Joe Kaeser, President and CEO of Siemens AG Discusses Actions to Achieve Inclusive Capitalism

In this age marked by a growing concentration of wealth and power, an erosion of trust in leaders and the organizations they lead, and a creeping dissolution of social cohesion, I believe the action that would make the most difference in achieving a more inclusive capitalism is for business leaders to develop an ownership culture in their organizations. By this I mean a culture in which employees are vested as owners of 'their' company and act accordingly. Why? Because owners are not complacent bystanders; they participate. They act responsibly, they innovate, they think long term, they strive to be the best, and they contribute to society. Ownership in this case makes capitalism inclusive as all employee shareholders profit from the long-term success of the company.

Why should business take the lead? Because business can usually act faster than government. Germany has a rich tradition of inclusive capitalism. In the 1880s, Chancellor Otto von Bismarck made Germany the world's first welfare state by developing a program that provided universal social insurance, including universal healthcare, compulsory education, paid sick leave, accident insurance, disability insurance, and a retirement pension. However, with all due respect for Bismarck's achievement, Werner von Siemens, the founder of our company, and his younger brother Carl had set up a permanent Workers' and Officials' Pension, Widows' and Orphans' Fund for employees more than a decade earlier, a benefit the company still finances and offers employees to this day.

As early as 1866, Werner von Siemens introduced a stock bonus program that gave employees a share of profits in addition to their regular wages. A century later, in 1969, employees in Germany had the opportunity for the first time to buy shares at the preferential price of DM 156, which was half the regular price. That year, 135,725 employee shares with a nominal value of DM 6.8 million were issued. The success of this program - 24 percent of employees in Germany took advantage of the offer - encouraged management to continue it. Today, 42 percent of Siemens employees are shareholders - that's 144,000. And we'd like to see this number increase by at least 50 percent to over 200,000 by 2020.

The Siemens brothers took these actions not only to alleviate social inequality; they wanted to keep skilled workers loyal to the expanding company in the long term. They also hoped to immunize employees against 'the subversive theories of the socialists' and make them less willing to strike. Werner von Siemens said in retrospect: 'It wasn't just human concern, but essentially healthy egotism that motivated us.'

Ownership culture was the right approach then and it is the right approach today. And that's why it's central to Vision 2020, our long-term concept for the future of our company. As we go forward, we will develop new ways to make the culture of our company more responsive, more participatory, and more inclusive. We will continue to contribute to society by training and educating employees and by investing in local communities. We will lead the way, and we hope that government will follow