ASSIGNMENT

PERFORMANCE MANAGEMENT

SUBMITTED BY:
LIYA MARY VARGHESE
P19130
 PERFORMANCE MANAGEMENT IN SAMSUNG GROUP

1. EXCECUTIVE SUMMARY
In the recent time human resource management has assumed new prominence because of
continuing concerns about global competition, the internationalization of technology and the
productivity of labour. It is argued that these market imperatives require manager to change
the way in which they manage the employment relationship in order to allow for the most
effective utilization of human resources (HR). Managers and academics argue that the
traditional approaches to managing workers are inappropriate ‚can no longer deliver the
goods. This study includes the strategies taken by the Samsung group in maintaining their
employee relationship. Harnessing workers full potential and producing the attitudes and
behaviour considered necessary for a competitive advantage require three aspects of
managerial control to change: organizational design, culture, and HR policies and practice.
Current managerial orthodoxy therefore argues the need for a restructuring towards
hierarchical structures, an enlargement of job tasks with greater employee autonomy and
managerial leadership to shape the more intangible aspects of the workplace, for examples
beliefs, norms and values.

2. INDUSTRY ANALYSIS
Samsung (means "three stars" in English) is a South Korean multinational conglomerate
headquartered in Samsung Town, Seoul. It comprises numerous affiliated businesses; most of
them united under the Samsung brand, and is the largest South Korean business
conglomerate.

Samsung was founded by Lee Byung-chul in 1938 as a trading company. Over the next three
decades, the group diversified into areas including food processing, textiles, insurance,
securities, and retail. Samsung entered the electronics industry in the late 1960s and the
construction and shipbuilding industries in the mid-1970s; these areas would drive its
subsequent growth. Other major players are Apple Inc. Huawei, Oppo, Vivo etc. Following
Lee's death in 1987, Samsung was separated into four business groups. Since 1990, Samsung
has increasingly globalised its activities and electronics; in particular, its mobile phones and
semiconductors have become its most important source of income. As of 2017, Samsung has
the 6th highest global brand value.

Notable Samsung industrial affiliates include Samsung Electronics (the world's largest
information technology company, consumer electronics maker and chipmaker measured by
2017 revenues), Samsung Heavy Industries (the world's 2nd largest shipbuilder measured by
2010 revenues), and Samsung Engineering and Samsung C&T (respectively the world's 13th
and 36th largest construction companies). Other notable subsidiaries include Samsung Life
Insurance (the world's 14th largest life insurance company), Samsung Everland (operator of
Everland Resort, the oldest theme park in South Korea) and Cheil Worldwide (the world's
15th largest advertising agency, as measured by 2012 revenues).

Samsung has a powerful influence on South Korea's economic development, politics, media
and culture and has been a major driving force behind the "Miracle on the Han River". Its
affiliate companies produce around a fifth of South Korea's total exports. Samsung's revenue
was equal to 17% of South Korea's $1,082 billion GDP.

3. SWOT ANALYSIS
3.1 Samsung’s Strengths – Internal Strategic Factors

 Research and Development – The foundation of Samsung has always been on

Innovative research and development. Expenditure in these departments resulted in
the company having a wide range of product portfolio among its competitors. These
include tablet, camcorder, mobile phone, camera, TV/video/audio, Memory Cards,
PC, and other accessories. They have 34 R&D (research and development) centers
operating worldwide. It spent US$14.857 billion in 2017 on
 Award Winning Brand – Samsung’s position as a pioneer for innovation is backed
with credibility. Samsung has won many awards for its offerings. Samsung has been
awarded the CES (Consumer Electronics Show) owing to its designs and products for
14 consecutive years. It went on to receive 36 CES awards in 2018 along with 400
more awards within a period of 14 years. It also secured 7 wins at the (IDEA)
International Design Excellence Awards.
 Ecologically Friendly Innovations – Samsung has enhanced its brand reputation
through its environmentally friendly innovations. It secured its ranking at 9th position
in the Top 30 Tech and Telecom companies of the EPA’s 2016 Green Power Partner
list. It also received the Environmental Protection Agency’s (EPA) annual ENERGY
STAR Partner of the Year Excellence Award for five consecutive years. Other
companies do not share this achievement and hence increases Samsung’s appeal
across all business lines.
 Stronghold in the Asian Markets – Samsung retains a stronghold in the Asian markets,
particularly India and China. Both India’s and China’s business markets are growing
substantially which is why Samsung has taken advantage of the opportunity and
incentivize in these countries accordingly.
3.2 Samsung’s Weaknesses

 Heavily dependent on the American Markets – It is estimated that both Apple and
Samsung sold at least 70.8% of smartphones in the USA. While Samsung has
diversified its resources and expanded its operations in Asia, it is still heavily
dependent on the American markets. The American economy is very unpredictable
and another recession could put Samsung’s revenues in jeopardy and can damage its
operational resources. That’s why Samsung needs to involve itself into the Asian and
European markets to ensure sustainability and avoid potential failures if the US
economy ever collapses.
 The decline in Smartphone Sales – Samsung has been experiencing a decline in
smartphone sales since 2017. A similar trend was seen in China due to the price
sensitivity of the Chinese market. They dump a lot of those products in the Indian
market at a lower cost which harms the Samsung sales. Samsung has tried to shift
more focus in India, but that strategy did not produce substantial results for the
company.

3.3 Samsung’s Opportunities

 Triple Protection Proposition – Samsung is preparing to launch its new air

conditioning product called the ‘Triple Protection Proposition’ that incorporates
cutting edge technology and impeccable construction. The product is geared towards a
target customer base that would ensure maximum customer retention.
 HR Management – Samsung can make impressive transformational accomplishments
if it invest in its HR management. Not only would it be good for its sales but it will
also give it competitive leverage over its rival. The company can utilize its brand
image and hire highly qualified and skilled employees to improve employee
performance and productivity.
 Diversification and Acquisitions – It is critical that Samsung avoids the mistake of
being limited to just one marketplace. It not only invites risks from an economic
perspective, but it also attracts unwanted political polarization and negative media
publicity. That’s why there is a business vacuum present in the Asian and European
economies in which Samsung can thrive. It needs to expand its customer base as well.
It can only be achieved through diversification and acquisitions of other businesses.
Samsung is a popular brand and can generate impressive revenues thanks to its
financial standing.
3.4 Samsung’s Threats

 Controversies – Samsung has been involved in controversies that have threatened its
business. Its rival Apple filed a lawsuit against Samsung for patent infringement
which underwent a heated court battle for seven long years until finally reaching a
settlement. However, the company suffered consequences when a jury decided that
Samsung had indeed copied Apple and was to pay $1.049 billion in damages. This
suit damaged the company’s reputation and its sales.
 Increased Competition – Competition from opponents especially from those within
the consumer electronics, smartphone products, and computing industries has reached
a record high. Whether it’s Xiaomi, Apple, or Huawei, all the technological
competitors are outmanoeuvring and outperforming each other to become the best
technology company. This only increases the pressure for Samsung in both
competition and finances.
 Legal and Regulatory Threats – With the world becoming more globalized and
digitally oriented, governmental authorities have begun issuing their guidelines which
are increasing legal and regulatory threats to companies around the globe. Samsung is
no exception to these rules. Laws differ from market to market, and these strict
regulations cause a hindrance in operations. Failure to comply could even result in a
complete shutdown in the respective market which may be fatal for Samsung.

4. FUNCTIONS OF HR DEPARTMENT
People, excellence, change, integrity, co-prosperity and social responsibility are some of the
principles that create the management philosophy at Samsung. The digital age has brought
many changes for Samsung Electronics, beyond its futuristic products. Performance, in all its
shapes, has become both means and purpose.

Every year, in its Sustainability Report, Samsung presents its management practices and
results, for the purpose of monitoring and analysing the efforts to ensure that all business
activities are aligned with sustainable development, Samsung Electronics identified several
key performance indicators with measurable data to guide our innovation in sustainability.

4.1 Strategic Human Resource Management Practices in Samsung:

Not only has Samsung been a major catalyst for Korea economic growth, but it has also been
a pioneer among the chaebols in terms of the development of formal HRM systems. Samsung
was the first chaebol to use a competitive recruiting system in the early 1960s. At that time,
most firms relied on referrals based on connections when they recruited employees. The
company is also well known for managing its people based on their performance and
capabilities. Samsung has the highest ratio of non-family-member executives. As Samsung
increasingly competes with foreign firms, it has begun to realize that it must build
competitiveness in its management and HRM practices in order to succeed in the global
marketplace.
4.2 How performance management system in Samsung works:

 Goals Management

They decided how they wanted to deal with the people and elements of the business before
they began to focus on product specifications and capital requirements. In broad terms,
Samsung goals related to the employees are the following:

1. Build a company with an extraordinary work environment as stated in company

documents,
2. Ensuring that Samsung employees feel valued
3. Ensuring a sense of pride of association with the company
4. Ensuring that each employee has the opportunity to reach his/her highest potential
personally and professionally.

 Performance Appraisal

Performance appraisal is the process of collecting, observing and analysing the recorded
information about the relative worth of an employee. The min motive behind carrying out the
process of performance appraisal is to measure the actual performance of the employees with
the expected performance that has been set.

Samsung uses the traditional method of performance appraisal that is target vs. achievement
method. The employees’ performance is evaluated based on their achievement in the
specified period, whether they are able to meet their target or not.

1. Establishing performance standards:

It is the first step in the performance appraisal system in Samsung which involves
setting up of the standards that will act as a base to judge the performance of the
employees. It also measures the degree of their contribution towards achieving
organizational goals and objectives.

2. Communicating the standards:

The standards set should be clearly communicated, easily understandable and in

measurable terms. It is the duty of the management to effectively communicate the
same to their employees so that they are well aware of their duties and responsibilities
to be performed. This enables the employees to understand their roles and the kind of
performance expected by the company. The standards also have to be duly
communicated to the evaluators or appraisers and can undergo changes at this stage if
required, on the basis of feedback received from employees or evaluators.
3. Measuring the actual performance:

It is crucial to measure the actual performance of the employees in the right manner
within the specified period of time. Performance appraisal is a continuous process in
Samsung and it involves monitoring the performance throughout the year and it
requires careful selection of appraisal techniques, eliminating degree of personal
biasness and providing assistance rather than interfering in an employees work.

4. Comparing the actual with the desired performance:

This stage involves comparing the actual performance with standard performance and
identifying deviations in the same. The deviation can be positive, i.e. actual
performance is more than the standard performance or negative, i.e. the actual
performance is lower than the desired performance. Thus, the crucial functions to be
carried out in this stage are recalling, evaluating and analysing of the data related to
employees’ performance.

5. Discussing results:

The result of the performance appraised is communicated and a follow up session

with the employees on a one to one basis takes place. The aim of this follow up is to
solve problems and reach a consensus. The feedback should be given with a positive
attitude or else it might have a negative impact on the employees’ morale and
performance.

6. Decision making:

The final step to performance appraisal system is to take decisions as to improve the
performance of the employees, take corrective measures to eliminate the deviations
identified and HR related decisions like rewards, promotions, transfers, etc.

 Training and development

Performance appraisal helps to find out the drawbacks in an employee’s performance

and hence he can be trained in those skills which would help him perform better.

Investing in people:
Samsung develop a lot of courses for Samsung staff to learn, and give them
opportunities to go outside to learn. E.g.: The design centre staff can go abroad or
have chance to work with famous talents. Moreover, Lee (Kun-He Lee) led launched
a design revolution, he personally invited the IBM design wunderkind Tom Hardy
from the United States to make the Samsung's designers to broaden their thinking.
 There are 307 designers in Samsung design centre. Samsung company give their
chances go to the best art design school in United States. As result, they design more
than 700 pieces of product model each year. Samsung Electronics win 5 awards in
IDEA competition (Industrial Design Excellence Awards), which is as many as Apple
Company.

 Succession planning
Through performance appraisal, employees with good leadership are identified, which
helps the organization to spot people to fill future key role positions.

5. BENEFITS FROM PERFORMANCE MANAGEMENT

1. Helped in highlighting the training needs

2. Boosts morale of the employees

3. Helps with identifying the right employees for promotion

4. Supports workforce planning

5. Increases employee retention

6. Delivers greater employee autonomy

6. CHALLENGES
Some challenges were faced by Samsung while evaluating the performance appraisal of the
employees. Sometimes due to a positive change in the market conditions, an employee may
be able to perform better than his colleague in the previous quarter leading to confusion for
the manager as to who has performed better. Due to this reason, it becomes difficult for the
manager to differentiate between a performer and non-performer, and rating becomes a little
confusing.
7. SUGGESTIONS FOR IMPROVEMENT
Ways in which Samsung supports its employees:

 Develop and implement high performance work practices, particularly those

concerned with job and work design, flexible working, resourcing, employee
development,
 Reward and giving employees a voice.
 Formulate a clear vision and set of values (the big idea) and ensure that it is
embedded, enduring, collective, measured and managed.
 Developed a positive psychological contract and means of increasing the motivation
and commitment of employees.
 Formulate and implement policies that meet the needs of individuals and create a
great place of work.
 Providing support and advice to line managers on their role in implementing HR
policies.
 Manage change effectively.
 Providing with medical support, health care measures and taking care of family of
employees by paying the kids tuition fees.

8. CONCLUSION

With the increasingly importance of human resources in modern business the management of
people is highlighted to be strategic. Samsung Management Philosophy is devoted human
resources and technology to create superior products and services, thereby contributing to a
better global society and the strong determination to contribute directly to the prosperity of
people all over the world. The talent, creativity and dedication of people are key factors to
Samsung efforts, and the strides Samsung have made in technology offer endless possibilities
to achieve higher standards of living everywhere.