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  • Zeitenwende in business - making employers reserve-capable (Part II) | Project A at the Nordic Defence Tech Meetup 🇫🇮

Zeitenwende in business - making employers reserve-capable (Part II) | Project A at the Nordic Defence Tech Meetup 🇫🇮

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Daniel Kirch, Johannes Wagner & Thomas Knauff
October 09, 2024

Welcome 🇪🇺

Thank you for attending the Defence Hive at PAKCon! We enjoyed the insightful panels & fruitful discussions (see below 👀) we had with all guests and hope to see you at the upcoming events or next year’s PAKCon.

We continue with the 2-part series around the ongoing debate on conscription in Germany, which has been reignited. Part 2 focuses on the legal framework around reservists, the compensation during the leave and the impact of company culture.

About the authors:
Daniel Kirch is the managing director of an AI company, startup investor and commissioned reservist in the Cyber & Information Domain of the German Armed forces.

Thomas Knauff is CFO and managing director of an entrepreneurial financed IT-Holding, angel investor and commissioned reservist at the German Federal Army’s Homeland Security Forces.

Dr.-Ing. Johannes Wagner is a director in a fluid technology company, startup investor and commissioned reservist in the German Armed Forces.

Yours,
Uwe, Jack and Jannic

The Defence Hive at PAKCon 🇪🇺🇬🇧

Thank you to everyone who attended the Defence Hive and contributed to the conversations & discussions on and off the podium. Especially the “State of Defence Investing” by our own Uwe Horstmann drew a lot of attention, highlighting the need to look beyond established investment topics such as dual-use and deepen the knowledge of Europe-centric solutions as well as the need to support these through venture-backed funding.

We hope you enjoyed the conversations as we did and are looking forward to sharing your thoughts with us by responding to this email.

In case you have not seen the keynote or are interested in accessing the deck, please access it here.

Defence Tech Meetup on October 31st in Helsinki 🇫🇮 

After the first edition in June, the Nordic Defence Innovation Foundry is hosting their second event in Helsinki this year. Join us for an afternoon and evening where industry leaders, investors, founders and innovators from the Nordic DefenceTech ecosystem come together to share common passions, build for Nordic defence and make a difference.

Join the upcoming K-Works event in Switzerland to chat with the Swiss Armed Forces!

A word from our colleague Rico Chandra:

After the inspiring events in February and August, a third ‘K-Works’ will be held bringing together entrepreneurs in the security & defence sector in Switzerland. The November 4 event, hosted by RUAG in Bienne, Switzerland, will focus on winning government contracts from the Swiss government. As always, we’ll conclude the evening with an apéritif’ to network with a diverse group of entrepreneurs and leaders from technology, military, defence procurement, venture capital, and academia, seeking to improve the interplay of these sectors.

If you are interested in joining, please register here or contact Rico directly for more information.

Zeitenwende in business - making employers reserve-capable

Part II

There are four different ways in which a reservist can be called up. These variants are subject to different legal requirements and have different consequences regarding the involvement of employers and the entitlement to USG benefits for reservists.

Military exercises (Wehrübung)

This term is described in more detail in §6 of the Conscription Act (WPflG). Since the WPflG only applies in the event of a situation of tension or defence according to §2, military exercises (even if often used in common parlance) are currently of secondary importance. If a reservist is called up for a military exercise, the employer can only prevent the leave of absence at considerable expense. The employment relationship is suspended during this time. Reservists undergoing military training are subject to statutory regulations under the Workplace Protection Act (ArbPlSchG). Employers are entitled to reimbursement of special costs incurred in connection with military training, in particular under Section 1 (6) ArbPlSchG. As the WPflG is currently not in force, this article will not go into further detail on military exercises.

Services (Dienstleistungen)

Section 8 of the Reservists Act (ResG), in conjunction with Section 60 of the Soldiers Act (SG), summarizes various forms of service for which (commissioned) reservists can be called upon outside of a state of tension and defence. "Exercise" (Übung) in particular should be mentioned here. The Bundeswehr requires the consent of the employer when reservists are called up for service, so that employers have the de facto option of prohibiting the release of a reservist (de iure, the consent requirement only applies from 6 weeks of exercise per year). 

It is also important to note in connection with services that the reservist may not use vacation time for this purpose. The employment relationship is suspended during the period of service. If the employer does not continue to pay the reservist, the reservist has the option of using either compensation for loss of earnings for employees/compensation for loss of earnings/compensation for self-employed persons or a minimum benefit under the USG. Services are also (partially) subject to statutory regulations that safeguard employment, such as §10 of the ResG. The total duration of services is subject to maximum time limits in the SG (e.g. fixed-term exercises in accordance with Section 61 (1) of the SG generally last a maximum of 3 months). 

Currently, services are the most important form of call-up of reservists, especially those who have been called up and are therefore highly relevant from an employer's perspective.

Official events (Dienstliche Veranstaltungen, DVag)

An additional variant for reserve service is the DVag, which is a conscription in accordance with §81 of the Soldiers Act (SG). DVag are very short-term (maximum 3 days) projects, which are found in the area of so-called sovereign reservist work independent of orders. DDs are entirely voluntary, employers do not have to agree to conscription in accordance with §81 SG and an enlisted reservist can take leave for a DD, for example. DVag therefore often take place at weekends. Apart from the reimbursement of expenses for travel and cleaning costs, reservists are not entitled to any further remuneration under the USG.

Association events (Verbandsveranstaltungen, VVag)

These are events that are offered by the reservist association's non-sovereign, non-commissioned reservist work. These essentially have the character of a purely voluntary activity; there are no entitlements to time off or remuneration for the reservist.

For the calculation of benefits under the USG, reference is made to the publicly accessible remuneration tables, as these are always based on the actual income situation and rank of a reservist. When reservists are called up for service, the Bundeswehr is required to make an economic assessment, for which reservists must generally disclose their income situation before being called up.

Corporate culture and values

Since the end of the Cold War, i.e. the early 1990s, the political and social focus in Europe has been on disarmament and the creation of unprecedented personal freedoms for individuals in all areas of life. The military and armaments were of little interest and in some cases even frowned upon. This also explains why financing from banks and venture capital for armaments activities was severely restricted. Many manufacturing companies that were still active in the armaments business during the Cold War actively withdrew from this sector and aligned their corporate culture and marketing activities with the social mainstream, which placed armaments in a dark category with tobacco, gambling and exploitation. 

Recruitment seemed easier if a company could show that it was not involved in armaments. Companies that had never been involved in armaments or whose products were not even considered were able to distance themselves from armaments in their corporate social responsibility guidelines and websites. Although this orientation is declining, it still characterizes the culture of many companies today. 

The systematic temporary release of reservists can also represent a challenge in terms of corporate culture. As changing a corporate culture is generally a demanding and lengthy undertaking, opening up the corporate culture to war readiness requires a major effort on the part of top managers and the entire organization. However, the new social and political consensus, which has recognized the enormous threat to our security situation and thus the basis for our life in peace and freedom, clearly supports this.

In this respect, practice shows that a change in corporate culture towards war readiness can be initiated by reservists who seek the opportunity to perform reserve service from their employers, but only succeeds if individual and later the majority of managers welcome and support this. 

Ideally, the company management itself will then systematically promote the individual commitment of the reservists in a positive light and market it internally and, if necessary, externally as a valuable contribution by the company to society. 

A positive example of a company that actively supports the reserves and communicates its commitment publicly is Commerzbank. In cooperation with the Hesse State Command (Landeskommando Hessen), Commerzbank has recruited new reservists and thus directly strengthened the Home Guard (Heimatschutz), in particular Home Guard Regiment 5. Employees with no previous Bundeswehr experience are also targeted. Commerzbank board member Manfred Knof emphasizes the company's responsibility to society, especially in uncertain times. 

Commerzbank also supports an initiative of 250 companies in Hesse: the so-called “Partnership for Homeland Security”. If an individual reservist who works for one of these companies would like to perform reserve duty, they can refer to this top management initiative to their superiors, HR department, colleagues, etc.

Another initiative to transform corporate cultures, “Employers and Reserves”, was founded by the Federal Association of Small and Medium-Sized Enterprises BVMW e.V. together with the BMVg. Their website features video statements from various managers calling for support for reserve services and outlining the benefits.

The 40-strong Aachen-based AI start-up Taxy.io, where one of the authors works as Managing Director, shows that reserve capability is also possible for small companies. During his reserve exercises, the other members of management largely take on the tasks independently. After initial organizational challenges, over time it was possible to uncover person-dependent and implicit knowledge and make processes more robust. Colleagues are motivated to help in such situations, as this represents indirect support for the reserve.

These examples show how a change in corporate culture can be initiated.

In addition to reservists, managers and entrepreneurs can of course also integrate other social commitment and resilience activities into this transformation, such as participation in the THW, the voluntary fire department, the Red Cross and many others, in order to reach a larger proportion of the workforce.

However, it should be noted that the initiatives practically always start with individual reservists who get their managers and colleagues interested in the topic and get the ball rolling. Waiting for initial activities by managers is rarely crowned with success. There is no substitute for personal initiative, proactivity and a responsible approach to the opportunities offered by the company to perform reserve duty.

Conclusion and outlook

It turns out that a wide range of positive experiences from employers and reservists provide guidance on how voluntary reserve services can be a success for everyone involved. The success factors range from the commitment of the individual reservist to the skills of the HR department and the necessary and valuable change in corporate culture. At the same time, there are still a number of challenges at the moment, mainly due to the massive bureaucracy involved.

However, these activities on the ability to wage war in peace appear trivial if one considers the scenario of a war that cannot be avoided through deterrence, also from the perspective of companies. If NATO were forced into a land war, for example by an attack on a Baltic state, the security situation in Europe would deteriorate to such an extent that foreign investment would decline, as would the domestic consumer climate. The public sector would also have fewer resources to support the economy. A loss of personnel due to drafted reservists and new recruits would also have a negative impact on many companies. Finally, additional large-scale refugee movements within Europe should also be mentioned, which would lead to new challenges. Anyone who considers this gloomy scenario will see that strengthening the reserve in peace and freedom is not a burden, but a great opportunity.

An early, swift and, if possible, digital process for call-ups, which would provide employers and reservists with maximum planning security, as well as uncomplicated data retrieval and transfer and administrative processing of salary and social security transactions in connection with call-ups, could contribute to a considerable increase in employers' willingness and understanding for the release of reservists. In addition, a clear legal regulation on mandatory leave of absence (analogous, for example, to Section 3 of the THW Act) by the legislator would be a desirable optimization.

News That Caught Our Attention 👀

Every week we feature a list of interesting roles in European DefenceTech start-ups and scale-ups for readers seeking their next challenge in their careers.

If you are a founder and would like to promote your open roles, please get in touch with us!

Passionate and want to contribute? 👩🏻‍💻

The European Resilience Tech Newsletter is always looking for regular and guest authors, writers, reporters, content creators etc. If you like what you read, you are passionate about improving European resilience regardless of your background and want to contribute, just reach out to us!

European Resilience Tech Newsletter Team

Uwe Horstmann co-founded Project A Ventures in 2012 as General Partner and has built Project A to be a leading European early-stage investor with over $1bn USD under management and having backed 100+ founders. In addition to Project A, Uwe serves as Reserve Officer in the German armed forces and advises the German Ministry of Defence in digital transformation issues.

Jack Wang is a software engineer turned product-driven tech investor and joined Project A in 2021 to lead the firm’s deep tech investing, which has grown to include DefenceTech. Prior to joining Project A, Jack worked in a variety of organisations such as Amazon and Macquarie Group across Australia, US and UK / Europe. Jack holds a MBA from London Business School and Bachelors of Engineering (Bioinformatics, 1st) from UNSW, Australia.

Jannic Meyer joined Project A initially contributing to what is now known as the Project A Studio, partnering with founders at the pre-idea stage, where he covered a variety of topics ranging from energy infrastructure to dual-use robotics and led our investment in ARX Robotics. He is now part of the investment team at Project A covering all things resilience.

Project A Ventures is one of the leading early-stage tech investors in Europe with offices in Berlin and London. In addition to 1 billion USD assets under management, Project A supports its 100+ portfolio companies with a platform team over 140 functional experts in key areas such as software and product development, business intelligence, brand, design, marketing, sales and recruiting. Project A have backed founders of Trade Republic, WorldRemit, Sennder, KRY, Spryker, Catawiki, Unmind and Voi as well as founders building in European Resilience: