There Is Perhaps No Tougher Task For An Executive Than To Restructure There is perhaps no tougher task for an executive than to restructure a European organization. Ask former Siemens CEO Klaus Kleinfeld. Siemens, with 77 billion euros in revenue in 2008, some 427,000 employees, and branches in 190 countries, is one of the largest electronics companies in the world. Although the company has long been respected for its engineering prowess, it's also derided for its sluggishness and mechanistic structure. When Kleinfeld took over as CEO, he sought to restructure the company along the lines of what Jack Welch did at General Electric. He tried to make the structure less bureaucratic so decisions are made more quickly, spun off underperforming businesses, and simplified the company's organizational framework. Kleinfeld's efforts, however, drew angry protests from employee groups, with frequent picket lines outside the corporate offices. A core challenge in restructuring European organizations like Siemens is the active participation of employees in decision-making processes. Half of the seats on Siemens' board of directors are allocated to labor representatives, which complicates top-down restructuring efforts. Labor groups criticized Kleinfeld's GE-like restructuring efforts, alleging that he secretly supported a business-friendly workers' group to undermine Germany's main industrial union. These conflicts and allegations led to Kleinfeld’s resignation in June 2007, and he was replaced by Peter L\u00e4scher. L\u00e4scher faced similar tensions between inertia and the need for reform; soon after becoming CEO, he decided to spin off VDO, Siemens' 10 billion-euro auto parts division, weighing stability and worker interests against pressures for financial performance from U.S.-style markets. His decision to sell VDO to German tire manufacturer Continental, which then downsized and restructured the unit, exemplifies ongoing restructuring efforts at Siemens. In 2008, L\u00e4scher announced significant layoffs—nearly 17,000 jobs worldwide—and plans to consolidate business units and reorganize geographically, emphasizing rapid adaptation to global changes. Since the leadership change, Siemens' stock prices declined by 26 percent on the European exchange and 31 percent on the NYSE, reflecting mixed investor reactions. While L\u00e4scher’s less controversial approach drew less public opposition than Kleinfeld's, some union representatives, like Werner Neugebauer, criticized the scale of job cuts as "incomprehensible and exaggerated," highlighting the ongoing tensions inherent in restructuring.
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