Case- Spiegel-Verlag Rudolf Augstein Gmbh & Co.Kg

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1. Why has the unique ownership structure of Spiegel been created? What problem was it designed to solve? Which problems have been created? How could the problems be solved ?

The unique ownership structure is to give all of Spiegel’s employees 50% ownership in the company. The reason why the unique ownership structure of Spiegel been created can be listed as follows: Employees would be able to share in the benefits and have better understanding of the business aspects of publishing; Any employee of Spiegel-Verlag excluding Spiegel subsidiaries who had been with the company for at least three years could join in as a “silent” partner; The employees had control of the company and justify their actions in the work; The employees ownership can increase the stability and the degree of identification of Spiegel; Rudolf Augstein considered Der Spiegel and its staff more as his family than a machine only for generating profits; To quell the demand of some of the editorial staff at Der Spiegel, who sought the approval of a similar statute such as one from Der Stern’s model.

It was designed to solve the problem in the late 1960s, when a democratization movement was reaching the minds of many journalists. Inspired by Der Stern’s model, some of the editorial staff at Der Spiegel sought the approval of a similar statute. To quell their demands, Rudolf Augstein came up with a radical proposition: to give all of Spiegel’s employees 50% ownership in the company. In this way, employees not only would share in the profits and participate in key decisions like the appointment of a new editor-in-chief, but also would understand better the business aspects of publishing.

The unique ownership structure created problem such like only the employees of Spiegel were allowed to become silent partners in the MKG, while the employees of Spiegel subsidiaries were not. In fact, the market shares and contributions of profits from Spiegel’s subsidiaries was rising in the early 2000s, which created an unfair advantage of Spiegel’s employees who received 50% of the entire holding’s profits while only contribute to 70% of these profits. Given that the subsidiaries and new products of Spiegel would grow fast in the following 10 years, the original model was expected to lose fairness and effectiveness. What is more, problems such as difficult making important decisions and dispersed ownership were also raised by this unique structure.