The Courage to Make Difficult Decisions

In the middle of the financial crisis of 2009, when company after company was closing its doors, Ralf Dieter decided to hire new employees for his company in China – and wait for business to pick up again. Today he admits that his decision to go on the offensive could have also backfired, but the company's subsequent market success proved him right. He has served for more than ten years as chief executive of the global mechanical and plant engineering firm Dürr AG. Rimma Gerenstein asked him what principle he is guided by in managing more than 15,000 employees, why he doesn't want to be a "helicopter manager," and why he donates to his alma mater.

Giving something back: Ralf Dieter, chief executive of Dürr AG, has been supporting the University of Freiburg for years. He studied there himself. Photo: Klaus Polkowski

Mr. Dieter, you studied business administration in Freiburg in the 1980s. What were your ideas of business back then?

Ralf Dieter: My ideas were limited to what I saw at my father's engineering firm and in the media. I didn't really have a conception of how a large company functions. What I do remember very well, however, is a lecture by Prof. Dr. Ralf-Bodo Schmidt on decision-making models. It explored the question of what drives and motivates people and how to bring it into line with company goals. I found it rather dry at the time, but in the course of my professional life I came to understand that the ability to put myself in other people's shoes is one of the most important requirements for my work.

So empathy is what makes a good manager?

Empathy is an important element, but you also have to know yourself. I think I'm capable of making a realistic assessment of my own strengths and weaknesses. That keeps me from drawing false conclusions. In addition, a manager needs to make difficult decisions, also in times of uncertainty. You can't always be ready for every eventuality. In my time in the army I learned the principle of "leading by example." That is the approach I take to this day. I only demand of my employees what I myself am ready to give. I flew economy too during the financial crisis. There were no extras for me.

You have had to make some uncomfortable decisions in the course of your career. When you started at the Schenck Group, you had to implement a corporate restructuring plan.

That is correct. I had to lay off several hundred employees. A few years later I made the decision to lay off 800 people at Dürr. I had no choice; the company was in a difficult situation. But I consider it part of my job in such situations to not just hide in my office but to face the people at the employee meeting. When the first people start crying, it's not a good feeling.

Dürr's annual turnover fell to 1.1 billion euros during the financial crisis – now it's back at almost four billion. How did you manage that?

I stood up at the employee meeting and said: "We need to get the word 'crisis' out of our heads. This is no crisis; it's a downturn." This time was an opportunity for us to prepare for the next upturn. And it was sure to come, unless you believed it was the end of the world. So we went to China, which was hit less strongly by the crisis, and expanded our operations in the development of paint systems for the automobile industry there. I hired people there without having enough orders. We worked at full capacity even before the demand picked up again. I thought to myself: If this plan works, we'll notch up a success. If not, I'll resign and someone else will take over my job. It worked: In 2010 we increased our market share in China to 80 percent in this segment.

You once said: "I'm not a manager who drinks coffee and looks at the numbers." What do you do instead?

In principle, I could do my job any place where I have internet access and a telephone, but that's not what I want. I'm also not the type of manager to engage in "helicopter management": flying somewhere to look at a company for two hours and getting an unrealistic picture because everything was brought into order beforehand. I consider it important to be close to the employees, because the only way to find out about morale and trends is by being around in person. For all the benefits the digital revolution has brought us, nothing can replace a face-to-face discussion. When a company buys a paint system that costs between 50 and 150 million euros from us, I want to be there at the negotiations.

How often does that happen?

Every time I go on vacation. I don't get much free time. Most of my weekends get interrupted by work. A place I can relax well is on nighttime flights: No one can call me, no one can write me emails, and I finally have time to reflect.

You've been supporting the University of Freiburg for years by funding a scholarship for the Deutschlandstipendium program. Why is it important for you to support your alma mater?

I earned my degree at public expense. I want to give something back, and I find that perfectly normal. What confirmed me in my decision later on was a letter I received from a student. She thanked me for the freedom the scholarship gave her. When I was a student, I had to pay for everything myself – I spent every free minute driving a truck. My father passed away a year before my graduation, so I spent my days liquidating his firm and earning money and my nights studying for exams. I feel good knowing that a young person today has less stress than I did back then.