Buhlmann's Corner

The building site in Pullach* – still the finest address in Germany

Siemens, an archetypally German company, works for the world, and yet it is difficult to understand its local management decisions. The features of a family company are recognizable, although the family has long not had the reins in its hands.

In 2007 the Supervisory Board conjured up Peter Löscher out of a hat as the new CEO.

Strategically it was right: he was not a German, he brought international management experience, as an external he was undoubtedly unencumbered and, and this was the greatest thing, came from the eternally better General Electric. Only one thing he had not: he was only a man. Strategically, everything was right, but humanly much was inadequate. Other companies that have at the same time broken with the tradition of filling the CEO post from their own ranks (Bayer) have found more sensitive solutions. Basically, not all decisions the CEO finalized, supported or initiated were wrong, but those of great value and significant scope continually were. All were expensively buried, or at least half written off.

And yet, the Supervisory Board has recently perpetuated the appointment – maybe for lack of ready alternatives. This means 9 million are now “due” – too little for a dividend but a lot if you want to do some good with it.

A Supervisory Board shows it is a good leader not by collections of opinions on its benefits, but by asking the right questions in good time (behind closed doors) and not waiting for shareholders (as at the last AGM) to urge the Board to give a profit warning.

On the Supervisory Board, as with the Board, the Chairman bears the special responsibility and the members discuss with him, then face the question of whether they share the result or had better move, or else change the Chairman. The Supervisory Board has manfully got through the hard compliance phase with the Company.  Hundreds of millions in penalties and costs have been paid to public bodies and billions to U.S. funds and consultants. It is increasingly evident that Americans, or anyway American companies, do not have the better compliance.  A flagship opponent in Europe was chosen, exploited even more than the one before (examples: Daimler and ThyssenKrupp). At a time of NSA (National Security Agency) in living rooms, research laboratories and “friendly” government offices, one sees all this in a yet more glaring light than before Snowden’s whistleblowing.

Not to mention that implementing a whistleblowing system (at Siemens) was part of American standards. Now for a new beginning and a rethink. A new beginning on the board should be accompanied by a new beginning on the Supervisory Board. It is also a time for reflection. This should not mean a return to old practices of “useful expenditures”, but a return to the pride that justifiably distinguished Siemens employees. The Supervisory Board is well equipped to shape this new beginning root and branch, and why it should not be the family who takes the lead responsibility in this new era?

There are many strategic reasons for doing so with a lady in the Supervisory Board chair – even the successful example of Henkel.

*villa location of a former TV soap, being converted for Löscher, and headquarters of German intelligence