Building a structure to drive performance and responsibility

Siemens is a German multinational engineering and

electronics conglomerate company Strong geographical presence and operated in a wide range of industries This case discusses evolution of organizational structure and issues related to it due to change in top management leadership

We have divided the entire timeline into two phases; one before Mr. Peter Loscher and the other after Mr. Peter Loscher. The major issues that Siemens had to face due to change in leadership are as follows: Change in organizational structure Corporate management structure Decision Making and Planning Corporate Cultural Change

Before Mr. Loscher: Complex and decentralized divisional structure. This led to minimal oversight from HQ and was one of the reasons why divisions indulged in scandalous behaviors. After Mr. Loscher: Simpler organizational structure with clear chain of command and clear delegation of authority. Siemens had a two dimensional structure comprising the global business(sectors , divisions and business units) and the regional units(clusters and countries)

Before Mr. Loscher: Siemens had a two tier board system: supervisory board and the managing board. Corporate Executive Committee involved with strategic management was selected by the Managing board. Below the Managing Board and the CEC Siemens was structured into operating groups,regional units, corporate departments and corporate centers After Mr. Loscher: CEC was dismantled and the Managing Board was made the sole governing body. CEO,CFO, General council, Chief of Human Resources,CTO, Sector CEOs were the members of the managing board.

Before Mr. Loscher: Four eyes principle was used to take decisions. Harsh financial targets were set as the main priority. After Mr. Loscher: The CEO principle was used to take decisions. Future oriented planning based on the feedback from employees and customers.

Before Mr. Loscher: Mr. Von Pierer focussed upon ambitious profit margins. Mr. Kleinfeld carried forward Pierers culture and wanted to ensure that Siemens grew at twice the global GDP rate. Employees were driven only by targets Highly aggressive CEOs with profit centric approach. After Mr. Loscher: Employees feedback was appreciated. Transformation of employees attitude and renewed spirit amongst the manager. Cultural change created adaptability issue for the employees initially.

 Inducing Transparency Dismantling CEC, introducing CEO principle and replacement of most of the Management Board members. Compressing 10 operating groups into 3 sectors. Clustering 190 countries into 17 regions. Introducing Two-Dimensional and Right of Way. Open culture and promoting personal accountability. Re-launching Siemens One and creating Market Development Boards (MDB) .

Solutions we Suggest
1. Organization Alignment Eliminate the Two-Dimensional structure and introduce an One-Dimensional structure. Addition of Balance Scorecards by the Supervisory Board to measure performance. Reduce number of regional clusters based on GDP growth and BRIC countries and concentrate on potential growth areas. 2. Profit & Loss Targets Introducing P&L in the regional business. 3. Organizational Climate Open door policy, strong internal communication, promoting employee suggestions, introducing semi-annual climate online survey to assess progress & identify gaps. 4. Strengthening Middle Management.

 Founding of the Infrastructure & Cities Sector in the year 2011 Mr. Loscher was ousted in July 2013 after the company repeatedly missed profit targets Mr. Jon Kaeser, previously the CFO, succeeded him and began review of companys business and organization Siemens revamps corporate culture Changes give more responsibilities to Companys Country Managers

 A crisis is the best time to introduce any major organizational changes as there are minimum chances of facing resilience. It is very important for the global units to feel the parent company connectedness to carry out the expectations. The main focus of a multi-national should be to drive performance and responsibility rather than focusing on profit making and individual development