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MANAGEMENT AND RESPONSIBILITY

The BAUER Group measures how well its corporate policies are put into practice on the basis of four key goals:

  • the trust of our customers (quality)
  • the health, safety and satisfaction of our employees
  • the environmental impact of our activities and products
  • optimum profitability

The implementation and development of a self-managed organization incorporating separate business units (companies) – unburdened by complex decision-making hierarchies, but rather nurtured and encouraged by the assignment of responsibility at an early stage – is the primary aspect of the management approach adopted within the BAUER Group.

The top management level – the Management Board of parent company BAUER AG – oversees the three main subsidiary companies: BAUER Spezialtiefbau GmbH, BAUER Maschinen GmbH and BAUER Resources GmbH. Managers operate under the own responsibility, and are to a large extent provided with independence in determining how their business units progress. The three main subsidiaries are in turn the parent companies of the three segments: Construction, Equipment and Resources. Each remaining subsidiary within the Group is assigned to one of the segmental parent companies. The Group comprises a total of over 110 individual companies.

Completely centralized management encompassing a single decision-making line for all these companies would not be feasible in practical terms, and would render the Group as a whole unwieldy and inflexible. Consequently, it has long been corporate policy to assign a high degree of independent responsibility to the management of the individual subsidiaries. Chairman of the Group Management Board Professor Thomas Bauer – the seventh generation of his family to head the business – formulates this approach in the following maxim.

The key responsibility within the Group in terms of the sustainable development of the business and policies relating to matters of quality, health and safety and environmental protection lies principally

with the Group Management Board itself. This responsibility is not merely delegated to staff departments, but rather – as in the case of the Group's organizational structure – is practised by each individual, from the Management Board down, through the subsidiary company and divisional managements, in the manner appropriate to each post-holder.

A special responsibility in this respect is incumbent upon the management boards of the holding companies controlling the Group's Construction, Equipment and Resources segments. At monthly meetings with the Group board, matters relating to the aforementioned areas are considered, binding targets are set, and appropriate strategies are developed. The managements of the individual Group subsidiaries are ultimately required also to define measures and goals for their business units, designating a named member of staff to be responsible for their implementation.

The links in this chain of responsibility further down the hierarchy are the department and section heads, who are responsible for ensuring that quality, health and safety and environmental protection policies are put into practice in the best possible way within their areas. The commitment of individual employees to these practices is continually promoted by means of training courses and special awareness campaigns conducted throughout the Group.

SELF-MANAGEMENT MAXIM

"The key factor in successful corporate governance is a self-managed system. Highly complex international organizations, as many thousands of companies are nowadays, can only be effectively managed by assigning the highest priority to the creation of appropriate hierarchies allowing all managers to act independently within their various divisions. The more complex a company's structure is, the more the management has to rely on processes running, and decisions being made, without intervention from above – independently in fact. The object is to promote the establishment of intelligent – largely informal – network structures within which capacities and collaborative processes can be coordinated on the basis of bilateral relations. The system as a whole is like a market economy, applied to the in-house business processes of a single corporate entity. The core concept is that of self-management. This must also be promoted even when the overseeing management level sees mistakes being made, because it is not possible to learn without making mistakes. However, if the managers within a system are able to learn how to handle complex developments independently in an assured manner, the businesses concerned are provided with much greater stability and are able to respond to changes in their environments much more effectively and flexibly than purely hierarchically based systems. Such systems can only be effectively managed, however, if the controlling function is able to depict all the divisions within it as if they were autonomous businesses. The unit managers must have a detailed understanding of their business based on its key performance indicators (KPIs). Even more important factors, however, are the driving forces which ultimately imbue the business with the necessary creativity and bring it success based on the commitment and enthusiasm of the workforce. The most vital task of management is to stimulate and support those driving forces."(Prof. Thomas Bauer)

CORPORATE GOVERNANCE AND COMPLIANCE

The origins of the concept of Corporate Governance – as a framework for the management and supervision of businesses, focused on key criteria such as preservation of stakeholder interests, transparency and appropriate handling of risk, all aligned to long-term value creation – have unfortunately been pushed more and more into the background over recent years.

A number of questionable compliance rules – paradoxically for the most part developed and today being implemented by companies themselves – are in fact hindering collaborative working and the application of healthy common sense in business. It is not possible to force people to act morally by applying immoral methods. Consequently, the BAUER Group rejects all such excessive measures, which are sadly all too often common practice in the modern-day business world.

The BAUER Group of course operates on the basis of nationally and internationally accepted values and principles in practising responsible, correct and proper corporate governance, oriented to the recommendations of the German Corporate Governance Code. It is our goal to conduct our business according to the principles of integrity and fairness. We do not believe that immorality will prevail.

Good corporate governance of course demands appropriate application of an ethical and moral code. Group company BAUER Spezialtiefbau GmbH was a pioneer in the field of ethics management and, as a co-founder of the German Association for Ethics Management in the Construction Industry, played a key role in the development of the construction industry compliance management system now known as "EMB-Wertemanagement Bau". Alongside BAUER Spezialtiefbau GmbH, Resources segment companies BAUER Umwelt GmbH and BAUER Water GmbH are also audited members of the scheme. Ethics management is today embedded in the BAUER Group's Management Guidelines, and applies to all the companies in the Group.

Newly recruited employees in Germany must confirm that they have been provided with a copy of the values programme on joining the company. Regular training courses also serve to refresh awareness of the relevant issues. We also require our employees and business units abroad to comply with local ethical standards and values.

The BAUER Group's Management Guidelines stipulate that active or passive corruption (the offering or acceptance of bribes) will not be tolerated, and will result in the immediate termination of the contract of any employees involved. We expect our employees to act ethically, in accordance with the principles of honesty and fairness.

AWARD

In February 2010, US subsidiary Coastal Caisson Corp. was honoured with the 2010 Sustainable Business Award by Earth Charter US. The award, presented in conjunction with the University of Tampa, goes to companies whose managements have exhibited outstanding social, economic and ecological responsibility. "We are very proud of our performance and of the success we have achieved," commented Chuck Puccini, Managing Director of Coastal Caisson.