Hidden champion. Being economically successful is not always easy, even for a globally operating electrical engineering supplier. In a family business, the difficult task of reconciling the representatives of the various family tribes and generations comes under one roof. Daniel Hager, CEO of the Hager Group, has found solutions to both challenges.
Daniel Hager laughs briefly when confronted with the well-known statement that the family is the greatest advantage of a family business, but also its greatest disadvantage. Then he hesitantly says: "Let me put it this way: When the family is united, everything can go very unbureaucratically. But if family conflicts are brought into the company, it can also be hell. Because we are always in a field of tension between ego, power and money."
Since 1955, the family has shown that this fragile balance can be achieved, when Peter Hager founded the Hager Group together with his sons Oswald and Hermann. At the Hanover Fair in 1959, the brothers presented a product that is still regarded today as decisive for the company's success: an electricity meter panel made of bakelite. For fitters, this innovation meant enormous time savings, as the plastic for the distribution box could still be processed on site.
In the 1960s, Hager then removed the meter board from the wall niche and sold the built-in cabinet with meter and a modular panel system for fuses. Today, the globally operating Saarland family business produces over 50000 products, from modular devices to cable routing systems and switch ranges. And with electrotechnical installations for residential, industrial and commercial properties, it generates sales of 1.9 billion euros in 129 countries - a true hidden champion.
This success story has above all to do with what is often called "familyness". Oswald and Hermann, Daniel Hager's father and uncle's uncle, had exemplified what it means to work alone for the company as a family as successors to the founder. "They could disagree at times, but when it came to the company, they always spoke with one voice. They left family issues in the family and company issues in the company."
On a video published on YouTube in 2012, the harmonious harmony of the two elderly, now deceased gentlemen can be seen. There they chat about the corporate values of courage, authenticity and integrity, their first successes and their strategy. These values, which had shaped his father and uncle, but also their absolute awareness of quality and their enormous innovative power, had made it possible for the newcomers to the industry at that time to have any chance at all, says Hager. Values that he still quotes today, he is asked about the recipe for success of the family business.
It is remarkable that even a 20-year phase of external management has not changed this. No, Hager objects, "Alfred Bricka wasn't really a foreign manager". He had already been with the company since 1974, a confidant of the founders, and then took over the general management of the group in 1988. At that time the brothers Oswald and Hermann Hager were already 62 and 60 years old and "were thinking of a succession plan to lead the group into the future". At that time none of the family members could be considered as the boss, so Bricka acted as interim boss.
For Daniel Hager and his siblings, the two years older brother and the ten years younger sister, the company was always present. But just present from a certain distance. Daniel Hager first wanted to study history, but then decided to study industrial engineering and international management with a view to working in a family business. Then the father of three worked first as a project manager for the American company Eaton and in the wind power industry.
In 2002, he says, the then CEO Bricka approached him and announced that he wanted to settle the succession in the company within the next five years. "Bricka didn't tell me I was going to be chairman of the board. He said we had to test how I was doing and how I was doing."
No carte blanche, then. Hager joins the company in 2003 and, together with Bricka, announces his intention to become Chairman of the Board in 2005. What did his siblings and cousins think? "That wasn't pronounced until then, and it wasn't an issue in the family either." The 44-year-old reflects Bricka's unequivocal recommendation for him, but has not left much room for discussion in the family either. Because "Bricka enjoyed an impeccable reputation in the whole family. His opinion and assessment were set. That was not discussed."
In the coming months, however, the relationship between family members will be discussed. Finally, Daniel Hager has represented the two owner families since 2008, with today six partners in his generation, the third generation and 14 additional members of the fourth generation, who are between 29 and half a year old.
Together with Peter May, consultant for family businesses and founder of the Intes Academy, Hager, his siblings and the three cousins sat down at one table to get to know each other. "I never had much contact with my much older cousins. Now we had time to put everything on the table and ask all the questions. As the third generation, we have seen how important it is to look ourselves in the eye again and formulate exactly what we want".
The key questions are: Do we want to remain an owner-managed, independent company? How do we solve conflicts? How do we deal with the issue of dividends? Who can become a partner, who can cooperate? What rights and obligations does a shareholder have? And what values actually characterize the Hager Group?
But the paper that emerged from it, the family constitution, was only an essential aspect, explains Hager: "The really important thing was the exchange that the third generation had. We've met, we're more familiar, now we know what we can and can't expect from each other." The different shareholdings and the positions of the individual family members in the company are also determined. Hager's brother Philip and his cousin Evi belong to the supervisory board, his cousin Peter works with customer-related projects. The family acts together. Just like in the past. May, who is also sometimes referred to as a "family whisperer", apparently did a good job.
On the economic side, Daniel Hager has a much more difficult start. Immediately after the change of CEO in 2008, sales slumped by double digits due to the financial market crisis. That was like an "electric shock for him," says Hager, who laughs when he realises that he is unconsciously using his specialist terminology. Hager reacts with ADD, Adapt, Delight and Develop, a series of measures "to ensure the future of the company". Adapt means adapting to market conditions. "In Spain, for example, where sales had fallen by half, employees had to be made redundant. In Germany, on the other hand, all jobs could be kept thanks to working time accounts." Delight is a customer offensive. "Many competitors withdrew during this time. I saw an opportunity to gain market share by fully supporting customers right now." Develop underlined the positive basic attitude - "I was sure that the crisis could be overcome" - and set the direction in which Hager should be oriented in the future. For this purpose, business that is not profitable is sold and business that fits in with the core business is acquired. Hager, for example, is divesting its branches in the Baltic States and the cable support systems business, which is profitable but no longer regarded as strategically important, with sales of 80 million euros. In 2010, the proceeds generated in this way will be used, among other things, to purchase the German counter company Berker.
The success shows itself quickly. At the end of 2009, the decline in sales compared with the previous year was only six percent, and the markets are actually recovering rapidly. In the years that followed, it became clear that Europe's central bank chairman Mario Draghi had even launched a genuine economic stimulus package for the Hager company with his zero interest rate policy. From
1.3 billion, the turnover of the Hager Group will rise to 1.9 billion euros by 2015. Hager's core business is residential construction, functional construction, new construction and modernisation. 85 percent of sales are generated in Europe, of which 30 percent are generated in Germany and
25 percent in France. If the construction industry runs there, so do the shops in Blieskastel. And the construction industry is running. According to the Federal Statistical Office, the volume of orders received by the construction industry in October last year reached its second highest level since March 2002. And every new house needs electricity, i.e. electrical installations.
In addition, the Group is driving sales growth through strategic acquisitions, all of which are financed from its own resources, as the CEO emphasizes. Similar to the creation of the family constitution, the head of the Hager Group also uses the competence of an external consultant, in this case the Austrian economist Fredmund Malik, for the integration of new companies.
"Only if this succeeds does the purchase of the company bring the expected return on the investment." Malik's theory is called Syntegration. The core idea here is to network knowledge distributed in many minds and to use it to solve a problem. Together a roadmap will be developed within a three-day workshop. The most important topics are put on the table. In the end, everyone knows what to do and what goals to achieve. The support of the external consultant structures the process. "We may have done it the same way before, but not so explicitly."
Another important acquisition is the Italian cabling company Bocchiotti, which offers Hager increased access to the Italian market and also enables Hager to take a first step into the American market.
With the radio alarm manufacturer brands Daitem and Diagral and the door intercom specialist Elcom, the Group is strengthening its building systems technology division. Hager sees enormous potential in the Smart Home segment. In China. In India. But of course also in Germany, where people are getting older and older. "A 'networked' home that makes the daily lives of older people and those in need of care easier is the topic of the future."
Innovations such as planning software also strengthen customer loyalty. Because in Germany there are no less than 2000 guidelines that must be observed when installing a meter. With the help of the Hager software, the electrician can now find exactly the model he needs within a very short time. "An incredible time saver."
Listening has given the Hager brand a high status among its customers, the electricians. "We implemented their suggestions immediately, and they said: "The people at Hager listen to us. Unlike the competition. As an entrepreneur, Hager has remained above all "pieds sur terre", "with his feet on the ground", as the Francophile Hermann Hager puts it. Or just down-to-earth, as Daniel Hager says.
The fact that this down-to-earth attitude and spectacular growth prospects are not mutually exclusive becomes apparent a short moment later when Daniel Hager outlines his plan to increase sales to three billion euros within a few years. "Yes, of course that's realistic," says the company boss: "Just look at all the topics where electricity plays a role. Starting with electromobility, energy efficiency, energy revolution, age-appropriate housing and living, smart home. And then you miss the growth rates of the last 20 years. We're not General Electric or Siemens, but if we define our topics well as a group and seize the opportunities, we're bound to grow."
By naming this sales figure, Hager also wanted to "inspire the employees to think. I wanted to put this number in the room so that our employees could deal with it. How do we have to work, organize ourselves, if we want to get to this size? And above all the question: Are these themes so promising for growth that they can bring us there?
But what if the building boom comes to an end? Because interest rates are rising again? "In the short term, perhaps there could be such a scenario," says Hager. But in the long run the group will always be able to address promising topics around the house.
Obviously, many others also trust the Saarlanders to do great things. Almost every month the family business receives requests to take over the company. Daniel Hager takes note of it almost casually. His job is actually to preserve the family business and find the next generation of enthusiasts who want to lead the company into the future. Actually - because the businessman can't completely resist a side blow to German politics. After all, the company has now reached a dimension in which the issue of inheritance tax is making it increasingly difficult to hand it over to the next generation.
But it's not that far yet. Daniel Hager makes the whole thing a lot of fun. As long as his recently deceased father, who also came to the office every second day at the age of 90, he does not want to do it. But he probably doesn't have to. Because whether the next generation will take over the helm or a foreign managing director will step in again - the family will probably find the balance between ego, power and money in the future as well. ®
Author: Mariella Bauer-Hallberg