Human Resources

Management
Case Study of Samsung

[Writer]
[Institute]
[Date]
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Table of Contents
Introduction ................................................................................................................................................... 3

Strategic Nature of HRM .......................................................................................................................... 3

The “New Management” System of Samsung .......................................................................................... 4

Personnel Management System of Samsung ............................................................................................ 4

Quality-Based Management of Samsung .................................................................................................. 5

Hybrid Management System of Samsung ................................................................................................. 6

HRM Policies and Practices based on Porter’s Value Chain Model (VCM) ............................................ 8

Conclusion .................................................................................................................................................. 10

References ................................................................................................................................................... 12
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Human Resources Management

Case Study of Samsung

Introduction
Of the entire world, the economic situation has been reaching the low economic growth since the
collapse of Lehman Brothers Holdings inc. in 2008 (Moriya, 2013). However, the current
business era is highly affected by fierce competition because of some institutional and legal
restrictive regulations and practices are vanishing and obstacles are breaking down (Moriya,
2013). Organisations, to compete at the global level, need to formulate creative and innovative
strategies and perform open management with the aim of eliminating all restricted and
discriminative practices and institutions. Thus, different areas, mainly the human resources and
human resource management (HRM), are getting much value as the key competitive resources
than ever before. HRM in an organisation is the function through which HR professionals and
practitioners performed a variety of different tasks, such as employee recruitment, selection,
training, development, reward management, and so on.

With this consideration in mind, the aim of this assignment is to critically analyse the HR
function and, drawing from the key principles of HRM, how the HR function can assist the
modern-day organisations to be more effective in achieving competitive advantage. For this,
Samsung, a South Korean multinational conglomerate, as the case study is used.

Strategic Nature of HRM

There is a consideration that the most common theme as definition of HRM is the policies about
human resource that need to be incorporated with an organisation’s strategic planning. It means
that a future that is more and more linked with HRM and emphasis on the incorporation of these
policies is with the business planning (Storey, 2014). Thus, the concepts of HRM policy
development are strongly associated with the strategic level. Finally, strategic HRM or SHRM is
developed, which is an approach to make right decisions on the organisation’s intentions and
plans in terms of policies, strategies and practices about employees, employment relationship,
resourcing, training, learning and development, performance and reward management, and
employee relations (Storey, 2014).

There are four meanings of SHRM (Hassija, 2014):

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 The use of thorough planning

 A logical, consistent and sound approach for designing and managing personal systems
on the basis of an employment policy and manpower strategy and frequently supported
by philosophy
 Matching policies and practices of HRM to some clear business strategy
 Treating human resources as valuable strategic asset for achieving competitive
advantage.

The “New Management” System of Samsung

Lee Kun-Hee, as the chairman of Samsung Group, developed the “New Management” in
Frankfurt in 1993 (Jaeyong Song., 2014). By using this management system, Samsung has
revolutionised itself from an average manufacturing firm based on low cost advantages to the
world’s top leading manufacturer with a firm brand image by providing the world with premium
products. In fact, story of Samsung is one of the wonderful successes in the business world
during the past two decades and in the 21st century. Samsung’s New Management Programme
includes a number of mandates that had noteworthy impacted the company’s HRM or personnel
management system, namely human resources(HR) paradigms, new management demands, and
new awareness (Jaeyong Song., 2014).

Samsung also developed an “Open HR” with the aim of preparing for an “Open Era” (Shvetsova
and Dobrynina, 2016). In doing so, it got rid of discriminative practices based on gender, race
and educational background for HR, and ultimately the company maximised its employees’
overall potential capabilities and competencies thus gained a strong competitive advantage
(Shvetsova and Dobrynina, 2016).

Personnel Management System of Samsung

Samsung has developed an open management in the personnel management era. Open
management means respecting the employees’ autonomy and creativity by eliminating barriers in
systems and practices, through which Samsung achieved its competitive advantage (Chang,
2012; Park, 2016). For this, the company also fostered see-through management and grew in
harmony with its customers. Thus, the HRM putting skills first and recognising human potential
is the key to Samsung's Open HR (Chang, 2012; Park, 2016).
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It suggests that opportunities must be created for all devoid of restrictive and discriminative
practices. On the basis of skills, employee compensation and promotion should be daringly
differentiated. Pay needs to be based strongly on performance level, and promotion based on
that. Most importantly, human resources are valuable assets to competitive advantage of
Samsung. By introducing the New Management system, Samsung has got success because the
company moved its goal of global first-class company further forward on the basis of its HRM
principle called the "People First" management (Chang, 2012; Park, 2016). New HR principle
served new HRM system by fostering and building capital in HR while transforming the
employees’ awareness and actions levels.

As a strategic endeavour for promoting talent in the long-term with the aim of entering global
markets, specialists at the regional level are sent as the heads of overseas branch (expatriates)
associated with the global leader fostering track (Chang, 2012). Since 1990, Samsung has posted
at least 4,700 regional specialists, who took take a pivotal role in many emerging markets, in
many countries (Harnish and Dumaine, 2012). Further, these specialists create optimistic
opportunities for business to collect immense regional data (Harnish and Dumaine, 2012). A
performance based reward system has also been enacted by Samsung in terms of pay and
promotion (Harnish and Dumaine, 2012). The company is greatly stressing on the individual
performance and organisational performance more compared with many Asian firms.

Quality-Based Management of Samsung

According to Chairman Lee, employees need to attack daringly and o the right timely, while
holding a strong sense of catastrophe when performing well and assault when catastrophe
occurred (Pucik and Lim, 2001). Focus of the company’s quality-based management is heavily
on technology-based resources through which Samsung formulated the excellent corporate
quality (Pucik and Lim, 2001). There are two key enablers featuring quality-based management
including human resources and technology resources. Human resource implies the driving force
of skills and capabilities of people contributing to develop prompt and timely management, in
order to achieve competitive advantage (Lee and Slater, 2007).

In 1996, Lee was appointed as a member of the international Olympic Committee and he first
mentioned brand by pointing out that the brand image of Samsung is low that needs to be
improved. At first, a strong brand is based strongly on consistent quality. The brand’s design
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should reveal the firm’s cultural pattern and philosophy. Thus, he created some innovative
slogans, such as “start changing now”, from the top and shared to develop harmony regarding
basic innovation. At the internal level, a strong sense of crisis was developed that accelerated the
brand image and for this the line-stop system as introduced. Traditional substandard models were
abolished. (Pucik and Lim, 2001)

In the brand management and competitive strategy of Samsung, Lee’s strong will and proper
guidance were the key success factor. The brand-building endeavours on the right time are
occurring with the surfacing of the digital era. The emergence and immense popularity of the
smart mobile phone and the flat screen TV markets around the world facilitated Samsung with
the greatest opportunity to bravely compete in the global market, even in the strong presence of
giants Sony and Apple. The immense popularity of smart mobiles gave the company another
opportunity, through which Samsung beaten Nokia and appeared as one of biggest smart phone
manufacturers in the world. (Pucik and Lim, 2001)

Hybrid Management System of Samsung

Until 1980s, Samsung has been following Japanese style management system, but since 1990s
the company adopted some elements of American style system in its management because of the
achievement in the business segment of semiconductor (Horwitz, 2012). While adopting
American style strategy and HR, Samsung kept Japanese patterns of operations and functional
management (Selko, 2014). Through this approach, Samsung succeeded in retaining its talent
pool (regional specialists) as best performers or change agents. Further, the company
transformed the coexistence of employee promotion and compensation based on the seniority
and merit levels from its traditional seniority-based and promotion and compensation system
(Selko, 2014).

The success of Samsung in blending American best business practices with a fundamentally
Japanese system is the influential lessons for the modern-day business leaders. Samsung blended
the conventional business and management style with American management skills and
formulated a new and innovative hybrid system for the company (see table 1). This management
system focuses more on innovative practices for incessant process enhancement (Lee and Slater,
2007). Further, the systems of merit pay and promotion were implemented in Samsung with a
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practice of respect for seniors and elders. (Selko, 2014) These are only a few challenges which
have been experienced by Samsung in developing this excellent management system.

Table 1: Samsung’s Hybrid System

Source: (Selko, 2014)

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HRM Policies and Practices based on Porter’s Value Chain Model (VCM)
As mentioned below, a well-known value chain model (VCM) developed by Porter and the value
systems’ corresponding notion has undoubtedly influenced the comprehending of the way the
strategic management system functions. Managerial thinking about such strategic matters as
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value development, coordination, and positioning has been developed by these models.
(Holsapple, 2003)

Porter’s Value Chain Model (VCM)

Source: (Holsapple, 2003, p.218)

This model initially focused on transferring raw materials into comparatively uniform, physical
goods, where a product’s value in the market is the medium differentiating it from another
product offered by competitor(s) (Bae and Rowley, 2001).

By focusing on both primary and secondary support, mainly the HRM, Samsung has been
integrated the conventional low-cost manufacturing ability with the capability of bringing
premium-quality, high-margin branded products quickly to the world’s market (Bratton and
Gold, 2012). In the HRM area, the company attracted the global talent pool and appointed them
as regional specialists, while retaining them through a variety of HR practices (such as
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performance-based reward) (Bratton and Gold, 2012). According to Porter’s VCM, Samsung
adopted an open personnel management system with the aim of enhancing efficiency and gaining
strong competitive advantage. For this, the company created a firm customer-centric approach
emphasised strongly on comprehending the customers’ future needs and expectations (Bratton
and Gold, 2012). To compete well around the world, Samsung has even transformed its
traditional management system to engage effectively with the world outside Korea (Bratton and
Gold, 2012). In fact, Samsung has transformed its HR strategies and practices by establishing
new organisations to hunt for and become accustomed with best HR policies and practices from
abroad. Moreover, the company also introduced a strong concentration on innovative practices
into an organisation improved for incessant process enhancement, which comprise the systems of
merit pay and promotion. Finally, Samsung has achieved strong competitive advantage by
improving its brand image around the world.

Conclusion
This assignment explored the major factors and forces behind immense success of the strategic
management of Samsung by using the generic value chain model proposed by Porter. For this,
this assignment deeply examined the way the company has greatly revolutionised itself from an
average electronic manufacturing company based on low cost advantages to the world’s top
leading and giant firm with a firm brand image, business reputation and high-quality products.

The ‘value chain’, in the strategic management area, reflects a wide variety of activities within
the organisation through which the company’s customers are valued in terms of either a product
or a service. To the degree that the organisation can re-organise and incessantly perform HRM
related activities and practices, so that it has attracted the talent pool, while reducing costs and
maximising value, then it can be considered to have gained and maintained strong competitive
advantage, and the story of Samsung and its HRM is really wonderful.

With increasingly more importance and value of human resources in the present-day
organisations, the employee management is found as a strategic task of HRM. The HRM
philosophy adopted by Samsung is devoted to its employees and technology as well to not only
produce high quality products and services, but also to gain and sustain strong competitive
advantage in the long term. The talent, innovativeness and creativity, and dedication of HRM are
all the major forces leading to the success of Samsung around the world. The company’s
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transition and transformation process needs to be continued to keep progressively moving

upward, and for this Samsung will need to reach a higher diversity and decentralisation levels in
the organisation.
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References
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