Essay: Samsung electronics

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  • Samsung electronics
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1. Executive summary
This document illustrates two economic scenarios; firstly, the strategies and policies Samsung electronics implemented during and after the 1997 Asian economic crisis if supply for workers greatly exceeded demand for workers. Moreover, it also describes the strategies and practices SAMSUNG would apply if demand for workers on the other hand exceeded supply during the Asian emergence and reconstitution
Poor and ineffective human resource planning can lead to an organization’s inability to attain her short term goals (operational and functional plans). The second section explores the impact of both economic scenarios on the main core functions of Samsung’s electronics human resources management under 4 aspects; resourcing the organization, human resource development (HRD), employment relations, managing performance and reward. The policies and practices used to asses them are as follows: talent management, recruitment and selection, organizational culture, training and development, employee voice and participation rights, pay and reward, performance management and appraisal.
2. Introduction
a. Brief presentation of SAMSUNG Group
Samsung Group is a South Korean multinational company founded in 1939 with its headquarters located in Seoul, South Korea. Samsung is composed of 34 affiliated groups comprising Samsung Heavy industries, Samsung Electronics, Samsung Mobile Display, Samsung Securities, Samsung Electro-Mechanics, Samsung SDI, Samsung Corning Precision Glass, Samsung SDS, Samsung Techwin, Samsung Life Insurance, Samsung Petrochemicals, and lastly Samsung engineering and construction. (Samsung (January 1, 2014 — June 30, 2014) Half Year Report, Korea: Samsung electronics.co ltd.)
i. SAMSUNG ELECTRONICS CO.LTD
Samsung electronics is a branch of Samsung group created on the 3rd of January 1969 in in Seoul South Korea. Samsung electronics manages 220 subsidiaries in 65 countries worldwide operating with an annual capital of about 200 Korean trillion. Samsung gradually gained her reputation and distinguished herself from her competitors through her diversification strategy by offering a variety of home appliances such as monitors, washing machine, refrigerators, microwave ovens, televisions…etc.) as well as mobile telecommunication products including smart phones and watches, tablets, PCs, semiductors. Her mobile electronics products constitutes her highest market shares and source revenue amongst her groups. (Oh-Hyun Kwon (2014) Sustainability report, Korea: Samsung Electronic)
 Core principles
People Excellence Integrity Change Co-prosperity
 Vision
Short term: to attain by 2020
“Inspire the World, Create the Future.” This new vision reflects Samsung Electronics’ commitment to inspiring its communities by leveraging Samsung’s three key strengths: “New Technology,” “Innovative Products,” and “Creative Solutions” and to promoting new value for Samsung’s core networks — Industry, Partners, and Employees. Through these efforts, Samsung hopes to contribute to a better world and a richer experience for all. Samsung Electronics (1995-2015) About us, Available at: http://www.samsung.com/us/aboutsamsung/corporateprofile/visionmission.html (Accessed: 8/24/2015).
 Philosophy
Developing innovative technologies and efficient processes that creates new markets to enrich people’s lives and continue to make Samsung a digital leader.
 Mission
Inspiring the world with innovative technologies and products that designs, enrich people’s lives, and contributes to a socially responsible, sustainable future
 Goals:
Quantitative:
Qualitative:
– Innovative company.
– Respected company.
– Top 10 world’s best workplaces.
– Creative leader building new markets.
– Global enterprise that attracts the world’s best talents.
b. Samsung’s Electronics Human resource and Overall business Strategy
i. Overall business strategy
Samsung’s overall business strategy is orientated on 3 axes which are as follow: creativity Management, partnership management and Profession
ii. Human Resource strategy
Samsung’s human resource strategy portrays 3 policies and approaches in line with her vision and values used in for the effective management of her organization which are: next generation, performance based evaluation and diversity and inclusion. (Oh-Hyun Kwon (2015) Sustainability report,
3. The impact of both economic scenarios on Samsungs human resource and overall business strategy
a. The Impact of 1997 Asian economic crisis on Samsung’s human resource strategy and practices when supply for worker exceeds demand
According to researchers like Winkleman (1999, p. 80), Nystrom and Starbuck’s (1984) and Pauchant and Mitroff (1992) crisis are unexpected events occurring without warning, threatening organizations’ functional and operational existence. The main causes of the 1997 crisis were high inflation rates, financial deregulation, currency depreciation, increased foreign debt which greatly rose from 100% to 167% weakening the banking systems. (International Monetary Fund, 1998). The impact of the 1997 crisis on Samsung electronics’ human resource strategy when supply for workers exceeded demand led to the following; workers’ wages and working hours reduced, early retirements programs implemented (attrition), outplacements, demotions, workers fired (according to the economist (2005) and Bae et Al (1997), 30% of Samsung employees were laid off; the number of employees dropped from 59 086 in 1996 to 57 817 in 1997 and later to 42 154 in 1998). (Elizabeth Howard (2010) The changing face of Retaining in the Pacific Asia, Abingdon, Oxon and New York in USA, Canada: Routledge and timekeepers (2005) ‘As good as it is?’ the economist, 13th January)
As for the impact on her overall business strategy, the crisis led to the restructuring of Samsung’s operational and functional strategies to maximize and control cost: Consequently product prices where cut down, 42 departments spun off, 10 indebted business units were sold out (like the construction business sold to the US firm Volvo). Samsung withdrew from the automobile sector, divested acquired firms, discarded from 3 joint ventures and sold them to foreign partners. But despite all her radical efforts to reduce her current debts and cut down her inventory, she was still highly indebted and her profit margins decreasing leading her to the point of bankruptcy. (S.Chang, Financial Crisis and Transformation of Korean Business Groups, Cambridge University Press, Cambridge (2003).
According to Schuler, R. et al., (1993), ‘the labour market is the relationship existing between demanders (who are workers) and suppliers (work organizations’). The contrast between labour markets on an organizations operations and human resource strategies in times of economic crisis and in an emerging economy are as follows; markets facing economic crisis generally affects the organization leading to a reduced working capital, employees lay off. Furthermore, it could equally result to ineffective labour force which could cause absenteeism, vandalism, corruption, strikes, shortages, violence at workplace, reduced level of involvement, commitment and production, a drop in quality, deterioration of the company’s external environment (withdrawal of shareholders, client boycott, companies reputation and credibility dripping …etc. (Junhong Gao, Ruth Alas(2010), Management in firms and organizations; Problems and Perspectives in Management, Volume 8, Issue 2, 2010). A group of researchers Ulmer et al. (2007), Perrow (2007), Curtin et al. (2001) and Mitroff and Anagnos (2001) all suggest different types of crisis falling under natural crisis comprising intentional and unintentional crisis.(Intentional crisis are physical, production, reputational crisis and unintentional crisis which constitutes economic, financial…etc. In general, the labour market during economic crisis is flooded and abundant due to the above factors, as companies concentrate their efforts in rightsizing and minimizing cost so as not to go bankrupt. Thus, economic recession periods results to high unemployment rates.
Contrary to an emerging economy, the availability of labour in such markets are tight, limited and expensive. Consequently, organizations dash into war in search for new talents and are ready to offer competitive quality pay making the selection procedures moderated to an extent. In such situations, the organization has a couple of choices either to recruit from the external market, implement training programs internally, promote current employees or can hire a HR agency.
In emerging economies, many multinational companies implement or change their HRM policies and strategies when their current markets are getting tougher or being threatened especially in cases where competitors launch new products or when new organizations are entering the new markets or changing, adapting new operations…etc. Such policies are implemented to boast employees internal performance and work quality for the achievement of better result or to counter (respond) to such threats. According to Samsung electronics 2014 sustainability report, Samsung implemented a new HR policies in line with her HR strategy of creating a Great Work place and some policies adopted where Work Smart, Flexible hours, Idea open space, G-lab, Smart work rewards …etc to improve her internal quality performance so as to respond to competition. These policies are beneficial to employees enabling them to work in better conditions. For example with the work smart policies employees receive specific training programs enabling them improve their skills for their action plans for obtaining better results. As for the flexible space policies, in 2009 employees were allowed to work 8 hours if they arrived before 6pm and in 2011 a mobile system was implemented enabling employees to check their mails on their phones.
b. Impact of the rapid emerging Asian economy after the 1997 crisis on Samsung’s HRM strategies and policies on demand exceeding supply for workers
During and after the crisis, different structural reforms, monetary policies and fiscal objectives where implied by the government to promote foreign investment. Moreover, the countries affected where Indonesia, Thailand, South Korea, China, Taiwan, Brunei, Singapore Malaysia, Philippine…etc. which all received external funded support programs from the World Bank and the IMF (International Monetary Funds). (“IMF-Supported Programs in Indonesia, Korea, and Thailand: A Preliminary Assessment,” 1999).
After the crisis in 1999, Samsung launched a massive recruitment campaign offering part and full time work contract to balance the her labour supply. Fortunately enough, she was able to re-employ the 1137workers laid-off in 1998 and clear all debts. As demand for exceeded the supply of workers, Samsung Human resource development center implemented the capital enhancement and performance based systems using the retention and attraction strategies. Through this systems and policies, Samsung was able to measure the performances and achievements of each employee and take immediate action. As the Asian economy was rapidly emerging, multinational companies dashed into a war in search of new talents making the availability of labour scare, limited, tide and expensive causing the labour market to be competitive. As a result to that, labour cost increased and in such situation, Samsung had no choice than to implement training programs, promote current employees, turn to third party recruiters to secure talents or recruit foreign employees…etc. According to Lee, N. H., 2011 and Yu & Rowley, 2009 Samsung hired foreign experts from multinational companies to restitute and reorganize the companies HRM policies and strategies after the crisis.
A company’s business life cycle and human resource fluctuate depending on the business state of growth. Hoy suggests the different ways a company may reacts at its different stages of growth. Hoy (2006)
ACTIVITIES START UP (Introduction) GROWTH MATURE DECLINE
Recruitment and Selection Recruitment for present jobs Retire for future jobs (Advanced recruiting capacity) Focus on efficiency Career Planning
Appraisal
Schedule Plan Growth criteria Profitability Cost saving
Compensation
Basic compensation, salary and equity share Salary and growth criteria Salary, bonus and profit sharing Salary, welfare and cost of living
Training development Limited training and development Training and socialization programs to adapt new employees to the organization Management and executive integration between planning, development Career development
Values
Entrepreneur Sales Competition Cost conscious
4. Impact of the economic scenarios under HRM strategies and components
a. Resourcing the Organisation
i. Samsung talent management, recruitment and selection
Samsung has implemented a talent based program which stresses on developing a simple, creative, flexible, smart and favourable environment for her employees. Samsung’s retention and attractions strategies are based on a ‘’best students’’ top talents policy. During the crisis, Samsung (Journal of World Business, E. Magoshi, E. Chang 44 (2009), Diversity management and the effects on employees’ organizational commitment: Evidence from Japan and Korea.)
 Recruitment selection and processing
After the economic recession, Samsung Electronics implemented different programs in her recruitment policies such as her internship programs (Selection, processing, retaining) all emphasizing on ability and individual performance. In 2006, ‘the Stepping Stone’ internship program for students with disabilities was implemented, and offers job trainings tailored for employees with disabilities. (Oh-Hyun Kwon (2015) Sustainability report, Korea: Samsung Electronics.) Also, a Global Scholarship program was created to select and recruit young people around the world for her leadership programs. In 2009 Samsung electronics introduced the Career Forum enabling Job applicants and foreign students to familiarize with their corporate culture, values, vision and strategies
According to her 2009 sustainability report, internship programs of 9 weeks and 16 weeks named the ‘’vacation industrial academia program’’ was developed to create opportunities for students to work at Samsung Electronics. During this internship program process, 182 graduates were recruited. Moreover, Samsung signed an agreement with the Ministry of Education, Science and Technology to select some 100 students of 1st year students of Meister schools as future employees. There are two types of recruitments process which are the internship and global process; the diagram below illustrates Samsung global recruitment process in 6 steps.
b. Human resource development
i. Learning, training, development and education
As the years passed by, Samsung reshaped and renovated her Human resource strategies. Samsung has created 3 educational training centers which operate in line with her philosophies, values and corporate culture. These centers comprises the Changjo Kwan center (Specialized in dissimilating Samsung’s core values and philosophies), the Hoam Kwan(specialized in developing the next generation of future leaders) and lastly the SGMI (dedicated in reinforcing employee competencies and global skills). In the same year, Samsung implemented the Harvard Management mentor program offering 67 online educational training courses under the following: credu, e-campus and SamsungEdu program. (Oh-Hyun Kwon (2015) Sustainability report, Korea: Samsung Electronics.)
Samsung has created a development management system which she named the expertise development assessment enabling employees to attain their goals. The EPD focuses on 3 concepts in line with her HR strategy values, leadership and expertise. In other words Samsung Electronics created and developed 1600 programs repartitioned in the four categories of value & leadership, next-generation leaders, global competencies, and expert training.
c. Employment relations
i. Employee Grievances
Samsung Electronics operates a using a hierarchal system, employees can channel their complains, worries, request improvements and changes, report inconveniences at work using specific channels across hot line websites. Employee grievances are treated on in 4 stages which are as follows: the first step consists the consultation and application phase where employees. However, Samsung has created an employee Counseling Center such as the Life Coaching Center, which offers counseling and orientation services for her employees with in different areas such as Office life, marriage, child-rearing…etc(Oh-Hyun Kwon (2015) Sustainability report, Korea: Samsung Electronics.)
d. Managing performance and reward.
According to Samsung electronics 2009 sustainability report, Samsung measures the performances and achievements of each of her employees under nondiscriminatory and performance based compensation policies to ensure fairness and competitiveness irrespective of grades, gender, sex, religion, nationality, social position and age. The traditional base system was replaced by the performance based system. Salaries are graded based on performance results such as interim management systems and respective annual employment contracts. There are two types of compensation which are the basic salary and performance-based incentives. (Oh-Hyun Kwon (2009) Sustainability report, Korea: Samsung Electronics.)
In 2010 Samsung Electronics implemented the Proud Samsung employee and flexible benefit reward for employees with an outstanding performance. The flexible benefits assist employees in different domains with social insurance (including national pension, health insurance, employment insurance, and occupational health and safety insurance), and support their physical examination, medical expenses, and family events (Oh-Hyun Kwon (2015) Sustainability report, Korea: Samsung Electronics.)
Compensation Structure
Basic Salary Individual performance Group based performance
Others
Incentives Productivity incentives Profit Sharing High potential employee incentives
Identical rates by grade Differentiated rates in proportion to individual performance Paid according to business performances Annual payments
Source: (Oh-Hyun Kwon (2009) Sustainability report, Korea: Samsung Electronics.)
5. Conclusion
From the above analysis, we notice samsung electronics depended on her Human Resource strategy based on talent management to drive
6. Referencies
Journal of World Business, E. Magoshi, E. Chang 44 (2009), Diversity management and the effects on employees’ organizational commitment: Evidence from Japan and Korea.
Oh-Hyun Kwon (2014) Sustainability report, Korea: Samsung Electronics.
Oh-Hyun Kwon (2015) Sustainability report, Korea: Samsung Electronics.
Oh-Hyun Kwon (2009) Sustainability report, Korea: Samsung Electronics.
Samsung (January 1, 2014 — June 30, 2014) Half Year Report, Korea: Samsung electronics.co ltd.
Elizabeth Howard (2010); the changing face of Retaining in the Pacific Asia, USA and Canada: Routledge.
Junhong Gao, Ruth Alas(2010), Management in firms and organizations; Problems and Perspectives in Management, Volume 8, Issue 2, 2010.
Barro and Xavier Sala-i-Martin, “Convergence across States and Regions,” Brookings Papers on Economic Activity (1991): 107—158;
Olivier Jean Blanchard and Lawrence F. Katz, “Regional Evolutions,” Brookings Papers on Economic Activity 1 (1992): 1—61.
Timekeepers (2005) ‘As good as it is?’, the economist, 13th January.
IMF-Supported Programs in Indonesia, Korea, and Thailand: A Preliminary Assessment,” 1999.
E. Magoshi, E. Chang 44 (2009), ‘Diversity management and the effects on employee’s organizational commitment: Evidence from Japan and Korea.’ Journal of World Business.
International Journal of Human Resource ISSN 2162-3058 2014, Vol. 4: Human Resource Management (HRM), Economic Crisis (EC) and Business Life Cycle (BLC)
ASIAN JOURNAL OF MANAGEMENT SCIENCES AND EDUCATION: W. Lee and N. S. Lee, Understanding Samsung’s diversification strategy: The case of Samsung Motors Inc, Long Range Planning
“Financial Sector Crisis and Restructuring: Lessons from Asia,” 1999, IMF Occasional Paper 188.
Samsung. (1988). The History of Samsung’s 50 Years.

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