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Siemens abandons regional cluster structure

21 October, 2013

Joe Kaeser, Siemens’ recently appointed president and CEO, has decided to axe the regional cluster organisation implemented by his predecessor and to return more power to country managers around the world. The move is intended to “intensify” Siemens' access to its customers, and to expand its regional activities.

The cluster structure was introduced in 2008 by former CEO Peter Löscher in an attempt to cut administrative costs by 10–20%. Siemens global operations in 190 countries were reorganised into 20 regional operations. For example, the North West Europe cluster brought together the UK, Ireland, Scandinavia, Poland, Estonia, Latvia and Lithuania under the same managerial umbrella.

Now Kaesar – who became Siemens’ CEO in July when Loescher left the post, four years before the end of his contract – has decided to eliminate a layer of management, returning to a flatter hierarchy that gives individual countries more responsibility for their own operations.

“Eliminating the clusters will make Siemens more streamlined and closer to the markets,” he says. “We're substantially strengthening our regions, whose heads are our customers' most important contacts.”

Kaesar: making Siemens more streamlined

In the future, Siemens those countries that are most important to Siemens – based on their business volume and growth prospects – will report directly to four managing board members. These “lead countries” account for more than 85% of the company's revenue, and smaller countries will report directly to them.

Kaesar is also bringing back former Siemens manager Dr Horst Kayser, who left in 2008 to become CEO of the robot-maker Kuka, to be his new head of strategy. He succeeds Peter Herweck who has a new role to make Siemens a leader in the process sector.

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