Siemens "led into the modern age": Germany's model manager fell deep

Tuesday, January 26, 2021

Siemens "led into the modern age"
Germany's flagship manager fell deep

A system of black cash registers, through which more than a billion euros in bribes flowed, marked the low point and the end of Heinrich von Pierer's career at Siemens. But on the 80th birthday of the once most influential manager in Germany, his achievements are being recognized again.

For almost 15 years, Heinrich von Pierer headed Europe's largest electrical company as a member of the board and then the supervisory board, and was known worldwide as "Mr. Siemens". He advised the Federal Chancellors from Helmut Kohl to Gerhard Schröder to Angela Merkel. He met the most powerful politicians and managers in the world and spoke to the UN. Then, in 2007, the bribe affair was exposed. For the former model manager of Germany, who is now 80 years old, a long ice age began.

Daniela Bergdolt, Vice President of the German Association for Protection of Securities Holdings (DSW), calls "tragic" that Pierer's career at Siemens ended with the black money affair. The unveiling of black coffers, through which billions in bribes flowed at the model group of German industry, not only shook the Siemens leadership. For years, the affair shaped the debate about corruption and corporate governance in Germany.

To this day, the scandal clouded the view of von Pierer's life's work. But that is good, says shareholder protection officer Bergdolt: "He brought Siemens into the modern age." Before Pierer, Siemens was a venerable company that was proud of the achievements of its engineers: "It wasn't that important whether it made a profit." Pierer turned the slow tanker into a fleet of speedboats: "He made sure that every single business area was also profitable," says Bergdolt. "At the 80th I say to him: Well done – thank you!"

What is the first thing that springs to mind Heinrich von Pierer when he hears Siemens? "That Siemens has of course changed a lot. The old company as I knew it no longer exists," he says. "I have a completely normal relationship with Siemens again. I speak to one or the other, from time to time. You listen, you are very polite."

Siemens was "too social" to critics

Siemens also officially praises Pierer today. After years of legal dispute over millions of dollars in compensation for the bribe affair, the affair takes a back seat, Pierer's performance as a manager comes to the fore. Pierer had "shaped an era" and "set the course for growth and direction of the company. We would like to congratulate Heinrich von Pierer on his birthday and wish him good luck, health and satisfaction for the years to come," announced the group.

Pierer, who holds a doctorate in law and holds a degree in economics, started at Siemens in 1969 in the legal department, made a career in the power plant division, was appointed to the Group's executive board in 1990 and CEO in 1992.

With almost 500,000 employees, but only a two percent return on sales, Siemens was "too social" for some critics at the time compared to its US competitor General Electrics. When Siemens threatened the first loss in the company's history in 1997/98, the shareholders went on the barricades and bankers talked about Pierer's replacement, he changed course. He brought Infineon to the stock exchange, sold the IT division Siemens Nixdorf, brought the computer division into a joint venture with Fujitsu, the nuclear power division into one with the French Framatome, cut 30,000 jobs and restructured medical technology.

During the restructuring of the company, Pierer kept the balance between the interests of the employees and those of the shareholders. In 2002 the Erfurt works council appointed Pierer as an honorary member. The Bavarian Minister of Economic Affairs Hubert Aiwanger says: "It is what distinguishes Pierer that he was valued by the executive floor as well as by the workforce." Under his leadership as CEO until 2004, Siemens had doubled its sales and increased profits significantly.

"The mountains are getting higher and higher"

In May 2006, Merkel appointed Pierer to head her new Council for Innovation and Growth. In November it was then discovered that Siemens managers had illegally paid bribes for hundreds of orders abroad. Around 1.3 billion euros flowed through black coffers to decision-makers in numerous countries in order to get orders. The scandal not only threw the spotlight on the practice of black cash registers and high bribe payments, which was alarmingly widespread among German industrial groups. It also shaped the debate about corporate governance, corporate management in stock corporations, in particular the role of long-time managers who often routinely moved to the supervisory board and were supposed to control their successors there.

Pierer had to vacate his position as chairman of the board. Bergdolt and IG Metall welcomed this. Works Council Chairman Ralf Heckmann regretted it because Pierer had campaigned like no other for the employees and the location Germany. Siemens demanded damages and threatened to take legal action. Pierer denied any personal debt, but paid Siemens € 5 million. The public prosecutor's office found no evidence of a criminal act by Pierer and also closed an administrative offense against payment of a fine.

"I'm fine, I can't complain," says Pierer a few days before his 80th birthday. "I can still do my sport, I have some consulting assignments." Pierer now gives seminars at his old faculty at the University of Nuremberg-Erlangen. "This semester is about the realignment of companies", he says and is amazed at his students: "I would not have been able to perform like that at that age." He has just finished writing a book, it will appear in March, a humorous guide for bosses and subordinates. The former Bavarian youth tennis champion also played point games for his club in 2020, "like every year, for 70 years in a row". And "in my old days, I followed my wife who started playing golf. And then I still go skiing with my children and grandchildren," says Pierer. But age takes its toll. "The mountains are getting higher and higher."