Professional Documents
Culture Documents
Assignment
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
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.
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.
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:
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.
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.
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.
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:
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.
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.
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:
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.