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New Siemens CEO Suggests Corporate Reorganization Sign Up to receive Daily News Alerts in your E-mail Inbox
Posted on Friday, July 06, 2007 4:58:00 PM |
In his first public comments since formally becoming chief executive officer of Siemens AG on July 1, Peter Loscher said at a press conference in Germany yesterday that he intends to streamline the huge automation and engineering company's organizational structure and will present a plan to do so this fall.
Loscher, who takes over as CEO in the wake of a bribery scandal that resulted in the departures of Klaus Kleinfeld, the former CEO, on June 29, and Heinrich von Pierer, the head of Siemens' Supervisory Board, said a reorganization is necessary to improve management oversight and the speed at which the company operates.
Loscher, the twelfth person to become CEO of 160-year-old Siemens and the first outsider to hold the post, was introduced at the press conference by Siemens' new Supervisory Board Chairman Gerhard Cromme, a former CEO of ThyssenKrupp AG.
"The Corporate Executive Committee will be scrutinizing the organization of the groups, the regional companies, and the tasks of the corporate units in detail," Loscher said, in a prepared statement. "In the fall, I'll present our conclusions to the Supervisory Board with these goals in mind: clear lines of responsibility, a high level of transparency, and maximum speed."
Siemens' 475,000 employees are organized into six major areas: Information and Communications, Automation and Control, Power, Transportation, Medical, and Lighting. In its fiscal year ended Sept. 30, 2006, Siemens had sales from continuing operations of €87.3 billion.
In outlining what he intends to do in his first 100 days, Loscher vowed to restore trust in the company and said that, in addition to examining Siemens' organizational structure, he will focus on the company's leadership culture, high-growth markets, innovation, the business portfolio, and compliance. He noted that he will continue the company's current strategic plan as devised under Kleinfeld, including the companywide program that was launched as Fit4More in April 2005 and succeeded by the Fit42010 initiative in April 2007.
Loscher said Siemens is looking for a head of compliance to replace Daniel Noa, who resigned in late June. The chief compliance officer will be an expert from outside the company with international experience, he said.
Loscher also had some choice words regarding Siemens' corporate culture. "What we want and what we need is a team culture — fast and efficient teamwork," he said. He said he will soon visit Siemens groups, production facilities, and research laboratories carrying this message. After a trip to Austria, where he was born, he will visit China, India, and Japan, "where Siemens still has substantial unrealized potential," he said.
Reaction to Loscher's comments from industry analysts in the United States and Germany today focused on the need to restore trust and the question of what form a corporate reorganization might take.
Andy Chatha, president of ARC Advisory Group, said in an interview that the trust issue was paramount and that it extended both inside Germany and into other markets. "Siemens is rocking right now in terms of the business and the stock price, but he has to build trust with the German public, the unions, as well as globally with the foreign countries where the bribery occurred," Chatha said. "Kleinfeld was doing a terrific job, but board members felt he was too Siemens. They had to bring someone in from the outside."
David Humphrey, an ARC analyst in Germany, said in an e-mail exchange that he had expected Loscher to continue with Kleinfeld's reform plans. "In addition, there are rumors that he may simplify the company's organization in a restructuring that would go into effect on October 1, at the start of the next fiscal year. The new structure would consist of just three business units, one of which would be the Industrial Division."
Humphrey noted that such a move would result in additional layers of management between Loscher and the company's current divisional structure. "But it would foster more cooperation and tap into those all-elusive synergies," he said. "My general feeling is that Loscher will leave the industrial units alone for a few years as they are all performing well, especially Automation and Drives."
Loscher, 49, had been president of Global Human Health at Merck & Co. Previously, he was at General Electric, from 2004 to 2006, serving as president and CEO of GE Healthcare Bio-Sciences (UK) and as a member of the Corporate Executive Council.
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