Leadership and Governance: A Case Study of Siemens

The report discusses the importance of effective leadership and governance strategies for organizations, with a focus on a case study of Siemens. It covers preventive measures against unethical practices, leadership qualities of a high performing CEO, and ways to earn employee loyalty by improving organizational culture.

Running head: LEADERSHIP AND GOVERNANCE
Leadership and Governance
Name of the university
Name of the student
Author note

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Table of Contents
Introduction....................................................................................................................2
Overview of the case study............................................................................................2
Case of Siemens.........................................................................................................2
Part 1..............................................................................................................................3
Preventive measures taken by board of directors against unethical practices of
CEOs......................................................................................................................................3
Part 2..............................................................................................................................5
Leadership qualities of a high performing CEO........................................................5
Part 3..............................................................................................................................7
Earning employee loyalty by improving organisational culture................................7
Conclusion......................................................................................................................9
References....................................................................................................................11

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Introduction
The report intends to concentrate on various leadership style and governance model
by using examples of C-suite employees functioning different business operations. Following
a case study which deals with different keys of business leadership, procedures of managing
organisations based on industrial background will be discussed here. Further, leadership
responsibility does not restrict itself between giving instructions and checking revenue. The
success of this job role depends on their capability of monitoring performance and examining
corporate direction. Audits will be necessary for managing risks and ensuring organisation’s
compliance. The overall success of organisation depends on understanding different
perspective of stakeholders and try to keep a balance with those. All these areas will be
addressed and analysed in this report as a brief guideline for managing organisation by
implementing effective leadership style.
Overview of the case study
Case of Siemens
As discussed in Charléty (2018), in order to understand the role of CEO within a
company maintaining all the theoretical aspects of corporate governance is significant.
Considering the case of former technological leader Siemens it can be said CEOs must be
efficient not only in terms of governance but being ethical and maintaining the core value of
organisation. The case study states that in the year 2006, after the news of record growth and
revenue Siemens was identified as they offered bribe to Government officials which led to
several arrests and detailed investigation (Charléty, 2018). The company faced huge penalty
and had to invest the most reliable human resource expecting to regain lost pride and
stakeholders’ trust.

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It took two years to filter the entire system and structure. New CEO of Siemens
decided to lead more strongly and focused more on corporate governance and employee
behaviour to ensure maintenance of company’s ethical guidelines and mitigating risks (Tao &
Hutchinson, 2013). While recovering workplace culture has been changed along with
business strategy in order to keep the practices best in class. Therefore, apart from its
efficient application of recovery procedure and operational strategies it can be said that this
situation can occur in any organisation at any level. Acknowledging this issues, it can be said
CEOs must not engage themselves into such practices and must take responsibility of
preventing such unethical behaviour and practices (Visser & Tolhurst, 2017). They must be
clean and unquestionable so that company can present themselves as epitome of trust in terms
of serving stakeholders. By following this rule, according to the case Siemens was able to
regain integrity among the employees and management.
Part 1
Preventive measures taken by board of directors against unethical practices of CEOs
As mentioned in the case study a degrading examples of bad behaviour has been
found among the C-suite employees. In case of Siemens, CEOs violated both the company
norms and ethical guidelines of business. As argued by Filatotchev and Nakajima (2014),
aligning employee behaviour continuously with parameter of organisational value is a secret
behind long term sustainability of business. It ensures both the financial and commercial
success of organisation. Ethical considerations must come as every employee’s first
consideration while executing responsibilities. As described in Puat Nelson and Devi (2013),
there are guidelines and policies, organisational code of conduct, the manner executives and
managers are using while dealing with stakeholders, management procedures and employee
value in terms of their authenticity. These factors help to align with core values and increases

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acceptability among different stakeholders. These are some of the crucial factors which can
help in mitigate potential risks.
The various practices of corruption is termed as exploitation of corporate power of
responsibility for personal benefit. Systematic corruption which means the involvement of
company officials and powerful personalities into the corruption. In such cases, asking for
help from correspondent legal framework, elimination of corrupted officials and detailed
investigation can be the necessary primary measures. Although, as described in Ammann,
Oesch and Schmid (2013), corporate governance does not only deal with ethics and code of
conduct yet company policies, strict supervision and developing practices of sustainability
refrain executives from committing such mistakes. Shareholders play a crucial role while
recruiting people into managerial posts to keep the corporate structure undisturbed.
Shareholders and investors create new board of directors and managers who are accountable
to structure and maintain strategic goals and policies respectively. As described in Babalola,
Stouten and Euwema (2016), the leadership ability must integrate all the employees and
senior executives under them reducing the turnover intentions or unethical mentality. There
are few corporate governance principals which are expected to restrict and reduce the
unethical practices within business.
 Directors must be transparent as far as sharing all the information and decisions
regarding business to investors and relevant stakeholders.
 Biased practices are not allowed while dealing with both the shareholders and
stakeholders of organisation. Fairness in every business operation is required to
ensure sustainability (Klettner, Clarke & Boersma, 2014).
 Honesty and integrity must be the ultimate motive while executing any task related to
business as they are accountable to investors and shareholders for every decision they

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make. They have to be responsible enough to deliver results by deciding the best for
their business.
Therefore, it can be stated that systematic corruption is a sign of poor governance.
With the right application of this conduct both the social and economic goals can be
achieved. In order to ensure ethical practice and developing the business as unbiased,
profitable and a result of hard work board of directors are suggested to follow three central
directions as follows.
 Effective structure and implementation of Policy as it determines responsibilities
starting from the management level to D grade staff. Well written and well
communicated policies are necessary for ensuring professional output (Tricker &
Tricker, 2015). By conducting regular meetings members can evaluate situation and
system. Occasional reviewing would help to understand flaws and take preventive
measures for that.
 Decision making is another crucial consideration regarding strategic dimensions like
working towards vision, mission and core values. In terms of identifying unethical
behaviour and taking necessary steps, decision making ability of senior management
pays serious attention.
 According to Lin, Ma and Johnson (2016), continuous process of strict supervision is
important for recognising bad practices among CEOs. While recruiting management
team shareholders must allow candidates of unquestionable character and make them
accountable to maintain so during their stay within system.

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Part 2
Leadership qualities of a high performing CEO
The case study gives examples of crisis and states some of the strategic ways to deal with all
those critical matters. In case of any discrepancy, CEO will be the ultimate one to become
responsible for not concentrating on details. They have to balance business operations with
governance procedure and yet have to ensure profitability and growth. A strong significance
of corporate governance can be identified in terms of growth irrespective of the size of
organisation. It suggests to adopt strategies of governance from early days of operation in
order to ensure gradual and productive growth of business. Instead of focusing on revenue
and profit if the company can think to invest on governance purpose then bigger dreams will
take lesser time to be fulfilled. Achievements will be easy with addressing both the internal
and external stakeholders’ perspective and making the investors aware of detailing of
monetary transactions. In a backdrop of current economic crisis, it has been noticed that
people entrepreneurs’ mentality has become profit oriented and they have grown a tendency
of ignoring stakeholders’ perspectives. Therefore, to regain the trust companies must work on
their governance regulation until media reports creates sensation regarding such governance
issue. Secondly, the market has been changing rapidly so business leaders are consistently
facing difficulty to keep up with those. As the CEO is highly responsible before every
stakeholder in case of any mishap, the high performance and leadership qualities will aptly
solve issues with corporate governance or stop being indulgent to such unethical practices.
As addressed by Lien and Li (2013), a distinct relationship can be found between
various styles of leadership and a dynamic corporate governance framework which can able
to function effectively and add value to business operation. It is an influencing mechanism
used by board members to implement the policies into organisational practices and managing
job responsibilities within governance infrastructure. This model can be adapted for

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satisfying specific business needs. This business model revolves around successful execution
of following components. 1) Organisation structure and interdependencies of employees and
management, 2) capability of over sighting responsibilities of managing various sectors
related to recruitment and retention, ensuring personal and employee accountability and many
more, 3) Establishing a good culture of mutual assistance by sharing knowledge throughout
the workplace and 4) infrastructure as mentioned before. Infrastructure deals with policies,
managerial process, IT and communicative support. Success of this model depends on
effective leadership qualities which has direct impact on employee behaviour. It has been
proven as stated in Kacmar et al. (2013), that transactional and transformational leadership
style likely to lead towards an improved corporate governance outcome by implanting
theories diplomatically.
To talk about leadership orientation of a CEO is not someone who used to be high
performing in business school but a personality who has all round knowledge of business. A
high performing leader must acquire knowledge and experience in every facet of business
irrespective of industrial background. Therefore, they must know operational detail of every
department and ensures integrity and coordination among different sectors of business
operation. Hence, few character attributes of well performing leaders have been described as
follows.
 Capability of making effective decisions determines their high performance. Leaders
have ability to state their views and motivate others to follow that. They ensures best
output as they are accountable in front of stakeholders. Clear and strategic decisions
able to accomplish goals and help to maintain governance policies as well.
 As mentioned before, executives have overall understanding of industrial details.
Stakeholders are meant to be satisfied by leaders’ understanding of industry
operations and channelizing the monetary resources and its proper execution creating

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value for relevant customers. Their ability of perceiving market trends is different
from a non-professional. Therefore, they have ability to take better decisions related
to investment and launching company products.
 Maintenance of an ethical and transparent relationship throughout the dealings.
This is how, a high performing CEO should be leading an organisation towards
accomplishment of organisational objectives.
Part 3
Earning employee loyalty by improving organisational culture
As discussed in Zhu et al. (2014), CEOs to ensure ethical practice and prevent the
codes of conduct from violation consistently seek for establishing loyal relationship with
employees working under leaders. In order to achieve the desired outcome leaders might
work on developing organisational climate, effective team and community management.
According to Ewoh (2013), managing a diverse culture and effectively working on
organisational change managers can satisfy both the business and employees’ interest.
Providing a good work atmosphere includes flexibility in working hours by balancing
private life with workload (Karatepe, 2013). It depends on leaders and his/her understanding
of employees’ ability to deliver a level of work within a stipulated time. An environment
must be made where teamwork has more priority than working on individual dependence.
Sharing knowledge between managers and employees or among employees will be effective
as far as providing assistance to employees is concerned. Effective communication is the
ultimate key to develop a helpful culture. Increase of social communication by social media
or groups will increase connections between them which will reflect on their performance.
According to Guillon and Cezanne (2014), motivational sessions will be helpful and if
employees are well aware of the company policy, code of conduct and legal boundaries; it

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expected that they would refrain themselves from unethical practices and devote loyalty
towards organisational objectives.
As discussed in Cooper, Gulen and Rau (2016), employee loyalty can be increased by
recognising workers’ effort, providing benefits and rewards as per performance. As CEOs
have to manage the employees and business operation efficiently, companies tend to keep a
huge gap between executive’s remuneration and a C-suite employee or CEO. It will create
less trouble if the remuneration and benefits are decided in terms of performance. In case the
firms could not perform in a situation of weak benchmarking there would be no difference in
a CEO’s pay scale. Therefore, issue is compensation and salary policy is both a problem and
motivational factor. It must be tailored according to company’s business condition and
incentives must be aligned with performance. Therefore, lack of governance in remuneration
policy creates confusion and increases company expenses. To mitigate this issue performance
based incentives will make the employees feel valued and worthy for business.
Among all these complications, as it can be identified after reading Liu and
McConnell (2013), media has to add some more pressure as they consistently follow business
organisations in search of internal flaw. While recruitment it would be appropriate to evaluate
CEOs competence as far as both the stability and crisis management are concerned. They are
expected to take effective actions even if the company is facing worst kind of crisis. With the
help of technology the work has been easier for them at least for collecting feedback and
responses from relevant stakeholders. Employees need to be provided with several training in
case any business shifting their procedure taking the leverage of technology. A large part of
human resource seeks for assistance when it comes to managing the change. Leaders are
expected to increase communication, provide them with necessary training and allocating
new responsibilities maintain the old ethical boundary and managerial guidance.

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Dealing with human resource does not mean they are allocated to take instructions
only. Managing employees is equivalent to managing different emotions and personalities as
well. In order to handle exclusive natures and at the same time ensuring productivity a leader
must create an atmosphere of care and assistance. According to Vangen and Winchester
(2014), it will boost the production as the doubts are solved with floor support. In order to
guarantee better performance from a culturally diverse workforce and to avoid conflict
among and with them employee loyalty must be increased again. Communication must be
increased through all modes to overcome language barriers and misunderstanding.
Conclusion
The conclusion can be drawn by saying that as described in Siemens case study,
sudden occurrence of ethical issues are results of prolonged ignorance in areas of supervision.
Employee performance must be monitored and CEO needs to be of unquestionable character
to hold such a higher and respectable position. Evaluation of policies and procedures would
be helpful in terms of measuring corporate direction and infrastructure of its governance
policies. Such risks are common in a business scenario, yet at any level of organisation it is
not possible to indulge or tolerate such unethical practices of bribery. To manage such risks
policies must be strict enough and so is the supervision procedure for ensuring compliance
and integrity within entire business organisation.

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