Case Detail

Case Summary

Lie, Cheat, and Steel: Governance and Scandal at ThyssenKrupp

Case Number: 5-117-001, Year Published: 2017

HBS Number: KE1006

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Authors: Evan Meagher

Key Concepts

Board of Directors, Business Policy, Corporate Governance, Crisis Management, Ethics, Global Strategy, Leadership, Organizational Culture, Two Tiered Boards of Directors


On March 7, 2013, ThyssenKrupp Group CEO Heinrich Hiesinger was shocked to receive a resignation letter from Gerhard Cromme, chairman of the company's supervisory board.

Hiesinger had been CEO since 2010. Early in his tenure, ThyssenKrupp incurred massive losses from disastrous steel investments and faced allegations of colluding with other companies to fix prices in its railway steel operations. As a result, Hiesinger had been forced to dismiss three executive board members, one for violating company policy. After a supervisory board member also was dismissed for violating company policy, the company's offices were raided in an investigation of price-fixing in steel contracts to the automotive industry.

Cromme had been sharply criticized by shareholders and analysts as an impediment to the cultural, strategic, and governance changes Hiesinger was trying to make to address the scandals at ThyssenKrupp, but for months he defiantly had resisted calls for his removal. With no warning, he resigned without naming a successor or creating a plan to select one.

Now that he no longer needed to deal with the distractions created by Cromme's presence, Hiesinger was free to finalize a plan to address the defects in ThyssenKrupp's governance.

Learning Objectives

After reading and analyzing the case, students will be able to identify differences between the U.S. and German corporate governance structures and understand their implications; assess weaknesses in Cromme's performance; and develop recommendations to improve corporate governance in a two-tier board structure.

Number of Pages: 12

Extended Case Information

Teaching Areas: Management

Teaching Note Available: Yes

Geographic: Germany

Industry: Industrial materials and solutions

Organization Name: ThyssenKrupp Group

Organization Size: Large

Decision Maker Position: CEO

Decision Maker Gender: Male

Year of Case: 2013