Samsung to overhaul rigid business structure

Samsung Electronics’ TV business chief Kim Hyun-seok, left, and company executives produce a print of their hands in a hand-printing ceremony during the “Startup Samsung Culture Innovation Announcement” event at its R4 digital research laboratory in Suwon, south of Seoul, Thursday. / Courtesy of Samsung Electronics

By Kim Yoo-chul

Samsung Electronics said Thursday that it will overhaul its rigid and bureaucratic management structure for faster implementation and adaptation in decision-making.

Samsung said in a statement that it held a Startup Samsung Culture Innovation Announcement event in its R4 digital research laboratory at company headquarters in Suwon, south of Seoul.

Top company executives attended the event including its consumer electronics business chief Yoon Boo-keun, senior mobile chief Shin Jong-kyun and management support team head Lee Sang-hun, alongside about 600 Samsung employees.

“Samsung will stay away from top-down structures and build bottom-up structures, while the company will put more focus on improving efficiency by introducing programs to self-motivate employees,” said the statement.

As a backup plan, Samsung Electronics said it will do away with its traditional structures in favor of a much flatter hierarchy by simplifying its ranking systems.

Samsung has been maintaining a structure of five distinct employee ranks, each of which comes with its prescribed title.

Inside Samsung, there are five ranks below the executive level ― sawon, daeri, gwajang, chajang and bujang.

A fresh undergraduate receives the sawon title and it usually takes more than 20 years to reach the vice president level in Samsung affiliates.

“Samsung will cut the steps in the ranking system and we will promote more employees if they prove their management capability or demonstrate outstanding performance,” said the statement. “The main focus for a new HR policy is to offer more credit based on the roles and functions in each unit rather than just based on titles.”

Samsung will announce the details of its new measures within the first half of this year.

“All Samsung executives are required to get rid of top-down structures,” the release added.

For active communications between working-level employees and executives, Samsung Electronics said it will activate the use of its internal communications portal ― MOSAIC. “You can put any idea into MOSAIC and we will respond to it.”

Procedures for preparing “fancy reports” to appeal to bosses will also be cut under the new company initiative.

“Samsung’s top management plans to kill unnecessary internal meetings and require executives to end the rigidity of internal reporting systems, which we believe is a legacy from decades ago,” said the statement.

The moves come at a time when a power shift is at hand, led by company vice chairman Lee Jae-yong. The de-facto Samsung leader is said to prefer a casual management style and is less guarded even on international trips.

Samsung sold the company-owned private jets and the vice chairmen uses commercial airlines for overseas business trips, a rare scene for heirs of Korean conglomerates.

But it remains to be seen whether the new Samsung plan will eventually work, as the hierarchy made executives feel quite “inferior” and “underpaid” compared to counterparts their age at other companies.

Also, rigid corporate hierarchy has always been an integral part of Korean corporate culture, with an emphasis on Confucianism favoring patriarchy, seniority and hierarchy.

Some say having a hierarchical system is effective for quick key decisions, though it’s true that the old-fashioned system is a poor fit for creativity and discourages workers.