Instructions
Begin training the dog with basic commands from an early age. The most important commands that can be taught to a herding dog before he is introduced to stock are "Come" and "Stop," "Heel" or "Sit." The names of the commands are not as important as the action they produce; you want your dog to be able to come to you when commanded and to stop what he is doing when commanded. Training is most easily accomplished using a "reward/penalty" system. When your dog listens and does what you ask, reward him or her with praise, petting or treats. When your dog does not listen or misbehaves, do not punish the dog; penalize it by ignoring it, giving it a jerk on its leash, etc.
Introduce the puppy to stock at a young age. Any dog that is going to be used to herd must be accustomed to being around stock before she begins herding. This will also benefit the stock being herded, as they will grow accustomed to the dog as well. Walk the puppy in herding position alongside the stock while it is still on a leash, or let the puppy run free with the stock to get it accustomed to the other animals.
Begin training with the stock when the dog is roughly one year old. At this point, the dog should be trained enough to be able to listen to you while working with the stock. Since German Shepherds were originally bred to herd animals, their natural instincts should kick in and allow them to herd the sheep without much direction. If the dog is beginning to chase the sheep and startle them rather than herd them, call the dog back and instruct it to stay. This penalty should indicate to the dog that what it was doing was incorrect and let the dog settle down. Calling the dog off will also allow the sheep to settle and herd more easily.
Continue to train the dog with the stock at least every week. Learn herding commands (a list of these commands is found in the "Resources" section) and teach them to the dog using the same reward/penalty method of training used with the dog from an early age. This training process is not only for the dog; you, too, must learn these commands and how they affect the movement of the herd. Only once you have complete control over these commands will you and your dog be successful herders.
How to Herd With German Shepherd Dogs
German Shepherd dogs are loyal, protective, intelligent dogs that are often used in work atmospheres. As their name implies, German Shepherds (sheep-herd) were originally bred to herd sheep. Because of this, it is in a German Shepherd's nature to herd animals. If you wish to use a German Shepherd to herd your animals, the same rules that would apply to any other dog breed apply: you must train the dog and introduce it to stock from an early age if you want to be successful.