Question

Review the case study provided below. In an APA-formatted Word document of at least 550 words, write an essay in which you answer the following four questions: 1. How would you describe the culture of Siemens before Kleinfeld's appointment as CEO? 2. Kleinfeld's leadership style was criticized as being “brash” and “American.” Is that a fair assessment? Why or why not? 3. Do you think the decision to “clean house” in the Siemens executive offices was the right one? Why or why not? 4. What challenges does Peter Löscher face in restoring the company's reputation?

Siemens' Commitment to “Clean Hands”

After CEO Klaus Kleinfeld put Siemens back on the road to recovery, a bribery scandal threatened to undo all the progress made. If things had turned out a little differently, Siemens CEO Klaus Kleinfeld might already be on his way to executive stardom, like his role model Jack Welch. Just two years after Kleinfeld took over the Munich electronics and engineering behemoth in January 2005, Siemens was on track to hit its aggressive internal earnings targets for the first time since 2000. In fact, it was expanding both sales and profits 168 faster than Welch's former domain, General Electric. The 2006 sales rose by 16 percent and profits by 35 percent, and the future was looking very positive.

Transforming Siemens was never going to be easy. With branches in 190 countries and over $100 billion in sales, the company has long been respected for its engineering expertise but criticized for its sluggishness. And Germany, with its long-standing tradition of labor harmony and powerful workers' councils, is highly resistant to the kind of change Kleinfeld tried to implement.

Against the odds, in just two years Kleinfeld had managed a major restructuring. He pushed Siemens' 475,000 employees to make decisions faster and focus as much on customers as on technology. He spun off underperforming telecommunications businesses and simplified the company's structure. When one group of managers failed to deliver, he broke up an entire division—at the end of 2005, it became clear that the Logistics & Assembly Systems Division, which made products such as sorting equipment used by the U.S. Postal Service, would deliver only a 2 percent profit margin. Most unpardonable in Kleinfeld's eyes was that the unit's managers waited too long to alert him to the problem. So Kleinfeld transferred the most profitable parts of the division, such as baggage-handling systems for airports, to other parts of Siemens. The rest was sold. Within weeks, an entire Siemens division with $1.9 billion in annual sales was vaporized.

Such aggressive tactics would inevitably lead to criticism of Kleinfeld's “American” style of leadership, but his eventual departure from Siemens (he is now CEO of aluminum giant Alcoa) came not, as many suspected, as a result of secret boardroom maneuvers. It came as a result of a need for a fresh start for the company after a scandal over bribery and corruption practices by senior managers to the tune of an estimated $2.5 billion.

In December 2008, Siemens announced that it would pay fines and other penalties totaling $800 million after pleading guilty in U.S. federal court to violations of the Foreign Corrupt Practices Act. The company also agreed to pay $540 million to German authorities in addition to a $274 million fine already levied for evidence of systematic bribery and corruption, including the use of airline tickets that could be exchanged

for cash, which executives in Siemens' medical division used to bribe clients in contract negotiations. Kleinfeld's eventual departure from Siemens came not, as many suspected, as a result of secret boardroom maneuvers, but as a result of a need for a fresh start for the company after a scandal over bribery and corruption practices by senior managers to the tune of an estimated $2.5 billion.

Thanks to full cooperation and transparency in the investigation, in addition to a multibillion-dollar internal investigation in which Siemens provided most of the evidence for its own prosecution, the company did not receive a ban from competing for future government contracts. However, having clearly demonstrated that much of its commercial prowess was achieved through a willingness to “grease the appropriate

palms” to win large government contracts from Nigeria to Norway, Siemens faced the challenge of rebuilding its reputation and proving that it can win business honestly (with “clean hands”)—even when competitors may continue to acquiesce to demands for bribes in order to win contracts.

The responsibility for rebuilding the company's reputation fell to Peter Löscher, as a designated (and untainted) outsider who previously headed divisions at GE (Siemens' greatest rival) to draw a line under the scandal and start a new era for the company. One of his first acts was to declare an amnesty for all 169 managers to come forward and share what they knew about the bribery practices—110 managers came forward and provided multiple new leads to internal and external investigators.

With Löscher's arrival and the need to wipe the slate clean, there was a dramatic housecleaning in the executive offices in addition to a cosmetic restructuring of the organization into three main divisions: industry, energy, and health care. It remains to be seen whether the restructuring is designed to improve operational efficiency or to make units more attractive to potential buyers.

Answer 1

Introduction

Organizational behavior can be defined as the study of how individuals behave in a work set-up both individually and as a team (McShane, 2015). The term is coined so, as this study is a key contributor to understand how an organization works and how its productivity can be improved, since any organizations would need its people to work together as teams to achieve organizational goals. Organizational behavior helps in interpreting the values, beliefs and all such aspects of an organization by analyzing how individuals working for the organization perceive these beliefs and integrate them with their own values (Langdon, 2013). The same can also be used to explain the culture within an organization. The various concepts involved in organizational behavior is the behavior of the individual in isolated situation, behavior of individuals in work groups and the behavior of the organization itself (DuBrin, 2013).   The below report is an analysis on understanding how workgroup, teams, power and politics which are all major concepts of organizational behavior effect the organizational culture at Siemens.

About The Company

Siemens AG is a German based company with diversified branches of Industry, Energy, Healthcare and Infrastructure. Established in 1847, Siemens defines itself as a global powerhouse with great focus on automation and digitalization. The company employs 348,000 people in 200 countries and hence is one of the best examples to understand how a company this size can manage its employees efficiently.

Siemens Culture

For such a large setup a firm organizational culture is required to ensure that the company holds together as one and work for a common goal. The organization culture at Siemens is called Ownership Culture, where it is said that every individual should apply the level of performance and vigor as if it was their own company.

The culture encompasses Leadership, Equality, Behaviors, Values and People Orientation as key factors of its culture. The culture is based on the company values and people oriented where each individual is responsible for the growth of the company and managers serving as role models (Thompson, 2013).

Schein Cultural Model

A detailed understanding of Siemens culture can be achieved with the help of the Edgar Schein organizational culture model which is also called as the Onion model. The model consists of three layers that depict the level of the depth to which the culture is embedded in the organization.

1. Artifacts and Symbols: This aspect of the cultural model is more of a visual representation of the culture in the organization. One can see this in their logos, dress codes, taglines and so on. It is upfront visible to the world to understand the culture in an organization. Siemens artifacts shows its culture in several artifacts. For instance, the tag line of the company is “Ingenuity in Life”. Siemens believes that innovation is one the most important factors for the continuous growth of the organization and the same is spread through their tagline. The constant work in the fields of manifesting, intelligent infrastructure, Sustainable energy and digitalization are all proofs for the company’s inventive culture. One place where the company’s culture of transparency can be seen is through there official website which has details of all the products, services and events of the company.

2. Espoused Values: These are the conscious goals and strategies of the company. Even the best strategies fail when it is not supported by a string culture. Siemens consciously imbibes the high performance goals into each of the employee’s objectives. The same is done through the ownership culture of the company where people orientation is high and each employee is expected to work as if the company was theirs.

3. Assumptions: These are difficult to recognize as they are self-evident and unconscious behavioral aspects. At Siemens a sense of entrepreneur culture is maintained to ensure ingenuity and the values of responsibility, sustainability and leadership are the assumptions that are present in Siemens.

Work Groups And Teams

Every organization has several sets of work groups that work towards the common goals of the organization. At collective group of people working for a single project but performing several independent functions can be termed as a work group (Bittner, 2013). These groups often have a common purpose and contribute individually to the achievement of these goals. The simplest visible work group in any organization is the whole organization itself. Every employee of an organization is a part of a group that is focusing on achieving the organizational goals. A simple situation such as the sale of a product involves people from several segments such as marketing, sales, finance and customer service. However, the functioning of each of these departments is not inter-related.

Work Groups have a significant effect on the organizational culture and vice versa. Since work groups involve individual persons, the way of communication, behaviors and individual values effect the performance and productivity of organization (Nielsen, 2013). A work group culture increase the sense of respect, appreciation and communication is the company