bus stops at seven in the morning. Workers start early but leave at four in the afternoon to rest and spend time with their families. German law prohibits working more than 10 hours a day. If travel is involved, workers cannot work more than 12 hours. Managers are punished if they ask for overtime and risk serious problems with the unions within the company," explains Koppensteiner, a German who has lived in Portugal for 20 years.

Koppensteiner founded his company in Portugal a year ago to help bridge cultural gaps. Today, he builds cultural bridges between the Portuguese business world and German-speaking markets (Germany, Austria, and the German part of Switzerland) in the mass production of automotive components.

When he moved to Portugal with his Portuguese wife in 1994, he joined the team at Vulcano Portugal (now Bosch Termotecnologia) and helped set up the water heater development centre in the Portuguese midlands. Much of his experience was gained in the automotive moulding sector, working at Simoldes in Oliveira de Azeméis and LN Moldes in Leiria.

"If everything in Portugal worked like the moulding industry, there wouldn't be a problem—the sector exports 90% of its products and is growing every year." He views moulds as a business suited to the Portuguese, who excel in flexibility since certain parts are custom-made to the customer's requirements. "It takes several incremental improvements to achieve the desired result, and the Portuguese are masters at this."?

The Portuguese are experts in flexibility, particularly in the machining moulds for the aeronautical industry. "The mould has to go into the machine as many times as necessary, and Portugal is a world leader in this: it has been exporting for decades, now even to Germany. There's an element of improvisation that fits the style of the Portuguese worker."

The cost of flexibility

The flexibility of the Portuguese workforce was a recurring theme in the interviews I conducted while writing this article. The moulding industry, in particular, exemplifies what Portugal does well. But it's not all roses: while some praise Portuguese workers' ability to improvise, others see it as a problem—specifically, excessive improvisation that can lead to deviations from plans and processes.

Johannes Habel, programme director at the European School of Management and Technology in Berlin (ESMT Berlin), with whom I spoke at length about the power of German SMEs, believes that the Portuguese should "learn to improvise" and know when there is too much or too little.

The price of flexibility is underlined by the Portuguese Bernardo Meyrelles do Souto, country manager of Deutsche Bank in Portugal. "Of course, improvision comes easy to us, but at what cost?" he exclaims. What is the cost of doing in two days what you should have done in a month? The Germans are very disciplined in executing their plan, which makes everything run smoothly with less cost and fewer surprises. Even if there is a surprise, there's time to intervene. "The so-called flexibility of the Portuguese is good for getting around surprises as long as it's within a plan.

Yet German perfectionism didn't come without its share of criticism. For Coverdale's Miguel de Almeida, the German need for a 100% perfect solution means that people are never satisfied, which leads to delays in product launches. The time spent on research and planning is extended, while execution is subject to tighter deadlines. The result is that when something unexpected (and therefore unplanned or unforeseen) happens, confusion arises. That's when a Portuguese worker can help.

"The Portuguese traits of flexibility, creativity and a sense of opportunity combine well with German virtues." It could be a perfect marriage. "In critical situations, it can make Germans open their minds and think outside the box if someone suggests less orthodox solutions.”

Thus, while the flexibility of the Portuguese workforce can sometimes lead to challenges, it also presents unique strengths that, when balanced with German discipline and planning, can result in highly effective and innovative outcomes.

Culture is the answer

I've been mixing various ingredients about Portuguese versus German culture so far. But how do you objectively make sense of all these elements? The answer lies in a scientific model created by Dutch social psychologist Geert Hofstede. Hofstede's model explains why each country is the way it is by analyzing the dimensions of national cultures, which he later adapted to organizational culture. He compares the cultures of different countries to show that there are national and regional cultural groups that influence the behaviour of societies and organisations.

Hofstede's first analysis was conducted at IBM between 1967 and 1973, involving more than 70 countries. The latest analysis, presented in the book Cultures and Organizations: Software of the Mind (3rd edition, 2010), co-authored with his son Gert Jan Hofstede and Michael Minkov, provides a comprehensive framework for understanding cultural differences.

Hofstede's Model of National Dimensions (6D Model) explains why some countries have a greater need for rules than others. Both Portugal and Germany, for example, exhibit a significant need to avoid uncertainty, which leads them to create extensive rules. This model offers a valuable tool for making sense of the diverse cultural elements that shape the behaviours and practices of different nations.

Fighting uncertainty by working hard or relying on experts

If there is one characteristic of the Portuguese that experts in cultural country comparisons do not doubt about they tend to avoid anything uncertain (99 points out of 100). They have very rigid beliefs and codes of behaviour; there is an emotional need to have rules, even if they never seem to work.

The bureaucracy that entangled Professor Manfred Perlitz when he was trying to buy a house in Portugal has now been explained. The cause lies in a culture based on the primacy of rules and the need to control uncertainty.

And why do the Portuguese feel the need to work like crazy, even if it doesn't make them more productive? In Portugal and in the countries that score high on this "time is money dimension”, people need to keep busy, to work long and hard. This could be part of the reason.

Although Germany doesn't match Portugal in its aversion to all things uncertain, it is also among the countries that avoid uncertainty the most (65 points out of 100). In line with the philosophical thinking of Kant, Hegel and Fichte, Geert Hofstede explains, that there is a strong preference for deductive over inductive approaches, whether in reasoning, presenting or planning: before moving forward, you must first have a systemic view of what you are going to do. Details are important to provide reassurance that projects are well thought out and make sense.

Germans tend to compensate for uncertainty by relying heavily on their expertise combined with a low "power distance dimension" where not everything is the responsibility of the boss. The Portuguese, on the other hand, compensate for uncertainty by working like "silly cockroaches."

Portuguese primacy of tradition versus German pragmatism

The cultural studies also show that Germans are pragmatic and make rules to suit their needs, while the Portuguese are more normative and stick to traditions. The explanation lies in the fact that Germany, unlike Portugal, scores high on the "long-term vision dimension” (83 points out of 100), indicating that it is a pragmatic country.

Germans believe that truth is very much dependent on the situation, context and time. They show an ease in adapting traditions to the conditions of the moment, a strong propensity to save and invest, and perseverance in achieving results.

The lack of pragmatism in Portuguese culture is reflected in their low score on this dimension (28 points out of 100). They are normative in their thinking and preoccupied with finding the absolute truth. They show great respect for tradition, have little inclination to save for the future and are focused on achieving results in the short term.

Normative societies that score low on this dimension, such as Portugal, have a preference for tradition and norms and are suspicious of social change. Long-term societies, such as Germany believe that it is education that prepares for the future.

Now it's clear that although Portugal and Germany are rule-oriented societies (and both have bureaucratic systems), there is a difference: while Germany is pragmatic about rules, i.e. willing to change them according to the conditions of the moment, Portugal sticks to what it has defined as the norm and resists changing the rules.

In terms of savings, the 6D model shows that the long-term vision of the Germans leads them to save for the future, while the short-term vision of the Portuguese leads them not to hoard but to seek rewards that don't take so long to earn. We are now beginning to have answers to our differences and similarities - not cultural stereotypes, but scientific evidence about the values that build societies.?

Ordoliberalism and austerity as a mirror of German culture

Where does Germany's preference for austerity and rule-making come from? Should the EU adopt the German economic model? Germany's tendency to save and uphold austerity measures is reflected in its high score on the "long-term orientation dimension" of the 6D Model. Its focus on creating rules stems from a relatively high score on the uncertainty avoidance dimension.

According to consultant Michael Schachner, Germans create rules to avoid uncertainty, but that doesn't necessarily mean they follow them. Schachner warns that, given Germany's powerful position in the EU, they can impose these rules on other member countries. As an economist and consultant specializing in Hofstede's Model, he believes Germany's cultural inclination towards austerity is deeply rooted in Ordoliberalism. This economic philosophy asserts that a government is necessary to establish rules and maintain order (ordo, in Latin) for a market economy to operate effectively.

In the article "Of Rules and Order," published in The Economist in May 2015, the author argues that the 2008 financial crisis highlighted the disparity between Germany and the rest of the world; and identifies the biggest flaw in Ordoliberalism: “It makes sense for individuals to save when they are in debt, as the proverbial Swabian housewife does in Germany. But if all individuals cut spending at the same time, the result can be a shortfall in demand that negates the benefits of microeconomic reforms.”

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8 Lessons from Germany: What Portugal Can Learn

Consultants and managers of German companies with operations in Portugal share their insights:

Lesson 1: "Reduce bureaucracy. Exporting the best management models to Portugal isn't possible as long as excessive bureaucracy persists. To have a competitive economy, government organizations must function efficiently." - Manfred Perlitz, professor at the University of Mannheim and advisor to the German government.

Lesson 2: "Avoid improvising too much and resist the temptation to deviate from structured plans. However, Portuguese should also embrace some improvisation and learn to improvise." - Johannes Habel, programme director at the European School of Management and Technology, in Berlin.

Lesson 3: "Be persistent and avoid constantly seeking loopholes when things go wrong. All plans face challenges, but discipline, which is often difficult for the Portuguese, is essential." - Bernardo Meyrelles do Souto, country manager of the Deutsche Bank in Portugal.

Lesson 4: "Meet deadlines and be punctual. Punctuality is the discipline of kings. A king can do whatever he wants but must be on time." - Moritz Koppensteiner, founder of the Aveiro-based consulting company Koppensteiner Technologies.

Lesson 5: "Give people more autonomy to use their creativity, which is often stifled." - Miguel de Almeida, consultant at Coverdale Germany.

Lesson 6: "Balance our joy and enthusiasm with the rigour of German planning, which is crucial. Enthusiastic Portuguese achieve 150% of their goals, while disappointed Portuguese achieve only 50%" - Pedro Henriques, Human Resources Director at Siemens Portugal.

Lesson 7: "Plan rigorously. My experience of over 20 years working for a German company, in Portugal and abroad, shows that Portuguese managers adapt well to the German management culture." - António Lopes Seabra, vice president of Continental Mabor's Asia Pacific Light Tyre Business Area.

Lesson 8: "Adapt our reality to the German model, which includes pragmatism in following defined processes and effective time management. At Bosch in Aveiro, Portugal, the German model has made our teams 17% more efficient over the last five years." - Jo?o Paulo Oliveira, country manager of Bosch Portugal.

You can read the original Portuguese version here: Os portugueses devem ser mais germanicos?

Pode ler a vers?o original portuguesa aqui: Os portugueses devem ser mais germanicos?