WINTERTemplate
Group-8
01
SIEMENS’ SIMPLE STRUCTURE-NOT
02
Architecture does not
create extraordinary
organizations by
collecting extraordinary
people. It does so by
enabling ver...
03
 Organizational structure: It defines how job
tasks are formally divided, grouped and
coordinated.
 A good organizati...
04Introduction
 Factors affecting organizational design
• Strategy: No matter what strategy the organization
pursues, the...
05
A design aligned
with business
strategy and the
market
environment in
which the
business
operates
Right business
contro...
06
 Simple structure
o Wide spans of control
o Authority centralized in a single person
o Fast, flexible and inexpensive ...
07
.
o Combines product
and functional
departmentalization
o Breaks the unity of
command concept
o Employees have
two boss...
08
oEarlier known as Siemens & Halske, it was
founded by Werner von Siemens on 12
October 1847.
oHeadquartered in Munich, ...
09
oHas around 427,000 employees.
oAnnual revenue of 73.5 billion euros in 2011
oAlthough it was respected for its enginee...
10
Klaus Kleinfeld
Key Players
Took over as CEO in 2005
Restructured company along
lines of Jack Welch.
Tried to make s...
11
.
Key Players
Peter Loscher
oAppointed as CEO on May 20, 2007
oSold VDO to Continental Corporations-
generated revenue ...
12
 What do
Kleinfeld’s
efforts at
Siemens tell
you about the
difficulties of
restructuring
organization?.
Question-1
13
Now
• Chairman and Chief
Executive Officer of
Alcoa since April 2010
• He was elected to the
Brookings Institution
Boar...
14Restructuring the Organization
Kleinfeld tried to do the following
o Low degree of
departmentalization
o Wide span of c...
15
50% board of members are
labor representatives
Labor representative did not
positively react to
restructuring
Confli...
16
People do not like to change, the really don’t like
uncertainty, and anyone coming in to change things
will be quickly...
17
It is appropriate to make it rational with
employees’ voice as well as company’s financial
stability.
American way of...
18
 Why do you
think Loscher’s
restructuring
decisions
generated less
controversy than
Kleinfeld’s?
Question-2
19
Loscher faced the same tension as Kleinfeld, in
terms of restructuring the company.
Loscher had to take a decision to...
20
One of VDO’s possible buyers was a U.S.
company, TRW, a U.S. private equity firm.
But German labor representatives de...
21
He announced plans to consolidate more
business units.
Reorganized the company’s operations
geographically.
Loscher ...
22
The decision of the company’s supervisory
board was unanimous, with trade union
representatives supporting the decisio...
23
 Assume a colleague
read this case and
concluded “This case
proves restructuring
efforts do not improve a
company’s fi...
24
oA business organization makes changes in
personnel and departments and can change how
workers and departments report t...
25
o Restructuring efforts of Kleinfeld were along
the lines of what Jack Welch did at General
Electrics. His efforts were...
26
oSiemens shares have risen 26% in the two
years since he took over, vs. 6% for GE during
Kleinfeld’s tenure.
oBut in sp...
27
He had to face questions about a bribery
scandal that had sapped his authority even
though he was not personally impli...
28
Instead of selling it to an American business
giant named TRW, he sold it to German tire
manufacturer-Continental tire...
29
 Do you think a
CEO who decides
to restructure or
downsize a
company takes
the well being of
employees in to
account? ...
30
Downsizing refers to a process where a
company or a firm simply reduces its work force
in order to cut the operating c...
31
 Yes, a CEO should consider the
well being of employees while
downsizing the company.
31
a)Productivity and Creativity Drops- The
employees may reserve ideas in case they
too are downsized. Lower creativity
s...
31
c)Decrease Morale- After the downsizing takes
place, remaining employees may face greater work
responsibilities without...
34
e) Advance Notice- According to the Worker
Adjustment and Retraining Notification Act (WARN)
requires employers to give...
35
Restructuring a
European organization.
Making it less
bureaucratic.
Kleinfeld Vs. Loscher.
Downsizing
Conclusion
36
Loscher’s efforts caused less
controversy, but did not go well
with all constituents.
37
Example of IBM, which had never laid off staff
ever since its incorporation.
Had to layoff 85,000 employees to stay i...
38
No business can continue to function in the
same way forever.
Restructuring is one of the options for a
business to s...
WINTERTemplate
Reference
www.siemens.com
www.businessweek.com
www.forbes.com
www.thesundaytimes.com
www.youtube.com
WINTERTemplate
SIEMENS’ SIMPLE STRUCTURE-NOT
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SIEMENS’ SIMPLE STRUCTURE-NOT

  1. 1. WINTERTemplate Group-8 01 SIEMENS’ SIMPLE STRUCTURE-NOT
  2. 2. 02 Architecture does not create extraordinary organizations by collecting extraordinary people. It does so by enabling very ordinary people to perform in extraordinary ways” - John Kay
  3. 3. 03  Organizational structure: It defines how job tasks are formally divided, grouped and coordinated.  A good organizational structure and design helps • Improve communication. • Increase productivity, and inspire innovation. • Create an environment where people can work effectively. Introduction
  4. 4. 04Introduction  Factors affecting organizational design • Strategy: No matter what strategy the organization pursues, the structure must support it to be successful. • Size: The design must take into account the size of the organization. The larger an organization grows, the more there is a need for formal structure, defined work assignments, and clear lines of authority.
  5. 5. 05 A design aligned with business strategy and the market environment in which the business operates Right business controls, Right flexibility, Right Incentives, Right people, and the Right resources. Effective organizational design
  6. 6. 06  Simple structure o Wide spans of control o Authority centralized in a single person o Fast, flexible and inexpensive to operate o Increase in size leads to slower decision making  Bureaucracy o Formalized rules and regulations o Centralized authority, narrow spans of control o Decision making that follows the chain of command . Types of Organization Design
  7. 7. 07 . o Combines product and functional departmentalization o Breaks the unity of command concept o Employees have two bosses- functional department managers and product managers Matrix structure
  8. 8. 08 oEarlier known as Siemens & Halske, it was founded by Werner von Siemens on 12 October 1847. oHeadquartered in Munich, Germany. oIt is organized into five main divisions: Industry, Energy, Healthcare, Infrastructure & Cities, and Siemens Financial Services (SFS) oLargest Europe-based electronics and electrical engineering company. The Company
  9. 9. 09 oHas around 427,000 employees. oAnnual revenue of 73.5 billion euros in 2011 oAlthough it was respected for its engineering prowess ,it was derided for its sluggishness. The Company
  10. 10. 10 Klaus Kleinfeld Key Players Took over as CEO in 2005 Restructured company along lines of Jack Welch. Tried to make system less bureaucratic. Spun off underperforming telecommunications businesses Profits increased by 35% during his tenure of two years. Labor force was not pleased with changes-allegations were leveled against him. Forced to quit in June 2007
  11. 11. 11 . Key Players Peter Loscher oAppointed as CEO on May 20, 2007 oSold VDO to Continental Corporations- generated revenue of 16.7 billion dollars oIn 2008,he announced elimination of 17,000 jobs. oPlans of boosting growth with energy- saving and infrastructure products . oCompany experienced its share of ups and downs. oEfforts to restructure generated less controversy
  12. 12. 12  What do Kleinfeld’s efforts at Siemens tell you about the difficulties of restructuring organization?. Question-1
  13. 13. 13 Now • Chairman and Chief Executive Officer of Alcoa since April 2010 • He was elected to the Brookings Institution Board of Trustees in May 2010 • Chairman of the U.S.- Russia Business Council • American business culture stint in Siemens' U.S. headquarters • Chief executive of U.S. operations • Strategic product manager at the CIBA-GEIGY • Worked at Siemens About 20years • Dramatic transformation of the company, reshaping the company’s portfolio Then Kleinfeld
  14. 14. 14Restructuring the Organization Kleinfeld tried to do the following o Low degree of departmentalization o Wide span of control o Make quicker decisions o Develop the under performing businesses o Less formalization
  15. 15. 15 50% board of members are labor representatives Labor representative did not positively react to restructuring Conflict between labor representatives and bank rolled business friendly work force Kleinfeld was forced out and replaced by Peter Loscher. Difficulties in Restructuring
  16. 16. 16 People do not like to change, the really don’t like uncertainty, and anyone coming in to change things will be quickly disliked by the employees. Organic model of restructuring is not positively effective. Simplifying group structure might cause conflict between roles in organization. Dominant culture v/s subculture. Why was Kleinfeld replaced ?
  17. 17. 17 It is appropriate to make it rational with employees’ voice as well as company’s financial stability. American way of restructuring was not apt for European organizations. Allegations against Kleinfeld about undermining Germany’s main industrial union. Why was Kleinfeld replaced?
  18. 18. 18  Why do you think Loscher’s restructuring decisions generated less controversy than Kleinfeld’s? Question-2
  19. 19. 19 Loscher faced the same tension as Kleinfeld, in terms of restructuring the company. Loscher had to take a decision to spin off an underperforming 10 billion-euro auto parts unit, VDO. He had to weigh the forces for stability, which wanted to protect worker interest, against U.S. style pressures for financial performance
  20. 20. 20 One of VDO’s possible buyers was a U.S. company, TRW, a U.S. private equity firm. But German labor representatives derided such private equity firms as “locusts”. Loscher decided to sell VDO to German tire giant, Continental Corporation thereby acquiring the support of workers.
  21. 21. 21 He announced plans to consolidate more business units. Reorganized the company’s operations geographically. Loscher was more supportive of German employees with his ideology where as Kleinfeld was more American in his thinking.
  22. 22. 22 The decision of the company’s supervisory board was unanimous, with trade union representatives supporting the decision. In mid-2008,although he announced elimination of nearly 17,000 jobs, yet he managed to downsize the organization efficiently.
  23. 23. 23  Assume a colleague read this case and concluded “This case proves restructuring efforts do not improve a company’s financial performance.” How would you respond to this statement?. Question-3
  24. 24. 24 oA business organization makes changes in personnel and departments and can change how workers and departments report to one another to meet market conditions. oSome companies shift organizational structure to expand and create new departments to serve growing markets o Other companies reorganize corporate structure to downsize or eliminate departments to conserve overhead. Often new owners or managers rearrange business structure to create a familiar business model. What is Restructuring?
  25. 25. 25 o Restructuring efforts of Kleinfeld were along the lines of what Jack Welch did at General Electrics. His efforts were to make Siemens less bureaucratic. o He has got little applause for boosting 2006 sales by 16% and profits by 35%. oHe had pushed Siemens' 475,000 employees to make decisions faster and focus as much on customers as on technology. He spun off underperforming telecommunications-gear businesses and simplified the company's structure. o .
  26. 26. 26 oSiemens shares have risen 26% in the two years since he took over, vs. 6% for GE during Kleinfeld’s tenure. oBut in spite of all this Kleinfeld was not accepted at the organization by the employees. His downsizing acts were not accepted by the employees and the board of directors at Siemens’ who represented the employees. Kleinfeld had angry employees demonstrating outside his window very often.
  27. 27. 27 He had to face questions about a bribery scandal that had sapped his authority even though he was not personally implicated. On the other hand Peter Loscher’s restructuring was more along the lines of German corporate vision. Loscher joined the organization after Kleinfeld’s tenure. Loscher spun off an underperforming 10 billion –Euro auto part unit named VDO.
  28. 28. 28 Instead of selling it to an American business giant named TRW, he sold it to German tire manufacturer-Continental tires. Though his actions often incorporated employee interests Loscher ,in mid 2008 eliminated 17000 jobs world wide in attempt to reorganize the company’s operations. During Loscher’s tenure the company did face a lot of ups and downs. Its stock price fell in the European stock exchange and New York stock exchange but did better than its contemporaries like Alcatel and GE.
  29. 29. 29  Do you think a CEO who decides to restructure or downsize a company takes the well being of employees in to account? should he or she do so? Why or why not? Question-4
  30. 30. 30 Downsizing refers to a process where a company or a firm simply reduces its work force in order to cut the operating costs and improve efficiency.  The following are the reasons for downsizing a company: a) Merging of two or more firms b) Acquisition c) Economic crisis d) Strategy changes e) Excessive workforce.
  31. 31. 31  Yes, a CEO should consider the well being of employees while downsizing the company.
  32. 32. 31 a)Productivity and Creativity Drops- The employees may reserve ideas in case they too are downsized. Lower creativity sometimes translates into lower productivity. b) Potential for Legal Issues- Unjustified layoffs leave employees exposed to expensive lawsuits .Company also stands to earn a bad reputation which could further harm business. Reasons for considering well -being of employees
  33. 33. 31 c)Decrease Morale- After the downsizing takes place, remaining employees may face greater work responsibilities without extra pay, so it will lead to decrease in the morale of employees. d) Social Media - Former employees may share their experiences on YouTube, Twitter, Facebook or a blog. If the comments are negative, it will seriously harm company’s reputation and also affect ability to attract new clients or employees. Reasons for considering well -being of employees
  34. 34. 34 e) Advance Notice- According to the Worker Adjustment and Retraining Notification Act (WARN) requires employers to give employees, a 60 days notice to mass layoffs when reducing their workforce by 33 percent or more. f) Severance Packages- It refers to the pay and benefits an employee receives when he or she leaves a company. Severance packages also include extended benefits, such as health insurance and outplacement assistance to help the employee secure a new position. Reasons for considering well-being of employees
  35. 35. 35 Restructuring a European organization. Making it less bureaucratic. Kleinfeld Vs. Loscher. Downsizing Conclusion
  36. 36. 36 Loscher’s efforts caused less controversy, but did not go well with all constituents.
  37. 37. 37 Example of IBM, which had never laid off staff ever since its incorporation. Had to layoff 85,000 employees to stay in business. This type is tough to manage and is mostly adopted to overcome adverse situations. Not always a result of business losses. May be needed in cases of acquisitions and mergers.
  38. 38. 38 No business can continue to function in the same way forever. Restructuring is one of the options for a business to stay on track with changing times and business conditions .
  39. 39. WINTERTemplate Reference www.siemens.com www.businessweek.com www.forbes.com www.thesundaytimes.com www.youtube.com
  40. 40. WINTERTemplate

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