Maintaining the "Single Samsung" Spirit: New Challenges in a Changing Environment

Citation preview

S

w W11236

MAINTAINING THE “SINGLE SAMSUNG” SPIRIT: NEW CHALLENGES IN A CHANGING ENVIRONMENT

Shaista E. Khilji, Chang Hwan Oh and Nisha N. Manikoth wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail [email protected]. Copyright © 2011, Richard Ivey School of Business Foundation

Version: 2011-07-08

In 2009, the world economy was hit hard by the financial crisis that unfolded in the United States. A number of industries, including the financial, automotive and real-estate industries, were engulfed in this meltdown. The electronics industry was not an exception. Sony, the leading global electronics company, announced that it was likely to post net losses of ¥228 billion1 for the fiscal year 2008 and, in preparation, laid off 16,000 of its employees.2 However, Samsung astounded everyone with its impressive financial performance. Although Samsung predicted a ₩100 billion3 deficit in the first quarter of 2009, it emerged with a ₩40 billion surplus for that period.4 A critical factor that contributed to Samsung’s superior performance was its strong investment in its employees. The fact that South Korea, the home base of Samsung, made deliberate national efforts to develop its human resources provided for a rich environment in which Samsung’s intense focus on effective human resource development (HRD) practices didn’t strike anyone as extraordinary. Despite its impressive financial success, management at Samsung was faced with a challenging situation in socializing its new groups of employees. This was the result of Samsung’s active recruitment of diverse employees, including more experienced and foreign (non-Korean) employees, in addition to the fresh college graduates whom Samsung had traditionally relied upon. At the same time, Samsung had also become aware of the stark differences in values between the older employees, who were obedient and easily followed rules, and the younger “digital native” employees, who were more individualistic and preferred egalitarian and open policies. Management was concerned that the “Single Samsung” spirit, which formed the core of Samsung culture, was being threatened from within.

1

¥ = Japanese yen. Moonhwa-ilbo, “Cars in danger: TOYOTA,” www.munhwa.com/news/view.html?no=2009042701071624025003, accessed April 3, 2010. 3 ₩= South Korean won. 4 “Samsung Annual Report 2008,” http://www.samsung.com/us/aboutsamsung/corporateprofile/download/SamsungProfile2008.pdf, accessed April 10, 2011. 2

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 2

9B11C010

A HISTORY OF SOUTH KOREA

In the early 20th century, South Korea was ruined by the 40-year Japanese occupation and in 1954, after the Korean War, it was considered the second-poorest country in the world.5 South Korea set itself on a path of economic recovery and development in the 1960s, during General Chung Hee Park’s rule. After General Park’s assassination in 1979, a brief period of political and economic instability followed. However, in 1987 free elections started the democratization process, which along with the heavy industrialization of the 1960s and 1970s provided a solid foundation for rapid growth of the South Korean economy. In particular, the information technology boom of the 1990s was taken full advantage of. In 1998, South Korea announced its arrival on the global stage by successfully hosting the Seoul Olympic Games. In 2011, it was recognized as one of the most technologically advanced and digitally connected countries in the world.6 Faced with a scarcity of natural resources, South Korea had intentionally tapped its national human resources. A National Human Resources Development (NHRD)7 policy was pursued in order to accelerate its economic development, and strengthen its national competitiveness. The stellar performance of South Korean students in international standardized tests8 was just one example of the commitment and dedication of South Korean society to educating its youth and maximizing their potential through early and continuous development. For example, South Korea was ranked first in problem solving and in reading, fourth in mathematics, and 19th in science in 2009.9 In addition, it was ranked as the 12th-highest country on the Human Development Index10 and 22nd in terms of its global competitiveness according to 2010 rankings.11 Despite its few natural resources, South Korea was also ranked the world’s 15th-largest economy in 2010,12 which it attributed to a long-term investment in its people. SOUTH KOREAN CULTURE

South Korea was one of the oldest continuous civilizations in the world.13 Although its long and rich cultural heritage had been influenced by many other cultures, including Chinese, Japanese and most recently American, and religions, including Christianity, the earliest and the most lasting influence was that of Confucianism. Confucianism played a critical role in upholding social order and justifying South Korean royal authority. Family values, emphasized in the Confucian philosophy, combined with high regard for intellectuals, were the driving force behind South Koreans’ commitment to education and learning. South Korean culture was hierarchical, and had a high power distance. All relationships were considered unequal and the junior/younger members were expected to yield to the senior members. The status differences were built right into the Korean language, which had different levels of formality depending upon age. This caused Koreans to be very age-conscious, since even a difference of one year in age would require a different level of formality when speaking. However, recent studies indicated that 5

Ibid. “The Global Information Technology Report 2007-2008,” World Economic Forum, https://members.weforum.org/pdf/gitr/2008/Summary.pdf, accessed January 31, 2011. 7 G.N. McLean, K.R. Bartlett, and E. Cho, “Human Resource Development as National Policy: Republic of Korea and New Zealand,” Pacific-Asian Education, 15, 2003, pp. 41-59. 8 “PISA 2009 Results,” OECD, www.oecd.org/dataoecd/54/12/46643496.pdf, accessed January 31, 2011. 9 “Highlights from PISA 2009,” National Center for Education Statistics, http://nces.ed.gov/pubs2008/2008016.pdf, accessed November 24, 2010. 10 “Human Development Report 2010,” UNDP, http://hdr.undp.org/en, accessed November 22, 2010. 11 “The Global Competitiveness Report 2010-2011,” The World Economic Forum, www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2010-11.pdf, accessed November, 22, 2010. 12 “World Economic Outlook Database October 2010,” International Monetary Fund, www.imf.org/external/pubs/ft/weo/2010/02/weodata/index.aspx, accessed November 22, 2010. 13 L.R. Kohls, Learning to Think Korean: A Guide to Living and Working in Korea, Intercultural Press, Boston, 2001. 6

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 3

9B11C010

South Koreans appeared to be ready to cast off their traditional ways and embrace a more egalitarian society.14 South Korean culture was also collectivist. It encouraged the collective distribution of resources, and emphasized pride, loyalty, and cohesiveness among members of the family and organization. This was consistent with Confucian traditions and values that emphasized harmonious, family-like values. In addition, South Korea was a high context culture, and stressed principles such as diligence, pride, selfsacrifice and delayed gratification. South Koreans tended to avoid open conflicts, often masked their strong feelings and kept communication with other members concise. SOUTH KOREA AND SAMSUNG — HAND IN HAND

The basic ingredients of South Korea’s recovery and economic growth (in the past five decades) were its values of “hard work” and “speed.” The average weekly working hours for South Koreans was 45 (compared to 36 hours in the United States and 35 hours in Canada) in 2010. This was the longest among all OECD countries.15 In addition, South Koreans lived by “ppally-ppally,” i.e., “hurry up first and foremost;” they worked fast, talked fast, moved fast, thought fast and even made decisions fast. Given that South Korea had only a few natural resources, and given its geographical proximity to three Asian giants (Japan, China, and Russia) who were not always friendly towards it, South Koreans were forced to work hard and with speed in order to achieve a national competitive advantage. The third ingredient of South Korea’s impressive economic success was often considered to be Samsung. Indeed, Samsung had been a major catalyst for South Korea’s remarkable economic growth.16 It held 15.7 per cent of the total market capitalization and contributed 20 per cent of the total South Korean exports in 2007. Samsung’s sales contributed 18 per cent of the national GDP in 2006. It was generally believed that if South Korea had another Samsung, it would be the world’s fifth-largest economy.17 Samsung had gradually grown to become one of the world’s leading global companies. In 2007, Samsung’s revenues were US$162 billion and had a total of 263,000 employees in 68 countries around the world (see Exhibits 1 and 2). Samsung’s brand value was estimated to be US$18 billion dollars and overall it was ranked 21st among the world’s leading companies.18 Samsung Electronics had risen to the position of the world’s biggest technology company by sales, pushing ahead of HP with reported sales of ₩136,290 billion (US$117.8 billion) for the 2009 calendar year, and was expected to retain its top spot with 2010 sales forecast at US$127 billion.19

14

R.J. House, P.J. Hanges, M. Javidan, P.W. Dorfman, and A. Gupta, Culture, Leadership, and Organization: The GLOBE Study of 62 Countries, Sage, Thousand Oaks, California, 2004. 15 “OECD Factbook 2010,” OECD, www.oecd.org/site/0.3407,en_21571361_34374092_1_1_1_1_1.00.html, accessed Jan 17, 2011. 16 S. Kim and D.R. Briscoe, “Globalization and a new human resource policy in Korea,” Employee Relations, 19:4, 1997, pp. 298-308. 17 “Samsung Annual Report 2006,” www.samsung.com/us/aboutsamsung/corporateprofile/download/SamsungProfile07_Full.pdfl, accessed April 11, 2010. 18 “The Best Global Brands 2009,” Interbrand, www.interbrand.com/de/best-global-brands/best-global-brands-2008/bestglobal-brands-2009.aspx, accessed April 2, 2009. 19 “Samsung beats HP to pole position,” Financial Times, January 28, 2010, www.ft.com/cms/s/2/c48d477a-0c3b-11df-8b8100144feabdc0,dwp_uuid=0e8db19e-d52b-11df-ad3a-00144feabdc0.html#axzz160Z3AXme, accessed November 22, 2010.

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 4

9B11C010

THE SAMSUNG PHILOSOPHY

Samsung lived and breathed the nation’s philosophy of an intense development of human resources. Samsung’s strong foundation lay in its values. Byung-Chull Lee founded the company on three values: “economic contribution to the nation,” “top priority to the people,” and “pursuit of rationality.” These values were then used to develop the Samsung culture and develop various organizational systems. Economic contribution to the nation ensured Samsung’s businesses served and contributed to the national economy and the global community. Byung-Chull Lee was driven by a passion to make a meaningful contribution to Korean society. He was convinced that Samsung’s entry into the semiconductor sector and shift to a more high-tech-oriented structure, although risky, would afford that opportunity.20 Top priority to the people became the cornerstone of creating an environment where humanity was respected and individuals were allowed to exercise their full potential for both individual and societal development. The founding chairman’s belief that “a company is its people” inspired Samsung to value its people and fostered a strong commitment to attracting, retaining, and training talent. Samsung endeavored to recruit the best talent, whatever the cost. Byung-Chull Lee believed that hiring competent people was the key to the development of Samsung as a company. Once employees were hired, Samsung aimed to provide them with the best working conditions and used monetary and non-monetary incentives to retain them. In a country that was ranked 138th in terms of the most difficult relations between employers and workers,21 Samsung offered a refreshing perspective towards labor relations. The pursuit of rationality indicated conscious efforts to develop mindsets for rational decision makers with the purpose of ensuring sustainable growth for the company. Samsung’s commitment to observing ethical principles, eliminating inefficiencies and cleaning up irregularities was the outcome of its long-standing heritage of rationality. When Byung-Chull Lee died in 1987, he left behind a company with a solid reputation and a strong corporate cultural heritage. The new chairman, Gun-Hee Lee, revitalized the Samsung Philosophy in an effort to redefine Samsung’s ideological foundation and realize its vision of being a first-class global company. In 1995, he emphasized the importance of human resource development and organizational culture: The 21st century will be a knowledge-based society where intelligent creativity rules. In this society, quality and contents of education will matter so much. Since it would be the era of education and culture, decent education and unique culture will be the crucial weapon for one to become the true winner of the world. In the 21st century, one genius would be able to feed tens of thousands of people. Subsequently, Gun-Hell Lee strove to make Samsung a genius company with a creative culture, and maintained an intense focus on educating and developing its people. The Samsung Philosophy read, “We will devote our human resources and technology to create superior products and services, thereby contributing to a better global society.” Gun-Hee Lee articulated the Samsung Spirit as the need “to actively participate with our customers, to recognize and confront the global challenge and to create a better future for all.” The Samsung Philosophy and Samsung Spirit were instrumental in establishing corporate values and developing employee behaviors that facilitated building a first-class company in the 21st century with the time-honored corporate heritage of Samsung. 20

Y. Choi, Dynamic techno-management capability: The case of Samsung semiconductor sector in Korea, Avebury, Aldershot, England, 1996. 21 “The Global Competitiveness Report 2010-2011,” The World Economic Forum, www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2010-11.pdf, accessed November, 22, 2010.

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 5

9B11C010

THE SAMSUNG CULTURE

Samsung’s corporate philosophy perpetuated a culture where employees felt pride in what they were doing and a sense of accomplishment in contributing to the well being of society. They exhibited a complete devotion to work, and Samsung’s growth gave them the confidence to challenge foreign technologies with enthusiasm and energy. Samsung developed a culture that remained open to ideas, technology, and innovation from the outside. Its policies encouraged knowledge sharing and transfer through aggressive recruiting and networking.22 Its management found creative ways of technology transfer through carrying out R&D activities right in the heart of the country of the original technology. This helped overcome inferior in-house technology bases and reduced technology gaps in a relatively short time frame. Another strong feature of its culture was Samsung’s ability to foster cooperation among various functional organizations. This was most apparent in its strategic decision to couple technology and management by enforcing positive interactions between technology and management. Top management involved technical managers in decision making. Technically savvy employees were given responsibilities in management and thus provided key inputs to corporate strategic decisions. The result was a fast, dynamic, flexible, and performance-oriented culture, created as a benchmark with companies like Toyota, GE, and Nokia. SAMSUNG VALUES

Since its foundation, Samsung had stayed faithful to its mission of contributing to the South Korean economy and the global community by challenging and exploring the impossible. However, in 1993 Samsung decided to establish a centralized initiative that could unite all of its employees globally to collectively address upcoming crises in the face of ever-intensifying market competition and rapidly changing business environments around the world. A “Single Samsung” initiative was rolled out. It was aimed at unifying its 26 businesses, which ranged from insurance, credit cards, and securities to household electronics and appliances, and focused upon improving efficiency across business lines through creativity, change, and the adaptability of employees. Samsung’s values consisted of five factors (see Exhibit 3): “People, Excellence, Change, Integrity, and Coprosperity.” “People” meant that Samsung valued its people and strove to provide them with opportunities to perform to their fullest potential. Byung-Chull Lee’s famous statement from 1980, “What sets a company apart from others is its people who are committed to work for the company,” was used to instill the philosophy that “a company is its people.” “Excellence” indicated that Samsung should give its best efforts with endless passion and a spirit of overcoming challenges to become the world’s best company in every possible way. “Change” represented Samsung’s commitment to taking the initiative to execute change and innovation with risk awareness: Samsung believed it could only survive if it constantly strove to innovate. “Integrity” signified that Samsung acted in an ethical way, and ensured fairness with honor and grace. “Co-prosperity” meant that Samsung was a good corporate citizen who took responsibility for the prosperity of its community and nation and the larger global society.

22

“PISA 2006: Science Competencies for Tomorrow’s World,” OECD, www.oecd.org/dataoecd/30/17/39703267.pdf, accessed November 24, 2010.

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 6

9B11C010

Samsung’s values provided a centripetal force for its people and emphasized that they played a critical role in elevating the company to global prominence. Reinforcing the unity of “Single Samsung” helped promote Samsung’s success around the world, and offered insights in efficiently managing daily activities and making management decisions. Samsung’s focus on people in its philosophy, spirit and values was, therefore, considered to be the most basic ingredient of its success. SAMSUNG’S HUMAN RESOURCE DEVELOPMENT PHILOSOPHY

A strong commitment to Samsung’s values was achieved through Samsung’s human resource development (HRD) philosophy, which focused upon respecting people and living by the belief that “a company is its people.” Byung-Chull Lee had modeled the HRD philosophy on his deep involvement with his employees. He was said to have spent 80 per cent of his personal time developing talent at Samsung. He often sat down with several groups of middle managers to share his ideas and/or seek their input. He was a regular visitor to the production plant and the R&D laboratories. Whenever the business was at a critical stage of growth, his visits became even more frequent. He handed out gifts to encourage employees and express his appreciation for their extraordinary efforts. Subsequent Samsung leaders followed his example and stayed involved and openly appreciative of the company’s employees. Samsung’s management philosophy and traditions became the key driving force in ensuring its continuous growth and making it one of the world’s best companies. Samsung was a pioneer among the chaebols in the development of formal HRM systems. It was the first chaebol to depart from a tradition of recruiting employees through referrals and connections, and started using a competitive recruiting system in the 1960s. Among chaebols, it had the highest ratio of non-familymember executives.23 This was the result of Byung-Chull’s practice of “People First,” whereby Samsung exercised zero tolerance for nepotism and cronyism. Similarly, Samsung was the only chaebol that rewarded its people on the basis of their performance and abilities. ROLE OF THE SAMSUNG HUMAN RESOURCE DEVELOPMENT CENTER (SHRDC)

Samsung continued with its tradition of developing people in earnest. The Samsung Human Resources Development Center (SHRDC) was formally established by HoAm-Kwan in 1982 to implement the “Samsung with high potentials” vision, and foster its commitment to employee development. As the birthplace of cultivating Samsung’s employees, SHRDC played an important role in maintaining and developing a cohesive Samsung culture through its people. When Samsung entered the semiconductor business in the 1980s, its management realized that South Korea had no expertise in the field. Management began targeting Korean-American engineers working in the United States, and recruited them by compensating them handsomely. Samsung supplemented high compensation with emotional and material support for its employees in helping them adjust to a different lifestyle in South Korea. These employees were also given full autonomy in developing new products. The end result was a dedicated group of project leaders with high levels of technical abilities and managerial insights, who subsequently led many complex and large-scale projects for the company. Another example of Samsung’s commitment to development can be seen in its strategy of recruiting highcaliber operators who were ranked among the top at leading high schools in South Korea. Samsung’s 23

S. Kim and D.R. Briscoe, “Globalization and a new human resource policy in Korea,” Employee Relations, 19:4, 1997, pp. 298-308.

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 7

9B11C010

culture and HR practices helped develop a committed group of operators who were very proud of the work they did. They worked diligently at Samsung to help it succeed in a competitive market. Exposure Challenging assignments and autonomy honed their skills so well that within a few years, these operators were training newly hired graduate engineers. As Samsung’s global ambitions strengthened in the late 1990s, it realized the need to build competitiveness in its management and HRM practices for greater success in the global marketplace. In order to address this challenge, Samsung adopted a new management paradigm to foster an environment of creativity and innovation. A new HR policy (Shin In Sa) that revamped a number of critical HR functions, including promotion, compensation and performance appraisal, was introduced in 1995. Its purpose was to create the maximum possible value for the employees and the company through a strategic alignment. The most important aspect of Shin In Sa was the implementation of a new individual incentives and reward system that was based on individual performance. It replaced the old group-based reward system. SHRDC nurtured human resources through three programs: Samsung Shared Value Program (SVP), Samsung Business Leader Program (SLP), and Samsung Global Expert Program (SGP). SVP was targeted at ensuring that the entire company followed one direction by sharing Samsung’s values; SLP helped develop leaders of the next generation in order to guarantee Samsung’s position as a global leader; and SGP focused upon developing global competencies amongst its employees in order to make Samsung a truly global company. By operating SVP, SLP, and SGP, Samsung aimed to attain global competitiveness and become the most admired company in the world (see Exhibit 4). It neared this goal in 2003, when it was ranked fifth among the world’s most admired companies by Fortune magazine. NEW EMPLOYEE ORIENTATION (NEO)

Samsung’s management and employees attributed the company’s global success to its strong investment in the development of its people. In 2010, Samsung had 13 educational/training facilities globally, which were dedicated to continuously upgrading its talent. Overall, SHRDC conducted approximately 250 training courses and workshops per year. Among its many programs, New Employee Orientation (NEO) was considered to be the most critical one, because it helped new employees adjust to the Samsung culture. NEO was also one of the oldest programs at Samsung. It began in 1957, merely three years after the Korean War ceasefire, when Samsung started an open recruitment system. In 2010, NEO was still a requirement for all of Samsung’s new employees. It consisted of four-weeks of intensive in-house training. In the first week, new employees learned about the Samsung Spirit, or Samsung’s history, philosophy, and values. SHRDC considered this first week to be transformational in developing Samsung’s new employees as Samsung people. In the second week, various modules explained etiquettes of working with senior colleagues, and included information about the company culture. In the third week, new employees learnt how to solve problems the Samsung way. In the final week, new employees were exposed to real-life business challenges through simulations. In the end, all new employees were evaluated on how they solved problems and implemented new solutions. NEO not only served the purpose of helping new employees think and behave as Samsung people, but also solidified Samsung’s unique culture of cooperation between senior colleagues and new employees. To achieve the latter, SHRDC brought in third-year employees as mentors apprentices. Their role was to connect with 10 to 15 new employees on a personal and professional basis. These mentors were the top talent in the company and served as mentors and, in many instances, continued nurturing relationships with their mentees well beyond the four-week duration of NEO.

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 8

9B11C010

NEO provided a focused orientation for Samsung’s philosophy, culture and values, and helped foster the Samsung Spirit among new employees. Developing new employees throughout their careers therefore extended beyond NEO. Once NEO was completed, the human resource development (HRD) department of Samsung’s affiliate company, where a new employee was based, offered a one-year “new employee training program” in partnership with SHRDC. This training included an eight- to 12-week program, which focused on improving job-related skills and knowledge. The next six months offered on-the-job training. During this period, new employees were required to work closely with their senior colleagues in solving various problems they were presented with. At the end of the year-long training program, new employees participated in a Samsung Summer Festival. The festival brought all of the new employees together and celebrated their accomplishments during their initial year at Samsung. At the same time, the Festival created a lasting bond among new employees and provided a networking opportunity among new employees and senior colleagues. Samsung’s management strongly believed that NEO helped them achieve multiple purposes: a) aligned employees across Samsung affiliates to Samsung’s strategic direction, and thus promoted a Single Samsung culture; b) fostered Samsung’s values among new employees and sustained the foundation of its unique culture, and c) achieved business results through cooperation. NEW CHALLENGES FOR NEO

NEO was a successful program, and often referred to as the pride of Samsung. However, in 2010 SHRDC realized it was faced with challenges. First, the profile of new employees had been changing gradually. Up until 2007, a majority of Samsung’s new employees were college graduates. However, during 2008 and 2009, Samsung increased its recruitment of more experienced employees by 50 per cent. Additionally, Samsung also started targeting foreign (non-Korean) employees, increasing their numbers by 34 per cent during 2009. This number was likely to go up by a further 60 per cent, as more South Koreans wanted to travel and gain work experience elsewhere. NEO training was designed for fresh South Korean college graduates. SHRDC wondered if more experienced employees should also be socialized into Samsung’s culture through NEO. If all of the new employees were not exposed to NEO, which fostered Samsung’s values, traditions, and culture, how would this affect their sense of belonging to Samsung? Second, South Korea was experiencing generational changes, as witnessed in other parts of the world. The value orientation of the younger generation (referred to as the “digital natives”) was linked less to tradition, because of early exposure to globalization, the Internet, and market reforms. Since they were more influenced by market forces than the older generations, they behaved in ways contrary to Samsung values. One executive-level employee explained, “We sacrificed ourselves for Samsung. We were obedient and followed rules. The digital natives really will do what they want to do and not what the company wants them to do.” On the other hand, some younger employees described the current Samsung culture as “conservative” and said they would like to see Samsung become more open and communicative. They also wanted Samsung to help them achieve a work-life balance. One young employee explained, “I want to achieve some balance between work and personal life. I neither want to work late hours nor do I want to spend weekends at work. I want to have a fulfilling personal life, hence spend time with my friends and family.” Samsung was aware that it needed to revise and re-evaluate NEO in order to better bridge generational gaps, as well as ensure that all new employees were socialized into Samsung’s culture. This was the spirit of Single Samsung. But was the current culture the right culture for the new generation? How could Samsung modify its unique culture to cater to the digital natives, while satisfying the older generation,

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 9

9B11C010

which remained committed to Samsung’s values? Was Samsung going to alienate the older generation by adapting its culture to the younger generation? However, if it did not adapt the culture to meet digital natives’ needs, was it going to alienate them? Samsung’s success story was impressive by all accounts. The management truly believed that people’s ability to perform well collectively was instrumental in this success. For years, NEO was considered critical in helping share Samsung’s values, promoting cooperation between younger and older employees, and sustaining a Single Samsung culture. However, as Samsung achieved much of the acclaim that it had aimed for in the 1990s, right at the pinnacle of its success it was faced with an unusual challenge. SHRDC agreed that a generational divide and a diversifying workforce were threatening the Single Samsung spirit from within. At the same time, it was clear that Samsung ought to continue with the same commitment to its people, but moving forward, how would it bridge the generational divide, and effectively utilize a diverse group of new employees? Samsung wanted to be proactive and address this issue before it hampered employees’ motivation and commitment to the company.

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 10

9B11C010

Exhibit 1 SAMSUNG’S SALES (in US$ billion)

Source: Samsung company documents.

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 11

9B11C010

Exhibit 2 SAMSUNG’S NUMBER OF EMPLOYEES (in thousands)

Source: Samsung company documents.

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 12

9B11C010

Exhibit 3 SAMSUNG VALUES

Source: Samsung company documents.

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 13

9B11C010

Exhibit 4 SAMSUNG HRD STRATEGY

Source: Samsung company documents.

This document is authorized for use only by Noah Keck ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.