Breman - A Rebel About To Turn 50

Breman is a family business, with ~1,700 employees and operating in the technical installation sector. Which means employees spend most of their time in factories or on building sites. They operate via a unique organization model.

To learn more about their model, we visited one of their manufacturing sites in Holland. There, we meet several employees—including René Breman, Albert de Wilde and Richard van der Wal. With them, we toured the factory, and talked about their unique organization.

The 'Breman System'

Breman has used a unique organization and governance model (which they call the ‘Breman System’) since the early 1970’s. It is designed so that employees have just as much say over company assets as shareholders. And profits are shared between both groups.

Their ‘System’ achieved international fame in its early days – via a Financial Times article in 1973.

Since those early days, the Breman System has slipped out of sight. It is time to revisit this unique system.

Two sides as a foundation for success

The ‘Breman System’ was designed by Reind Breman, the father of René. It has survived for decades, and is deeply rooted in the organization. It is based on two components they refer to as:

• The 'soft side‘ or ‘the human‘, and
• The ‘hard side' or ‘the structure'.

A healthy balance between the two is regarded as a healthy ‘Breman System’. It is the foundation of everything they do and believe in.

The 'soft side' - the human

Rene: “The ‘soft side’ of the ‘Breman System’ consists of the purpose we want to achieve as a collective, combined with the principles of how we want to treat each other as humans within the organization.”

We break the so-called ‘soft side’ down into four different elements. Each answers a particular question, and is widely communicated to all employees;

Higher purpose - why do we exist?

The higher purpose of Breman is ‘Bremanism’. It means that together they want to ensure a better living and working environment—for themselves and future generations.

Bold goal - where are we going?

The bold goal of Breman is to be ‘energy positive’ in 2025. This means that they want to return more energy to employees, customers and the earth than it costs them.

Core values - what do we stand for?

Breman operates with four core values: supportive leadership, stewardship, local/loyal entrepreneurship, and shared responsibility through employee participation.

Core qualities - what do we excel in?

Breman operates with five core qualities: to collaborate, to be a craftsman, to surprise customers, to master & learn, and to innovate with guts.

The 'hard side' - the structure

Rene: “The ‘hard side’ acts as the assurance of what we want to achieve together. This assurance is based on an alternative model that tries to find a way between capitalism and communism. It is a model that aims to radically disconnect capital from power.

So, we operate from a completely different perspective to many other companies. In a traditional company shareholders bring in the capital, and employees the labor. The employees receive their salaries, and profit goes to shareholders who hold the power.

In our model the shareholders supply the capital and the employees the labor. But we share the power equally, on a 50/50 basis. The employees receive their salaries and the shareholders receive a part interest. If there is any profit left then we share this among all parties. This model is unique.”

Let’s describe the elements that make this unique model work:

Network of Teams

The 1,700 employees at Breman work in 36 mini-companies. Each is registered as a separate legal entity, and kept relatively small. This makes Breman’s structure similar to other network of teams structures we have written about before.

Rene: “This structure was deliberately chosen in the 70’s to be able to be locally present; to be close to the market and to be close to the customer. It also ensured a lot of autonomy for the local entities.

As a result you can see all the local entities are different. Some operate with very progressive ways of working, while others are more traditional. Sometimes there is still considerable hierarchy in place. We have all flavors present.”

All the local entities are part of an umbrella company, making Breman a kind of ‘family of mini-companies’. Assets are largely held by this company. The mini-companies rent assets (like accommodation, tools and equipment) from the umbrella company.

Supportive Leadership

The employees of the 36 mini-companies select their own managing directors and decide how they will work in their own mini-company. Which is why some work with traditional hierarchies, while others use more progressive models.

Rene: “Any leader at Breman is appointed by the employees and the shareholders. But the employees not only hold the power to choose their leaders, they also have the power to remove them when they prove to be incompetent. In that way we ensure a culture of supportive leadership.”

Distributed authority

Rene: “The power in the mini-companies is shared equally by all employees. And the power in the umbrella company is shared equally by employees and shareholders.” To make this work, Breman introduced a unique governance structure in the 1970s.

Simplified it works like this: Governance of the umbrella company is administered by three people;

• One representative on behalf of the shareholders
• One representative on behalf of the employees
• And one facilitator who guards the process.

These are chosen democratically by the groups they represent. So, the representative of the shareholders is chosen by the Breman family, and the representative of the employees by the 36 mini-companies. The facilitator is chosen by both groups.

When there is an important decision to be made – like an acquisition or a major investment – a proposal is sent to the umbrella company. The three people in the governance structure, however, do not decide about this proposal themselves.

Instead, they consult with the groups they represent, and thereafter a simple voting process follows. Each representative casts a vote, a ‘yes’ or ‘no’, on behalf of the group they represent. In case of a draw, the proposal is send back for revision. If after multiple revisions the voting still leads to a draw, then the fate is ultimately decided by pulling a straw.

Rene: “Extensive discussions take place on all important issues and decisions. That takes time and requires a lot from the representatives. A lot of information needs to be exchanged as both parties need to to have the full picture on the decisions to be made.

Nobody wants fate to be decided by pulling a straw. So all parties make sure to create the best possible proposal for all parties. This really works well.”

Profit sharing

Company profit is shared equally among shareholders and staff. The family receives half the profit and the employees receive the other half.

Rene: “The family leaves most profit in the company as we want to ensure sufficient capital for long-term growth and investments. That’s why the shareholders only receive interest for the use of their capital.”

This is different in the mini-companies. Each mini-company calculates its profit and is entitled to distribute 50% to the employees involved (if the mini-companies made a loss in the year before, then this must first be paid back before a profit is distributed).

The mini-companies decide for themselves how to distributed the profit amongst themselves. In practice this is often decided by the managing directors of the mini-companies and their respective workers' councils. But note, employees still have full legal control over this process.

Not easy to start, and to maintain

The system René’s father designed is now carved in stone, but was not easy to make it official practice in the early days.

Rene: “The model was devised by my father and his brothers in 1971. They presented it to the employees and immediately put it into use. However it was not officially ratified by a notary until 1978. And then only by a notary on the other side of the country. For me this is a sign that it was not easy to validate the system legally on paper.

I still notice that today. We have and had many other business owners visit us. Some find our model interesting and want to introduce it in their own companies—until they talk to their accountants and lawyers. Suddenly they become less enthusiastic.”

And although the ‘Breman System’ has been in place for almost 5 decades, it has not always proven easy to maintain, even in their own case.

Rene: “In order to keep the system healthy I have learned that both sides are equally important. You need the ‘soft side’ to serve as a driving force to boost performance and bind us all together. But you also need the ‘hard side’ to guarantee this happens in the right way, and also in difficult times.”

Rene explains that at the beginning of this century, the ‘soft side’ was neglected for a few years. It led to serious consequences; “We have seen that if the ‘soft side’ is not present, things can turn traditional rather quickly again.”

They are still in the midst of fixing this: “We have been working hard at developing the ‘soft side’ for the last couple of years. This requires hard work and the fight to make the system completely healthy again is still going strong.”

Business results

Despite all struggles Breman’s business results speak volumes about their unique model. They have grown into the biggest independent player in the Dutch technical installation sector, with a turnover of over €300 million.