Germany has one of the biggest business markets in the world. You will inevitably end up negotiating with a German company at some point in your career. Negotiation in Germany is very different from others, even from countries they share borders with like France or the Netherlands. Anyone who enters negotiations with German counterparts might find themselves coming down to earth with a bump as they discover negotiation strategies and styles they have never seen elsewhere.
Let's take a closer look at some of the things you need to know before negotiating with Germans.
Germany — A pillar of Europe
Germany is the 3rd most populous country in Europe and is the most populated in the European Union, with over 80 million people calling this country home. There are opportunities for negotiations across the country. The financial centre is in the city of Frankfurt, but tech startups and other industries are rapidly growing in the capital of Berlin, and other cities like Hamburg remain important seats of industry and commerce.
It is also an incredibly important economy, not just in the EU but globally. Germany has the 3rd largest GDP in the world and represents one of the most important business and manufacturing markets around the world. If a company wishes to make a deal internationally, Germany will likely offer them a good market in which to do so.
What can we expect from German negotiators?
There are, of course, several stereotypes about the German businessperson, as we often find with other cultures. Stereotypes tell us that the German business culture is very straightforward and serious, and their negotiators and business people will reflect this.
A stereotypical German businessperson is likely cold and reserved, devoid of any sense of humour, and direct in their manner of speaking. Maybe they even look like a personification of the Bauhaus architecture movement.
Anyone who has spent any time with a German will know that the above stereotypes simply aren't true—especially when it comes to a sense of humour! Germans have a very sly sense of humour in conversation; they just keep it out of the boardroom. While it is true that business negotiations in Germany might be a more formal process than you are necessarily used to, that doesn't mean that it will be a dry, bland affair.
We've mentioned the Lewis model in other blogs, and Germany is yet another linear-active country. They value reliability, direct discussion, and logical arguments over emotional ones. If you provide a faithful and regulation-bound negotiation, they will respond in kind.
5 tips for negotiating with Germans
So, how do we approach the negotiation process when we know that Germans will be sitting on the other side of the table from us? Here are some tips you might want to bear in mind when meeting German business partners.
1. Expect some resistance
Germans are not natural negotiators. Unlike other nations like the USA which view negotiation as part of the dance and game of business, Germans will likely prefer to keep things straightforward.
Germans believe in the value of a win-win scenario and view negotiations more like a problem-solving exercise between your party and theirs. If you try to push your own agenda too much, they may feel like their views aren't being respected, and thus, you will encounter resistance.
2. Be realistic with pricing
One common negotiation opening can be to suggest a high price that is, frankly, unrealistic. If your opponents don't see through your ruse and grant you it, great for you! If not, it creates a benchmark that you can use to your advantage when haggling.
Germans will see right through your ruse, and they won't appreciate the price inflation. They might be offended that your initial offer was obviously too high, but, equally, if you then drop it to a more reasonable price, they might see you as being unable to stick to your principles. Some wiggle room on price can be achieved with skilful negotiation, but you need to be realistic from your very first proposal.
3. Keep things transparent
The German approach to negotiation typically involves a lot of honesty and transparency. They prefer to negotiate based on facts and data, so any provided needs to be as accurate as possible. They will also appreciate a commitment to building a foundation together that may inform the rest of the negotiations.
This does not necessarily mean that they will be open to collaboration. They might have a clear understanding of what they wish to get out of the deal, and might not be willing to budge on some key areas. As a negotiator, it is better to head in with an open mind and a willingness to share what you know.
4. Watch out for etiquette traps
Younger German business owners might be more open to holding negotiations that are not as bound in etiquette and formality as what we are about to describe. However, it is still worth noting that highly formal meetings can be commonplace in corporate environments across the country.
First of all, be there on time! If there is one German stereotype that does hold true, it is that they value punctuality. Make sure you are there to get started at the time you originally agreed on, and let the other party know if you will be running late.
Negotiations will typically open with firm handshakes all around and an exchange of business cards. You also need to pay close attention to how your German counterparts introduce themselves. While many countries negotiate using first names, older or more traditional Germans may still use and require you to use formal titles like Mr./Ms. or German equivalents such as Herr/Frau.
Unlike with British or American negotiators, you can expect Germans to get right down to business. There is unlikely to be any sort of small talk. Instead, you might launch straight into a discussion of the matter at hand.
5. Be prepared for directness
Even if you have previously sat down at the table with American negotiators, you might still not be prepared for just how direct Germans can be. They will focus on details, and they may not appreciate attempts to be evasive.
They also may demonstrate a very defensive negotiation style. This can be very frustrating for some negotiators as you are receiving nothing back while feeling punished for not sharing what you know. Remember, they only seek to be cautious. If you provide adequate evidence to support your claims, laid out in an easy-to-understand fashion, negotiations should be able to proceed normally.
A side-note for salary negotiation at German companies
Germany is a popular destination for international professionals, and there are plenty of opportunities across many industries. However, candidates should be aware that there are few conversations around salary expectations as you might see in other countries.
Many have reported that they expected to receive an opportunity to negotiate, or at least open salary discussions, only for an offer to be made and that would be it, end of conversation. Depending on the industry you are entering, international candidates may be able to negotiate the salary they want. Industries populated by younger professionals like tech or those that pull strongly from startup culture may be more open to salary negotiations.
It is also important to remember that many German employers also offer a lucrative overall compensation package. If salary negotiation is off the table, it might still be possible to pick up other benefits like extended PTO or a company car, all of which might help contribute to your job satisfaction.
Negotiating salary is not impossible in Germany! Some companies may be open to giving you a little leeway in discussing your base salary, allowing you to potentially negotiate a salary increase over what you were initially offered.
We've previously discussed negotiation tips for the UK and the USA if you are interested in the cultural differences of negotiating in these nations.
Negotiate like a pro with Scotwork
Germans can come across as intimidating if you have never dealt with them before. However, in meeting them you should find them to be a warm and welcoming people with lots to offer. Remember, in a negotiation, they want to know what is in it for them. They want to be able to move confidently towards a solution that works for everyone, but they need to see solid proof of how you will get there together.
Don't treat negotiations as something you always have to win, and don't expect an aggressive approach to get you anywhere fast. Keep momentum going, but ensure everyone has a chance to voice concerns and provide clear evidence at every stage of the negotiations.
Whether you have business to do in Germany or you are headed to the other side of the world, Scotwork can help you enter those negotiations with confidence. Over our 45 years, we have grown from our beginnings to offices in 46 countries and training in 29 languages. Our negotiation training is for everyone, regardless of your current experience or industry. Get in touch to find out more and unlock your negotiation skills.
