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Kleinfeld said, "Siemens tolerates absolutely
no illegal or irregular conduct by employees - and I really mean
zero tolerance.
We are employing the knowledge and experience of external and
independent experts to track down specific cases of misconduct
and gaps in Siemens' regulations, structures, and processes and
to make our compliance system absolutely watertight."
4 |
However, with the reputation of the company taking a
beating and the company's board not making it clear whether they would
extend his contract beyond the September 2007 deadline, Kleinfeld
announced his decision to quit.
"In times like these, the company needs clarity about its leadership. I
have therefore decided not to make myself available for an extension of
my contract... The company must have complete freedom of action,"5 said Kleinfeld. The decision came a week after von Pierer, who was working as
the chairman of the company, stepped down.
Experts noted that Kleinfeld had managed a major restructuring at
Siemens in just two years. During his two-year tenure as CEO and
Chairman of Siemens, the stock price of the company rose by 26 percent.6
He pushed Siemens' employees to make decisions faster and to focus as
much on customers as on technology.
He sold off the unprofitable mobile phone production unit to BenQ
Corporation (BenQ), a Taiwan-based consumer electronics company, and
fostered a joint venture between Siemens and Nokia Corporation (Nokia),
a Finland-based mobile phone company.
He had also spent US$ 8.6 billion
in 2006 on acquisitions in growing areas such as medical diagnostics and
wind power.7 Analysts felt that Kleinfeld's decision to step down was
unfortunate.
However, there were reports that Kleinfeld's command and control style
of functioning had resulted in a lot of discontent among many. The
German media described his aggressive management style as the American
management style.
Analysts pointed out that the over-powerful supervisory board had ousted
Kleinfeld despite his good performance at Siemens, and though he had not
been directly implicated in the bribery scandal.
Many felt that the
board had used the bribery scandals to get rid of Kleinfeld, who had not
been received well by the conservative old generation at Siemens.
Analysts and many top executives said there was an urgent need to take a
re-look into the functioning of the Co-determination law8 in Germany.
Commenting on the reformation of the Co-determination law, Hans Hirt,
Head, European Corporate Governance, said, "Management boards have
changed quite a bit. But supervisory boards are an unreformed area."9
However, Siemens' supervisory board defended
the decision saying that it was an effort to give a new
beginning to the company.
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4] Chris Mellor, "Siemens Slush Fund Scandal
Deepens," www.techworld.com, December 13, 2006.
5] Georgina Prodhan, "Siemens CEO resigns, leadership
vacuum grows," www.reuters.com, April 25, 2007.
6] Jack Ewing, "Siemens' Culture Clash,"
www.businessweek.com, January 18, 2007.
7] Jack Ewing, "Siemens' Culture Clash,"
www.businessweek.com, January 18, 2007.
8] The Co-determination law was enacted in Germany in
1976 to provide a greater role for employees in the management of
companies.
9] Richard Milne, "Germany's Two-Tier Governance System
Comes under Fire," www.uk.biz.yahoo.com, May 8, 2007. |
