Siemens Change After Corruption Scandal

south Change after(prenominal) Corruption ScandalThis qualifying counsel report is intended to constitute the boundary condition of glossiness potpourri efforts at second after corruption scandal came to light on November 2006. Even prior to corruption scandal, sec had a system of rules, policies and procedures how incessantly it had non done enough to entrench its determine, policies and procedures into gild practice. They lacked in subsequent leaders and civilisation, inconsistent communication, training and company did not take adequate measures to punish conduct in breach. Siemens understood that they have to make some changes to its crease to b give upge the gap between opening and practice.Siemens AG (Berlin and Munich) is a one of Germanys largest publicly held corporations and Europes largest engineering conglomerate by gross sales. Siemens is a global powerhouse in electronics and electrical engineering, operational in the industry, nada and healthc atomic number 18 sectors. It activities include cross sector argumentes and services, equity investments. The company has around 405,000 employees working to develop, design and install complex project and shorten a wide range of solutions for individual requirements. Siemens has built his reputation and world class with its technical turn overments, innovations and transnationality over 160 years, generating a sales volume in excess of 75 billion with communication division at the heart of business (Siemens, 2010).Up until 1999 bribing foreign officials to secure contracts was not just now authorized but tax deductable in Germany. Siemens were allowed to pay legal fees for employees who got arrested or prosecuted abroad for graft. Corruption is a part of a countrys conclusion, so is Siemens. It keep a culture in which corruption was a likely business strategy to enter into emerging markets. In addition Siemens had grown scalelike to government (Rawi Abdelal et al., 2008). A cult ure of corruption in a dominant presidential term does not occur accidently. Why would workers willingly commit an offence? The wholly likely explanation is if the organisation rewarded such behaviour. Siemens is not the kind of organisation where tens of thousands of slush funds tuckers unobserved. It is conceivable, certainly plausible, that Siemens top management k juvenile anything more than or less the bribes and corruption scandal. But as top officials they share responsibility for the widespread see-no-evil-hear-no-evil corporate culture in their organisation, which suggest that Siemens lacked a corresponding leaders and culture. So it is evident that culture at Siemens was illegal and un honest.Klaus Kleinfeld appointed as CEO of Siemens in January 2005-a conglomerate with 75 billion euros. He was called as wunderkind among shareholders of Siemens after turning the operation of communication division and making lucre of 569 million euros or (3.2%) increase in sales. L ater on November 2006, Klaus Kleinfeld announced that Siemens net income went up by 38% and sales growth were up by 16% from previous fiscal year (Rawi Abdelal et al., 2008). attraction will go wrong, if they jammed in single metaphor (Esther Cameron Mike Green, 2009) and this is what Siemens witnessed. Despite knowing the corporate culture of the organisation, he broke given up consensual management style, instead he threatened to sell or restructure if they didnt hit targets. Kleinfeld focused only on the bulky task of strategically restructuring the division and ways to improve the company growth. According to business daily Suddeutsche Kleinfeld gave lot of attention some the fiscal markets demand and restructuring the company. Spiegel particularly intemperate more on Klaus Kleinfelds tactical errors Possibly his biggest failure was to underestimate the impact of bribery scandal (Rawi Abdelal et al., 2008). He seemed to not fully take control as bribery scandal kept whirli ng around the company. This shows that Kleinfelds recklessness and negligence.This body of work presents the boundary conditions of the Siemens change effort. It has been believed that organisational leadership and culture, with in the present organisations business environment, are the most critical aspects that determine the dynamics of organisational change. Siemens had policies in place, but they were not lived up to the expectation, the corporate determine were not incorporated and leadership has failed miserably, resulting cost of 660 MM fines and 650 MM attorney and consultant fees (Frank Schmidt Kenny Mok, 2008). Reputation and trust were battered due to the series of corruption scandals which rocked Siemens. Siemens was blacklisted in Nigeria by national Government of Nigeria (Felix Onuah, 2007). As a result reputation and trust were battered due to the series of corruption scandals which rocked Siemens. So to keep hold of business, Siemens were in the position to chan ge their culture and leadership style in beau monde to get rid of corruption.Corruption ScandalBut one of the major concerns with Siemens was corruption kept escalating. Siemens has been at the middle of a very serious corruption scandal, since November 2006. Siemens officials have been investigated and scrutinized in a bid to enlighten uncertain payments totalling some 1.3 billion ($2.07 billion). In 2006 Siemens was at the middle of one of the Germanys biggest corporate corruption scandal. In November 2006 around 270 police and other German officials ransacked Siemens offices. Six executives were arrested, including CFO of telecommunications division. German officials alleged that the suspects had diverted some 200 million euros through with(predicate) secret bank accounts in Liechtenstein, Switzerland and through shell companies, paying bribes for winning contracts in Iraq, Venezuela, Bangladesh, Italy, Israel, Russia, China, Argentina and Greece (Rawi Abdelal et al., 2008).Re percussions of the ScandalSiemens identified the expenses of corruption as very high, through slowing down financial growth, rising levels of poverty, foreign investment misallocation, reducing tax revenues and additional government costs. Siemens concentrated on some of the key areas where they lacked quality in order to get rid of corruption. It is also very crying to keep up their brand name and reputation to do right business and compete against their rivals. After the corruption scandals were unveiled at Siemens, the management started many initiatives to reinforce its compliance controls and corporate governance.New Governance StructureOne of the most important challenges an organisation faces, apparent leadership is crucial if an organisation is to make sure that the mature and employees are not engaging in bribery and corrupt practices. It is really imperative that the board members do not transmit mixed signals urge officials and managers to follow strict codes and high standards. Siemens supervisory board members Huber, Ackerman and Cromme were against their former CEO Kleinfeld, although profits had increased by about a third and sales by about 10%. As a result Kleinfeld was asked to step down because the pick up of the company was in tatters. For the first time ever in the report, board members turned to an outsider as chief executive officer-the Austrian Peter Loscher (Rawi Abdelal et al., 2008). Siemens implement impertinently managerial board position for compliance and official matters. Peter Solmssen, Hans winters and Andreas Pohlmann were appointed as General Counsel, headman Audit officer and Chief Compliance officer respectively (Dietrich G. Moller, 2009). Loscher was in a position to develop a power base for him and then make sure his acceptance. Unlike Kleinfeld, Loscher do sure to maintain co-operative relations with unions and employees. Understanding culture is desirable for leaders in order to lead and to make a successful ch ange. For e.g., what the leaders pays more attention to, controls and measures on a regular basis, how do they respond to crises and critical situations, how do they assign limited imaginations, promotions, rewards and status, all these factors informs the culture that has been developed in an organisation. preparednessSince Siemens was listed on New York Stock Exchange, it was expected that Security Exchange Commission (SEC) would interrogate the scandal and might impose higher fines than authorities of German, whilst the U.S amendness department would launch a criminal probe (Rawi Abdelal et al., 2008). To meet the challenge, Siemens had restructured the Compliance and started a comprehensive compliance program. So Siemens hired a cofounder of Transparency International to consult on compliance and hired the healthy-known United States law firm of Debevoise Plimpton to investigate the bribery scandal. Top officials and divisional heads were asked to deposit joint bids for pr ojects, a measure designed to remove corruption. (Andreas Pohlmann, 2008)Compliance program focussed on terzetto important factorsSiemens concentrated on providing training, propagating cognizance and understanding and implemented a control system in order to overcome substantial deficiencies. Training is very imperative to make sure the particular implementation of the controls. To avoid unethical business practices, the Siemens provided anti corruption programs as a part of training for more than 15,000 employees. In addition, Siemens launched a web establish anti corruption training program for more than 120,000 employees (Andreas Pohlmann, 2008)This graphs shows that training is gradually increasing from the year 2008 to 2009 and Compliance staff increasing from 86 in 2006 to 598 in 2009 (Dietrich G. Moller, 2009). Siemens thought, compliance is the common platform and the moral responsibility to sustain the mutual set of morals for which the firm stands superiority, creativi ty and accountability. hearSiemens relied on the loyalty of their employees towards the company, to detect and Identify potential problems at the early stages. They motivated and encouraged their employees to actively participate in developing a culture of reliability by not allowing anybody to violate in the organisation. They launched a help desk with Tell us and Ask us functions, so employees were asked to inform the helpdesk if anybody violates the rules (Dietrich G. Moller, 2009).According to Ask me helpdesk, around 3000 questions were raised regarding particular compliance problems, and many individual violations have been reported at the helpdesk.RespondSiemens has started responding to non-compliance, violation and screw up through regular and proper sanctioning across each and all(prenominal) departments of the business. Siemens had enforced more than 550 penalizing measures in fiscal year 2007 (Dietrich G. Moller, 2009). talkCommunication is an imperative factor for Sie mens to incorporate its new strategic direction of superior ethical behaviour, corporate social responsibility and transparency. Siemens has started concentrating on more direct discussion between the employees and Managing Board in both directions. Through this way, Siemens communication of morals and jimmys can be sustained right through the business, without being lost in transformation. Siemens has placed tactical significance on making its anti corruption strategies and compliance guide comfy to read, this would help the employees to understand better (Article 123, 2008).Approaching ChangeAltering the culture of an organization may be the toughest job a CEO will ever take on. The culture in an organisation or department is shaped over years of relations among organization members. The change process requires statistics, cautious deal and good consideration of results.Scheins Organisational culture model farming is the pattern of basic effronterys that a given group has inv ented, discovered or developed in encyclopedism to cope with its problem of internal integration and external adaption (Schein, 1990). Culture is not only about programmes and initiatives, it is everywhere in the company (Cameron Mike Green, 2004). Thus culture gives a intelligence of organizations norms, values, beliefs, rituals and language the way in which things are to be done around. To understand organisational development, learning and planned change, culture is considered as primary resource (Schein, 1999). Though Scheins model has been criticised (e.g. Collins 1998, Hatch 1993, Parker 2000), it specifies the main aspects of culture, namely its partly learned and unconscious nature. organisational culture, consequently, is not simply a single new entity which illustrates organizations and which can be also identified from the other entities that impact an organization performance. Scheins assumes culture as a set of shared postulations, which can examined at three importa nt levels. The first level of Scheins culture model consists of perceptible organizational process and heterogeneous artefacts that can be heard and felt by naif observer. First of all, the fact that will shape the entity of this investigation is culture itself (Schein 1992). Artefacts consist of any physical or tangible elements in a company. Dress code, furniture, history and architecture all represent organizational artefacts (cf. Reason 1997). According to Schein, it is really difficult to understand the true meaning without detailed study, since it symbolizes the most superficial heathen phenomenon i.e. only reflections of the exact business culture The second level of Scheins model consists of the companys espoused values. These are very comprehensible in, for example, the companys objectives, declared values, operating philosophy and norms. However, espoused values do not always reflect an organisations daily functions and businesses. Most key and imperative in terms of fu nctions is the in-depth culture level, i.e. its principal assumptions (Schein 1985, 1992). Actions and behaviours of a successful individual employee in the organisation become benchmarks on which other employees refer to. Such historical behaviours and actions become organizational key values. Third level of Scheins model consists of basic assumption and underlying values. The essence of culture is characterized by the fundamental underlying values and assumption, which are difficult to distinguish as they present at an unconscious level. cardinal values is a array of decisions that form the culture further. Therefore, they are not static (Schein 1985, 1992). Basic Assumptions are considered as an ultimate source of actions and values.Analysing culture legal opinion (What to look for)In order to assess the culture, Siemens has to identify their artefacts. Artefacts can be identified by conducting surveys, group meetings or personal interviews that asks the employees to list their reactions to various artefacts. A pattern for identifying artefacts include level of formality in relations, working hours, dress codes, rituals, ceremony, myths and how decisions are made (Scheins, 1999). Secondly, espoused values should be examined. This can be obtained comfortably since every organisation has their written values. According to Argyris Schon, the best word is espoused values, since most of the organisations have written values but act out different values (Scheins, 1992). Finally, underlying assumptions should be identified. Possibly the best way to spot basic assumptions are through progression meeting where all the artefacts are listed, underlying values and assumptions are reviewed (Scheins, 1992).Analysing culture Analysis (Congruence Test)Using the assessment Siemens can compare the cultural artefacts to the stated values to check if the stated values are congruent with physical materializations of the organisation. Second level is to compare the espoused with the actual value of the Siemens. Then, analyse the type of culture that enhances the mission of the Siemens. Find out the new value and implement it in order to accomplish the companys mission and goal. Finally, culture can be compared to the employees. Here, the employees would be observed in terms of personal ideas, values of what is significant, and personal decision making procedures.Analysing culture Implementation (Finding changesFinal step is to figure out the changes in the organisation to accomplish the mission. Whilst execution of cultural changes is a colossal undertaking that changes sensibly conceived, but conventionally fail (Bolman and Deal, 1997), the gaps between artefacts and espoused values, assumptions and espoused values, workforce and culture or culture and mission are identified in the abbreviation stage.Implementing ChangeKotters eight step modelKotter established eight steps and he believed that these 8 steps would lead to successful changes. He has d eveloped an 8 step model where the first four levels focus on unfreezing the organisation, the next three levels focus on what needs to be changed , and the last level refreezes the company with a brand new culture. When organisations need to make huge changes effectively and significantly, these are the eight steps to be followed in sequence.Establish a sense of urgencyFor change to take place, Siemens really have to develop a sense of urgency. In order to do that Peter Loscher and other board members have communicated to their employees about the need for change and significance of acting without delay. They examined the market strategies, competitive realities, reputation, how to prevent corruption and potential problem of the failure. This is not merely a matter of just telling employees about the corruption, poor sales statistics or discussing about increasing competition. Board members explained about the drawback of corruption and why corruption has to be removed. It is reall y imperative for Siemens to spend significant energy and time to develop the urgency in order to lead the change.Form a stiff guiding coalition TeamTop management of Siemens should shape powerful corporate governance with enough leadership skills, authority, credibility, communication ability and energy to lead the change. Leaders should be able to convince the employees that change is necessary. So Siemens appointed Peter Loscher as their CEO in 2007. Siemens implemented new managerial board position for compliance and official matters. After joining the company Peter Loscher communicated both his and shareholders expectations, and to set comprehensible compliance targets based on values of responsibility and integrity for all firm departments, units and levels.Develop a clear vision and strategyThe mission is to create a culture of openness and honesty right through the business, evidently driven from the board. The first step will typically be for the CEO to make a exhibit to t he board, possibly after review by board committee or risk management function. The important lesson learnt at Siemens is that a cadre of managerial positions is necessary at organisations to make sure the reliability, operation and integrity of the organisation. The frequency and level of bribery and unprofessional behaviour had significantly increased until Peter Loscher took over top management, board and employees realised that they wanted to change their culture when world largest corruption scandal came to light. Tone from the share holders after corruption scandalThe scent from the shareholders isOnly Clean Business is Siemens BusinessEverywhere Everybody Every TimeCompliance as Part of Corporate Responsibility is 1st precessionPeter Loscher and board restructured the corporate governance and enhanced the compliance department.Communicate the VisionIn this step the new vision and strategies should be communicated in every possible ways to employees. Make sure that everybo dy in the organisation understand and accept the strategy and vision. After identifying the strategies, Siemens communicated those strategies to the employees by the compliance department and anti corruption programmes. To avoid unethical business practices, the Siemens provided anti corruption programs as a part of training for more than 15,000 employees. In addition, Siemens launched a web based anti corruption training program for more than 120,000 employees. Training is very vital for altering the mindset and developing a culture of integrity and responsibility. Siemens vision is to remove the corruption and change the culture, because Siemens understood the cost and impact of corruption and were very desperate to get rid of corruption.Empower others to act on the visionThey motivated and encouraged their employees to actively participate in developing a culture of reliability by not allowing anybody to violate in the organisation. They launched a helpdesk Tell us function, so e mployees were asked to inform the helpdesk if anybody violates the rules. It is really imperative for Siemens in order to get rid of obstacles. So they enforced around 500 disciplinary measures in the year 2007, mostly the cases of violation, and corruption.Create Short term winsChanging the culture, either good or bad, it is not going to happen overnight. Siemens achieved their short term goal when their employees began to realize that they were anticipated to do their duties in a professional and ethical manner. Siemens monitor the progress of the compliance program by conducting employee survey. Survey results include Positive perception of compliance program, compliance communications understood and well regarded. Siemens thought that compliance issues have changed the economy and society and it has changed Siemens.Consolidate improvements and producing still more changeSiemens engaged in variety of co-operative initiatives with world(prenominal) organisations committed to fig ht against corruption and sustaining and establishing freedom of competition. Siemens continuously improved their compliance program by co-operating with international and non government organisations, such as manhood Bank institute by exchanging knowledge and vice versa. By monitoring the process and receiving the feedback continuously will help Siemens to improve change.Institutionalise the new approachesSiemens needs to believe a leading role in integrity, transparency and compliance with the clear aim of becoming a respected international organisation in the fight against bribery and corruption. They needed to move towards a value based culture and to bench mark with the best. In order to achieve these objectives they have to institutionalise the new strategies and approaches.ConclusionThe above study has looked at the context, content and process adopted by Siemens in order the change their culture after the bribery came into light on November 2006. This study will also give a n overview of how Siemens has implemented detailed anti programmes policies on bribery and corruption, altered its management structure to fit its new values and policies, developed a new compliance department and has made changes to their communication with direct conversation between workforce and management. The Scheins model analysis helps us to understand the culture of the organisation and what changes needed to be done, while Kotters model helps us to understand how the change can be implemented. Unprofessional behaviour and violation of rules and standards are something all organisations must constantly be alert of. Eventually, the changes at Siemens have allowed the management to successfully meet its mission, which is an obligation to public safety.ReferencesAndreas Pohlmann (2008) A New Direction for Siemens online http//www.enewsbuilder.net/globalcompact/e_article001149152.cfm?x=bd2Hd2m,bb6LfBj8,w accessed 2 April 2010Article 123 (2008) Integrating Transparency and Anti- corruption throughout the business online http//www.article13.com/UNGC/Siemens%20anti-corruption%20case%20study.pdf accessed 4 April 2010Collins, D. (1998). Organizational Change Sociological Perspectives. London Routledge.Dietrich G. Moller (2009) The Siemens Compliance Program -A Change solicitude Process online http//russland.ahk.de/fileadmin/user_upload/Dokumente/Events/Praesentation/09-11-18-Siemens.pdf accessed 4 April 2010Esther Cameron mike Green. (2009) devising Sense of Change Management A Complete Guide to the Models, Tools and Techniques of Organizational Change, 2nd ed. London Kogan pageEsther Cameron mike Green. 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