Building a structure to drivePerformance & ResponsibilityBy,GROUP 6Ankur Abhilash UH14008Krishna Panigrahi UH14019Punyatoya Sahu UH14033Purbasa Patnaik UH14034Soumya Kanungo UH14045

Case revolves around the most turbulent times in the companys history.Charges of rampant corruption, bribery brought negative publicity for the company.Profitability and employee satisfaction was at an all time low.Under this critical situation, Peter Loscher became the CEO in July,2007, replacing the incumbent Klaus Kleinfeld. Introduction

Founded in 1847 by Werner von Siemens and his partner, Johann Georg Halske in Berlin.Siemens grew rapidly, operating on a global scale, with presence in almost all nations.Transitioned from a functional reporting structure to a divisional structure in 1989.This new structure placed greater emphasis on local responsiveness and enabled Siemens to benchmark against its peers.Company Background

Functional vs Divisional StructureBusiness departmentalizes according according to the activities performed by individual groupsA clear chain-of-commandCommunication flows freely within departments, but less so between departmentsMight complicate strategic decision-makingBusiness departmentalizes according to geographical areas, markets, or products and servicesDivision heads have decision-making powerDuplication of efforts and increase in costsIntra division among divisions

Corporate Management Structure

Corporate Governance

Features of Siemens structureCoordination among Siemens businesses and corporate technology (CT) for a solution focused firmLocal Responsiveness Mr/Ms SiemensTeam based Management by the Four eyes principleFour eyes principle a two person team consisting of technical head and commercial head

Two year restructuring programme called Fit4More.Siemens One, a program to simplify large scale projects for global customers.Focus on global developments.Authoritative Rule.

Kleinfeld era

Bribery scandal led to low confidence among clients and employees.Friction between headquarters and local regions.Slow and time consuming decision making process.Heartless management by Kleinfeld.Ineffectiveness of four eyed principle.

Problems at Siemens

Replaced 4 eyes principle with CEO principleEmphasis on transparencyCorporate ReorganizationIntroduction of two dimensional structureIntroduction of ClustersSimplification of financial reportingEmpowering regional leadershipEstablishment of MBDs

Changes implemented by Loscher

Consensus and group decision making was abolished.Established one individual for one management team.Reduction of management positions from multiple managers to one CEO.Faster decision making process due to clear delegation of authority.CEO Principle

Comparison between the two eras

Before LoscherAfter LoscherOrganization structurecomplexSimpler(clear delegation of authority)Management styleAggressive target oriented managementGoal driven keeping future in mindCultureDemotivated employees only driven by targetMotivated employees where their feedback was appreciatedDecision making process4 eyed principleCEO principle

Consolidation of the business: 10 operating groups to 3 sectorsOrganization of the 190 countries into 17 regional clustersMinimization of the administrative and coordination activities within individual countriesEstablishment of Competence centers

Corporate reorganization

1st dimension: Global business- Sectors, Divisions and Business units2nd dimension: Regional units- Clusters and countriesRight of way substituted the old matrix structureAbolishment of profit and loss accounts except for four categories

Two Dimensional Structure

Focus on local customizationDeveloping a spirit of entrepreneurshipVision: Siemens-the pioneerEstablishment of Market Development Boards (MBDs)Siemens One approach to customersSiemens Redefined

Middle Managers as the key vehicle to get to all organizational levels An open door policy and strong internal communicationsEncouragement in the form of appraisals and recognition to enhance employee productivityP&L targets to be shared by global business and regional unitsElimination of thetwo-dimensional to reduce bureaucracy and redundancy in sales and support activities and eliminate conflicts and boost collaboration

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