• Armin Steuernagel: Mr. Bruch, let’s talk about ownership. Who owns Globus?

Thomas Bruch: My understanding is that Globus is self-owned. We have legally implemented this definition of ownership as well: The voting rights of the Globus Holding company cannot be inherited. Instead, through the foundation’s governance, they are passed on to people who have the necessary values and abilities.

To understand our ownership structure, you have to meet our people. They are the ones who share and support Globus. First and foremost it’s our employees, ten thousand of whom hold a silent investment in the company. At the same time, Globus is part of over 170 local communities with its regional operations. Our customers talk about “their Globus,” and our cooperations with local institutions in education or other parts of the public sector strengthen that bond.

 

• You’ve taken a very different approach to ownership. Ten years ago you officially changed your legal status to foundation ownership. Aren’t you breaking with a 200-year-old tradition of passing the company to the next generation of your family?

What I inherited from my ancestors is the responsibility to ensure that the company continues to evolve and innovate, and I take that task seriously. It is not productive to just continue with the same approach as past generations. The company is a different organization than what it was forty years ago, when I started, and society has changed as well. Those changes must be taken into account. We need new paths into the future.

 

• Why don’t you just pass your shares on to your children?

Naturally, the tradition in a family-owned business is something special, and growing into a company is a valuable experience. From a very young age, I witnessed how my father fulfilled his responsibilities in the business. He demonstrated what it meant to be an entrepreneur in good times and in bad. It is only possible to have those experiences when you are born into a company.

With three sons I faced the question of how to divide the shares in the company between them. At the same time, I was conscious of the fact that my children wouldn’t necessarily want futures at Globus. By placing my shares into a number of foundations, we have found a solution that leaves the option open for the next generation to take an active role in the business. At the same time, it was important for us to make sure that abilities and values play a role in filling key positions. Decisions regarding those positions will be made by the board. In the end, the question is this: What is the key thing about being an entrepreneur? Is it the legal voting right to control the company? Or is it the potential to shape the company in the many ways an effective leadership role offers?

• Are there any other reasons for your decision?

There is one more thing: What would happen if I left equal shares of the company to my children? Should I assume that they would act in concert on key decisions for the longterm? What if they have children of their own one day? I already have two grandchildren, and I am sure that there will be more. Does it make sense to continuously split the voting rights generation after generation? Would this not create a lot of potential for tension in the company?

When making this decision, I wanted what was best for the company. I came to the conclusion that a foundation structure or steward-ownership structure would work very well for us. It makes clear that the company has a value in itself: as a home to thousands of employees, for our customers, many of whom have been buying from us for two or three generations, for the society we are part of, and of course, also for the family, which continues to have a close relationship to the company through the foundation structure.

 

• What exactly is special about your ownership structure?

In my opinion, there are two aspects that make our ownership structure stand out: First, our foundation model ties ownership to entrepreneurship for the longterm. Voting rights will always be held by people who act as entrepreneurs. There is no room for so-called investors in this model. This tight connection between those who take on leadership roles in the organization seems fundamental to me. The second point is that ability and values play a key role in filling leadership positions. The board of our foundation decides who will take on significant responsibility for shaping the company.

 

• What is your position on the profits the company makes?

At Globus, profits are not an end in and of themselves. They are the seeds for the future. They remain in the company to fund investments and development in many different areas. A portion of our profits goes to the non-profit Globus Foundation, which is used to address societal concerns.

 

• What were the challenges and considerations you had when implementing the structures you describe?

There was a long decision process before we took this step. On one hand, I had long been thinking that Globus, as a company where employees and customers play a special part, should also have a special ownership structure. I had been thinking about a foundation model for some time. I had many conversations with our board where we developed these thoughts. It was all about creating some clarity about what it means to be entrepreneurial and what we could do to emphasize the role of entrepreneurship at Globus in a special way. In 2005 we reached a point of some clarity. That was the year when we implemented the structure we have today.

 

• Your steward-ownership structure creates a special kind of responsibility. What do you consider to be the greatest advantages of that?

I believe stewardship has an impact on how people take responsibility for the company’s actions. It is immediately clear that what we do is not about portfolio management or maximizing personal gains. It is about the company itself and everything that belongs to it. Steward-ownership strengthens the focus on what the company needs for the long-term.

 

• Does this also affect how innovative the company can be?

If innovation is to be successful, it requires a lot of patience. Short-term profit orientation runs counter to innovation. At Globus we do not depend on quarterly reports. What matters for us is that what we do makes the company stronger for the long-term. This attitude creates investments that make it possible for great ideas to develop, even if they take a number of years.

 

• Do you believe that your ownership structure has a noticeable effect on the actions of Globus employees?

I think that how employees identify with the company is crucial to achieving sustainable success. Do they identify with the company’s products? Do they identify with the way people work together in the company? More and more people pay attention to how you answer those questions. More and more people want to know how your company takes responsibility for the environment and society. We took all this into account in developing our ownership structure. The way in which we live steward-ownership fosters individual responsibility and consideration for the whole organization. Living responsibility for people, nature, and the company - that is one of our core principles. We’re told by customers that there’s a special mood at Globus. This reflects the fact that we are simply different from many other businesses.

 

• Can you give us a concrete example of the way workers take responsibility for the company?

Last year on a Saturday morning during the Christmas season we had a very business day in one of our stores in St. Wendel. A few of our cashiers were ill, and the lines at checkout were especially long. One of our employees happened to be shopping there and saw what was going on, so she went inside, put on her uniform, and opened another register. Just like that - without asking anyone. To me, this demonstrates how special our employees are. They are aware of the importance and the meaning of what they do. They know that they and their personal efforts are needed. They are entrepreneurs within the organization, and they shape Globus for themselves, the community, and our customers. They feel the purpose of their work.

 

Thanks a lot for your insights!