A surprising number of UK owned firms fail to scale in Germany and they seem to make similar mistakes.

Over the years i’ve seen hoards of British recruitment firms enter the German market, some make it – even spectacularly so, but the majority never seem to crack it. I have tried to summarise five core areas where the Brits and the Germans still don’t understand each other and that lead to failing.

Disclaimer – I’m British, have run recruitment firms in Germany since 1997 and I have made all of the mistakes that I’m about to describe. It seems that I’m not alone too, as I have observed many other recruitment companies hailing from the British Isles continuing to make precisely the same mistakes.

Germany of course is a very attractive market and it’s no wonder that companies based in the more developed recruitment markets of the UK and elsewhere are eyeing up opportunities here. In my time with APSCo Deutschland, which I set up and ran for 7 years, I met many hundreds of talent companies. If they hadn’t already set up local operations, they were generally looking at international expansion in either the USA or in Germany. Some didn’t take the big step to launch at all internationally, of those that did roughly half set up some kind of infrastructure in Germany.

Post pandemic and companies started recruiting again, in fact for a while it was a recruitment frenzy out there making it even more attractive for newcomers, or non-resident recruitment firms.

But a word of warning, more than a fair share won’t succeed. Here are 6 reasons why many firms have failed and will continue to fail in Germany

1 – Leadership

It’s a well-trodden path – set up a remote desk in the UK working the German market, your most successful consultant is packed off to Munich or Berlin to establish the office once there’s some momentum. It seems to be a much better option than trying to identify a local MD, after all, most of the potential candidates, even if you can find any at all, didn’t appear very sales driven.

In any market the top fee earners don’t always make great managers, however taking an experienced consultant from the UK and parachuting them into Germany is even riskier. The owner, or board, will want the culture to be replicated in the new office, and who better than somebody who has grown up and excelled in this culture. Well there are no easy solutions here, the only observation I can offer, based on my own experience and some good examples observed through the APSCo network is focussing on engaging a local individual first, and then building the office around their preferred location. If this means your office is not in Munich and you can’t get to the Oktoberfest, then so be it. I’ve seen businesses built around excellent people in some quite odd places. And sometimes not having a lot of other recruitment firms around you is a plus.

2 – Sales Culture & KPIs

Spend any time on Kununu, or other employee review platforms and you’ll see countless negative comments about KPIs and aggressive sales culture. It’s the number one reason for people to leave, including my current business. In the twenty two years since I set up my first recruitment firm in Germany I have met only one candidate who volunteered that he wanted a sales job over any other type of role. One candidate out of thousands. Incidentally I offered him a job on the spot and he turned me down, thought about it for 6 months and then joined.

Germany is not noted for it’s sales, nor indeed it’s service culture. High kudos has always been awarded to the “recognised” professions, engineer, doctor, lawyer, and sales is slow to achieve a fraction of this kudos (although fortunately earnings potential can be comparable!) So it should be of no surprise that running a commercial team in a service business in Germany as you might in the UK is going to cause some headaches.

Use KPIs, they’re essential, but drive them subtly. Position them as diagnostic and not to apply pressure, and the more indicators that are driven then less they will impact, likewise unrealistic targets. My local experience is that good recruiters tend to achieve more quality with less quantity in Germany. KPI averages compared to UK businesses are generally lower. Fortunately, average fee values tend to be higher.

I’m guilty as charged on this (I learnt my tradecraft in the 1990s initially in London with a weekly wooden spoon award for the lowest performers), but through necessity have come to learn how to create an effective culturally adapted balance. I personally drive 3 core, non-revenue KPIs openly and monitor another 5 or so under the radar to diagnose week areas of the process. Importantly we celebrate success and offer support to those who are struggling. The Wooden Spoon has long gone.

Whether 180 or 360 degree recruitment is a sales job, no getting away from it, but how it’s driven in your German office will be different. The noisy, dynamic “sales floors” with bells, gongs, chanting, banging the table (or ceilings!) when a deal is closed can be fun but deep down your consultants will probably prefer a different type of acknowledgement.

Some German recruitment firms pride themselves on having no KPIs and no consultant awareness of the revenues they are generating. Good for them. We all have our own thoughts on that. Generally I believe that staff want to be able to measure themselves against a goal and peers. But in a respectful and supportive environment.

3 – Remuneration & Benefits

When I was based in Moscow I implemented a very successful system so consultants could actually earn more % commission by voluntarily reducing their base salary. I had consultants requesting lower bases! Seems unbelievable but it really happened. In Germany I had many more requests for higher basic salary and lower commissions and OTE either at offer stage or from existing staff. UK firms seem to like the lower base high OTE Commission model, of course – it’s lower risk. But the thinking is that job seekers in Germany would be sacrifice guaranteed base for the chance to earn more high end commission is flawed. Locally the focus is more on stability and also non-financial benefits; Flexibility, Training, Environment, Respect, Autonomy. Performance related high financial gain offset by lower base is not as desirable as a UK recruiter might think. As always, exceptions apply.

I am drawn increasingly to offering good basic salaries with a fair performance element across the board but rising exponentially for super billers. I’ve always had a small number of recruiters earning more than me. Again, good for them. But the main focus for me now is ensuring the remaining 80% of staff feel they are remunerated fairly. This means investment up front in the right people but repays dividends in lower staff turnover, any firms biggest cost.

4 – Contractual & Commercial

Often overlooked – Typically UK recruitment firms shy away from the costs of creating bespoke German AGBs (T&Cs). Most translate their UK terms into German. Most of the time these are never tested in court and with low levels of deals from small companies it takes a while until you come up against a client who won’t pay. This happened to me three times with a deal value in excess of £50k in the 2000’s. I took all three clients to court and lost each case until the Pfennig dropped. Having done loads of business in places like Russia in the wild 1990s, Kazakhstan, Belorussia, Baltic States, Ukraine and Central Europe, I have actually had more non-payment issues and court cases in Germany. But no longer.

5 – Patience

As a general rule I take what I think is the length of time needed and I double it. Don’t expect spontaneous decisions. A German client called my Russian mobile phone and asked for a meeting, he was based in Heidelberg, I was based in Moscow at the time, but by pure coincidence happened to be driving near Heidelberg! I said “you won’t believe it but I could be in your offices in 15 minutes”. The client’s response was “no, this is impossible” and was accompanied by what I can only assume was a mild medical emergency.

This is relevant for business planning. Patience and consistency has always been core qualities for building a successful business here. Unfortunately these are not always qualities associated with UK recruitment entrepreneurs.

6 – A New Flexible Way to Work

Many firms have resisted the rising call for more flexible working. Covid forced our hand with home-office as an alternative to furlough or Kurzarbeit and we were generally surprised that the effectiveness of some experienced staff increased. Across the board less experienced consultant working from home failed and received little training, development or exposure to more experienced consultants teaching by doing.

Now Covid is a distant memory the home office hangover lingers on. Most firms have developed (or reluctantly been forced to develop) a hybrid solution but those companies who had been the most flexible have really suffered financially. Basically it’s been a real challenge getting the staff back into offices into the pre Covid structure. Juniors simply are not able to gain all the valuable peer and mentor experience when at home, and if the mentors are at home it’s the same story.

But the reason German firms often appear more attractive in winning talent is that they tend to offer a higher degree of autonomy around working hours, breaks and the much maligned and abused “work life balance”. As recently as 2022 I implemented a flexible work regime in a (British) recruitment firm in Frankfurt. Generally staff were putting in the same number of hours, in some cases more, new starters were attracted to the business and although there were teething problems with minor abuses, overall performance did not suffer, in fact overall there were more positives than negatives. However the precedent set in Germany did not sit well with the culture of other company offices in the UK and elsewhere, so there was pressure from the beginning to reign it in. Which is what happened. One by one they all left, including me!

The Future?

Well times are changing. But the challenge of implementing a professional and focussed sales culture with the right degree of automony is one many are finding increasingly difficult, and not just British recruitment firms. In reality of course it’s not that the British way is not right, it just needs somebody talented to adapt it intelligently to the very different German culture, particularly of our younger work force. But some firms will not be capable of adapting and will continue to experience difficulties recruiting high potential staff, retaining them and will always be hunting grounds for other recruitment firms with a more local approach

What’s clear is that not every company will get the right balance. However it’s a safe bet that British recruitment firms will continue to make the cardinal error that Germany is the same as at home, and fail as a result.