Samsung to give up authoritarian ways

Seoul, March 24

Samsung Electronics, world’s largest maker of phones, memory chips and television sets, plans to revamp its authoritarian, top-down corporate culture to become more like a lean start-up as it copes with sluggish demand and growing competition.

The firm said today its staff pledged to reduce hierarchical practices, unnecessary meetings and excessive working hours in a ‘Start-up Samsung’ ceremony held at its headquarters in Suwon, South Korea. The first step in this new culture of flexibility? Requiring all its executives to sign a statement promising to scrap the company’s traditional authoritarian ways.

Samsung is searching for new business strategies as a father-to-son leadership transition looms. Lee Jae-yong, 48, is expected to succeed his ailing father, Lee Kun-hee, at a time when Samsung’s mainstay semiconductor and phone businesses face competition from Chinese rivals. Samsung has its eye on expanding into health care and pharmaceuticals, but has lagged Silicon Valley in embracing trends like autonomous driving and artificial intelligence.

The firm says it will announce in June exactly how it plans to reorganise its workers and eliminate red tape. It said new vacation systems would allow employees spend more time with families and take breaks for self-improvement.

“By starting to reform the corporate culture, it means we will execute quickly, seek open communication culture and continue to innovate as a start-up company,” Samsung said.

Samsung says it has been trying to reform its very Korean corporate culture to suit its identity as a global firm and to encourage more creativity and grassroots input from workers. Like most Korean firms, its management style tends to mirror authoritarian ways of South Korea’s past, when a military dictator ruled country.

But analysts said Samsung faces a huge challenge in levelling a seniority-based corporate hierarchy that is decades old. Some suggested the campaign also might be aimed at identifying underperforming workers and trimming its managerial ranks to cut costs.

“South Korea has a military and seniority-based culture. Will that be eliminated simply by removing Samsung’s ranking system? It will never happen,” said Kim Young-woo, an analyst at SK Securities.

Kim said the measures are a prelude to layoffs. Older workers at Samsung who were promoted based on seniority would be forced to leave the company early as younger talent moves up the ladder based on merits.