The Ethics of Samsung - Case Study Example

? The Ethics of Samsung Your’s The ethics of Samsung Samsung’ history backs to 1938 when Samsung opened its stores in the Province of North Kyungsang in Korea. Samsung expanded its business to overseas countries in fields of fertilizers, paper, insurance, retail operations, and then started its business in the communication sector. Now Samsung has become the group of companies and globally responsive for the needs of the market and core business sector including the finance, electronics, trade and services. Global success of the Samsung lies in the new management’s declaration of organizational creativity, intellectual capacity, employees’ empowerment and technological innovation. New management encompassed the encouragement of employees to adopt changes in the company and strive to become more ethical for others. Therefore, qualitative performance at Samsung is preferred over the quantitative terms. In the presence of these efforts, Samsung Electronics admitted breaches of the labor regulations in the way of the excessive working hours. Repeated use of child labor at some factories of Samsung was also observed. However, Samsung takes measures to correct these violations including revising hiring policies, overtime practices and work hours. Welfare and health protection were among other measures (Mundy 2012). Compliance program of Samsung is intended to guarantee the legal compliance of self-governing and network of compliance officers supports and represents all departments. Compliance officers dispense advices and provide legal resources to employees. This compliance program is developed to ensure that Samsung’s employees comply with government’s regulations, laws and other policies to mitigate the risks of the unanticipated legal fallouts. Talking about vision and mission statement of Samsung, it is stated in the motto that creates the world by inspiring the world. Samsung is committed to inspire the communities by leveraging the key Samsung’s strength in the innovative products, new technology and creative solutions and also promoting the values of Samsung’s employees and partners. Samsung also declared that company responded to the internal changes as well as a new development. However, change in the mission statement was intended to keep the pace of growing international operations. New mission statement is focused to devote the technology and human resources to create services and superior products towards contributing the global society. Enhancing the well being of people all over the world is another point of Samsung’s mission statement (Lee, 2006). Code of ethics of Samsung did not mention the ethics office, but most companies of Korea had the ethics officer (Samsung Engineering, 2013). Samsung like other business companies requires the mechanism for transmission of practices and values on the corporate, social responsibility and ethical business. Samsung Engineering continues to educate and communicate the employees on the Samsung’s compliance management through training of employees and encourage employees to participate in the practices of the compliance program. The training contains the points of legal compliance and relevant laws on corruption prevention, and fair trade. In fair trade at Samsung, no employee is allowed to do unfair transactions and provide the improper influence to others. No employee in the future is allowed to provide the unfair and false information. Employees of Samsung cannot involve in acts of receiving the money, any service or benefits from undue advantages. They are also strictly prohibited to receive rebates or do doubtful transactions. Cyber education has been provided to all Samsung’s employees on the understanding of ethical management. Samsung Electronics knows very well about the development of compliance culture and create core values for top management and employees. A zero tolerance principle is ensured in all cases of unethical and misconduct of business conducts. A pledge of compliance is signed by executives and all other employees in order to abide by foreign as well as local laws of Korea. Training programs for existing and new employees are developed. In 2011, a total number of 262,922 employees participated for training of different 27 courses in six categories. Out of the total number of employees, 76,531 employees received training on corruption prevention and remaining employees received training on compliance program (Samsung Engineering, 2013). Training at the Samsung is very rigorous as managerial training is given at priority level, and ethical standards are conformed. Feedback from training leads towards the decisions for the next years to observe the ethical code violation in the previous year within media and industry. There have been certain cases of trade secrets’ infringements in South Korea as major corporations were involved in the illegal disclosure of technology owned by Korean corporations. Some of the major corporations were involved in the illegal industrial espionage as prosecutors from South Korea found that about 18 people had attempted illegal technology theft. Employees of a US company Alliininged materials were suspected in leakage of the semiconductor technology of Samsung (Todd, 2010). Both Samsung and LG Electronics produce the OLED displays, and theft of circuitry, TV sets and diagrams are rising in South Korea (Yang and Park, 2012). Most recently, Samsung publicly accused the LG Electronics of corporate espionage. Samsung charged one of the employees at LG Electronics regarding the technology of sensitive displays used mobile devices. This technology is vital for Samsung because more than 98% mobiles use the similar displays at a global level. Samsung alleged that they approached one of their lead engineers who assisted in development of the MOLED as a next generation technology. This issue was further complicated when more than one employees were found involved and two of them were ex-employees of Samsung. This picture became even more complicated as Yonhap News Agency published story of six former researchers of Samsung, who helped to steal the Super AMOLED technology of Samsung to LG Electronics (Coleman, 2012). Samsung foundry is responsible to handle the secure information of customers. IP protection policy is at work to assure the customers’ trust and satisfaction after achieving the ISO 17799/BS7799 certification. It is enforced to strictly comply with such protocols. IT security, audit compliance, employee confidential, document control and training programs are the security commitment of foundry. Sensitive data of all stakeholders is protected through multiple secure systems. Internal policies, advanced encryption regarding the handling and distribution of data are mandatory. Samsung with more than 160,000 employees is committed to comply with foreign as well as local laws. Global code of conduct is applicable to all employees. Ethical management at Samsung provides the means to respond the changing global business environment and a vehicle to create trust for local communities and other stakeholders. Monitoring system is operated to check the fair practicing and also transparent corporate management. An independent audit team operates to encourage and monitor the ethical practices of employees at Samsung. More than 10 years experienced professionals at Samsung use the reward system for auditing. A cyber audit program was started since 2002 to incorporate the integrity of the corporate culture for overseas and local businesses. Behavioral guidelines and Corruption has been defined under this program. Online vehicle is used to report the irregular activities including the corruption. An Anti Corruption Education program is launched in more than 22 different languages, which encourages the local employees to know the Samsung’s code of conduct in overseas plants. In these efforts, particularly Electro-mechanics employees of Samsung abide by foreign as well as domestic laws through the correct decisions and ethical protocols. Employees of Electro-mechanics prohibit the illegal activities of bribery for the inappropriate business profit. It is also aimed at Samsung to keep the viability and health of social communities within Korea. Samsung with a high solidarity and sociability has transformed itself into a communal organization with a high solidarity and sociability. Violation of Samsung’s practice and standard, including the antitrust policies and code of conduct are dealt after investigation. There will be punishment according to the severity of the infraction. Policy contains all types of punishments such as the management involvement. Employee will be seated before the manager, and conversation on the misconduct or any other violation is conducted by the employee and manager. The manager will point out the areas to be addressed in training to assure that it will not happen again. In case of repetition or worse violation, a written warning is given to the employee and a copy of the warning letter is attached with the main file of concerned employee. If an employee commits a strong violation of code of conducts of Samsung, concerned employees’ manager sends the case to top level management for removal from service. Although, employees of Samsung strongly comply the code of conduct, but many employees have been terminated for the last few years. In the face of ethical behavior, the recommendation for improvement in the Samsung’s policies is a difficult task. There are a large number of employees who appointed to do their job on the ethical behavior, ethical investigation, training for employees, and finding from the investigation of the violation. Training on employees’ ethics and those employees who violate the ethics is conducted yearly. Ethical policy of Samsung has been developed for the last many years. Negative publicity of Samsung on ethics has been on media because of rivalry from other competitors in the market, and few issues in the policy and those areas, which are directly concerned with ethics. In the presence of all these advantages and disadvantages, the top management of Samsung is committed to comply with the ethics in Samsung Organization. References: Coleman, T. (2012). Situation Report: Samsung accuses LG of corporate espionage, http://intelnews.org/2012/07/28/01-1048/ Accessed on 15/10/2013. Lee, M. (2006). Samsung Electronics: The Global Inc. Samsung Electronics. Mundy, S. (2012). Samsung reveals Chinese Labor Breaches, Available from http://www.cnbc.com/id/49972512 Accessed on 13/10/2013. Samsung Engineering (2013). Compliance & Ethics, Available from http://www.samsungengineering.co.kr/sustainability/compliance/common/suView Accessed from 14/10/2013. Todd (2010). Korean Authorities arrest many in alleged theft and transfer of Samsung’s Trade secrets to Hynix. Available from http://wombletradesecrets.blogspot.com/2010/02/korean-authorities-arrest-many-in.html Accessed on 15/10/2013 Yang, J., and Park, K. (2012). The Curious Case of Samsung’s missing trade, available from http://www.businessweek.com/articles/2012-11-29/the-curious-case-of-samsungs-missing-tvs Accessed on 15/10/2015. Read More