Peter Löscher's resignation from Siemens

Eight months ago, in the November 2012 issue of the Harvard Business Review, I read about Peter Löscher, who was hired by the Siemens Chairman Gerhard Cromme to replace the previous CEO Klaus Kleinfeld, who was forced out following the bribery scandal in 2003.

Löscher declared that he and Cromme “hit it off”, and he replaced “about 80% of the top level executives, 70% of the next level down, and 40% of the level below that.” In addition, Löscher also “fundamentally changed how our (sic) managing board made decisions.” Löscher must have certainly believed that he was on the right track to turn around a German institute. But I was more than slightly horrified by the amount of change to personnel. Replacing about 80% of the top level executives meant that only 20% of them remained. And these 20% would have had to managed plenty of new colleagues with different personalities, agenda and working habits. In addition, these 20% would have had plenty of new subordinates to monitor, guide and coach. Those are certainly a lot of change for a person to handle on top of having a new boss. The HBR article did not cite any ex-Siemens employees, but I guessed that perhaps the turnover would have been more than the statistics cited by Löscher: people that he did not replace might also choose to leave, when they felt that their employment was no longer secure, or if they did not agree with new company directions taken by the new CEO.

In late July this year, news broke that Löscher was being ousted by the Chairman who brought him in, after five consecutive profit forecast cut. In contrast to other German companies whose shares have increased, Siemens’ share prices dipped 22 percent under Löscher’s watch. Coupled with Löscher’s failed expansions into thermal solar, it might just be a matter of time before Löscher was replaced. Some news agencies have also cited power struggle as a reason for Löscher’s departure, despite the new Siemen’s CEO Joe Kaeser’s denial.

I wonder if HBR might do another article on Siemen and Peter Löscher, to sort of close the loop on Löscher, and perhaps analyse if Löscher drastic slashing of jobs was one of the contributing reasons for his spectacular departure.