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Samsung’s December Personnel Changes Loom, Uncertainty Grips The Business

November 28, 2014 - Written By David Steele

Samsung currently employs almost 300,000 people around the world, around a third in Korea. And every December Samsung announces personnel changes, which is customary for Korean businesses and has the unfortunate side effect of distracting employees of all grades for several weeks beforehand, especially those looking for a promotion, transfer or avoiding the sack. This year things are especially difficult for employees because of the very difficult year that Samsung has ensured. We’ve already written about the possible changes at the top of the Mobile business but let’s consider the many higher and middle management grades that may also be affected. The disappointing earnings is expected to cost many jobs and so this year, the disruption is particularily bad.

One unnamed Samsung employee told Reuters, “People are very uneasy; even the senior management are asking around about what might be coming.” The Maeil Business Newspaper, a Korean businesses daily, reported the company could cut 20% of overall executive positions but 30% from the mobile division. To further complicate matters, Samsung group boss, Lee Kun-hee, remains in hospital after a heart attack earlier on the year. His son and business successor, Jay Y Lee, has the helm this year. His decisions may show how he intends to run Samsung in the future. And this comes at a difficult time for Samsung as the difficulties it faces show no signs of abating: Samsung faces competition in the mobile businesses at the higher end of the market from Apple as well as stiff competition at the less expensive end of the Android market from Chinese manufacturers such as Xiaomi and Lenovo. Samsung is already making changes to its mobile products in the face of competition but has more of a focus towards the expensive end of the market; products such as the Samsung Galaxy Alpha are metal-made and premium-priced. This stiff competition has caused Samsung’s market share to shrink all year and sales to disappoint compared with expectations and last year’s products.

Samsung have declined to comment on potential changes but I’d not expect anything different, because the business keeps these changes a secret until the absolute last moment! Another Samsung employee said, “We talk a lot about which of the senior executives will still be with us. What happens to them will determine how we will need to work.” We understand that because so many Samsung managers and executives are distracted from their day job, the rank-and-file employees are needing to work weekends and long hours to ensure that developments for major projects remains on track. Ultimately, this is not good news for Samsung’s 2015 and maybe even 2016 product lineup. Strategic planning is on hold because managers don’t know who’ll be around to see them through. And whilst the business will return to normal after these changes, it’s clear that there is much uncertainty created by the looming Samsung staff change. And I hope that they are able to battle through these changes and that things will quickly return to normal: having a planned uncertainty built into the corporate calendar must make life difficult for everybody at Samsung.