International Human Resource Management at Samsung Electronics - Case Study Example

COVER SHEET 1.0 INTRODUCTION The subject of International human resource management entails a complex interaction between three different factors: cross-cultural management, comparative human resource management and industrial relations systems. These three factors interact within the context of a highly globalised business environment and rapid changes. In practice, international human resource management entails different practices. These involve responding to both cultural and institutional differences; the use of expatriates in the process of global integration; and managing the process of change and growth within an organisation. In addition to these, international human resource management practices seek to enhance global coordination within the company through the traditional functions of the human resource department. Samsung Electronics provides a classic example of how a multinational organisation utilises different approaches in managing its international human resource practices. This report presents the international human resource management plan for Samsung Electronics. The report is organised into three different sections. In the first section, a brief examination of the background of the company is provided. This also covers its mission, vision and general strategies. In the second section, the report evaluates different theoretical issues and contemporary trends in international human resource management. Special emphasis is laid on the practice of multinational corporations that are similar to Samsung Electronics. The analysis of issues and trends in relation to the situation at Samsung Electronics are presented in the findings and analysis section. Finally, the report offers conclusions on the practice of international human resource management at Samsung Electronics. 2.0 BACKGROUND OF THE ORGANISATION Samsung Electronics was started back in 1983 in Daegu, Korea as a small general trading company (Samsung Electronics 2013). Right from the beginning, Samsung Electronics has focused on rapid growth as a central strategy in its operations. This was reflected by the rapid rate at which the company grew from a small trading company in Daegu to a middle level diversified company in Seoul by the end of 1947. With a strong focus on diversification, the company entered into the electronics market in the 1960s with the formation of different divisions that were focused on manufacturing different types of electronic goods. Currently, Samsung Electronics is organised into four separate businesses as follows. Samsung group deals with electronics, engineering and most high-tech products and components. The Shinsegae, Hansol and C J groups are concerned with retail, logistics, and entertainment and telecom businesses (Samsung Electronics 2013). Being the largest conglomerate in the world with a strong focus on diversity in terms of its global presence, Samsung Electronics presents a classic case of how international human resource management can be practiced in a truly global setting. Throughout its modern history, Samsung Electronics has sought to utilise the diversity in its human resource as a means of attaining its corporate objectives. In line with this, the company has sought to develop a comprehensive and effective human resource management strategy in its operations. 3.0 ORGANIZATIONAL MISSION, VISION, VALUES, GOALS AND STRATEGIES Samsung seeks to devote its human resources and technology to create products and services that are superior. With this commitment, the company endeavours to contribute to a better global society (Samsung Electronics 2009). As such, the mission statement of the company seeks to address the rapid changes that are taking place not only internally within the organization but also externally in the prevailing global business environment. This approach is summed up in three statements as follows: providing economic contribution in the world, giving priority to the management of human resources, and seeking to establish rationalism within the organisation. As such, the mission of the company reflects its rapid transformation since its inception back in 1983 to its current state as a global company in consumer electronics. In essence the strategy of the company is informed by different values. These include change, people, integrity, excellence and co-prosperity (Samsung Electronics 2013). 4.0 KEY ISSUES IN INTERNATIONAL HUMAN RESOURCE MANAGEMENT According to McCourt and Eldridge (2011, p. 24), organisations are concerned with different activities as part of their international human resource management activities. For instance, many organisations at the multinational stage are concerned with human resource planning, performance management and general industrial relations within the organisation (McCourt & Eldridge 2011, p. 26). In addition to these, organisations seek to enhance the strategic use of their human resources by incorporating training and development as part of their organisational practices. Such an approach takes into consideration the issue of inculcating global leadership values in employee training and development programmes. Lastly, organisations are concerned with the staffing issues in all their subsidiaries in the global market. For instance, multinational organisations seek to align their recruitment, selection and training processes with the demands of international talent management (Harzing & Van Ruysseveldt 2004, p. 67). On the other hand, Dowling, Festing and Engle (2013, p. 89), observes that strategic human resource management in multinational corporations is a function of two separate types of factors: those operating within an organisation and those that emanate from external sources. Whereas external factors are made up of the characteristics of the industry, those of the country and inter-organisational networks, internal factors comprise the general structure, strategy and orientation of the organisation (Tornikoski 2011, p. 223). Also, in using the human resource function as a strategic tool, organisations seek to align their strategies so that they address the following goals and concerns: efficiency, competitiveness, flexibility and the balance between global integration and local competitiveness. Another key issue in international human resource management facing organisations operating on a global context regards the role of corporate risk assessment and management (Fetzer 2012, p. 60). In the current business environment, the success of corporate risk management practices for multinational organisations depends on how they handle the following factors: the nature of the business, the level of maturity of the firm and its subsidiaries and lastly, the state of the host country (Harzing & Pinnington 2010, p. 175). There are several categories of risks that organisations seek to mitigate in their operations. Apart from the threat of cyber-terrorism and risks associated with espionage, theft and sabotage, organisations also seek to mitigate risks associated with out of facility fires and other travel risks (Brewster, Sparrow, Vernon & Houldsworth, 2011, p. 34). In addition to corporate risk assessment and management, organisations operating on a global scale are faced with the need to manage the performance of their employees. This is so because of the need to align the functional objectives of the organisation for horizontal collaboration within the organisation. Also, performance management for multinational organisations not only provides clarity about the roles and contributions of individuals within the organisation but also links the entire human resource management practices to the objectives of the company (Harzing & Pinnington 2010, p. 201). According to Hsieh, Lavoie and Samek (2012, p. 54), global performance management within corporations seeks to set specific objectives for the corporation, provide an evaluation of the entire performance process and link the results to rewards and development. Several key issues dominate the practice of performance management for global organisations. For instance, the volatility of the global environment, the level of maturity of different subsidiaries and the effects of distance on the performance of employees are some of the key issues which performance management seeks to address in global organisations (Brewster et al. 2011, p. 55). In addition to these issues, performance management is influenced by the role of expatriates and non-expatriate staff within an organisation. This is important since the performance of different staff is depended on the interplay between these factors within an organisation (Atkinson & Shaw 2006, p. 180). Lastly, industrial relations play a key role in shaping the course of international human resource management practices. According to Dowling, Festing and Engle (2013, p. 44), industrial relations entail three basic components: the stakeholders involved, the types of agreements in use and the industrial relations system that has been adopted. In general practice, international human resource management seeks to address the needs of the key stakeholders in industrial relations in the countries where the company is operating in. The needs of the shareholders of the company, the employees, the labour unions and the government need to be taken into consideration in developing a system of industrial relations (Zanko 2003, p. 81). In addition, there are different types of agreements which play a major role in shaping the course of industrial relations in many multinational organisations. Agreements such as employee collective bargaining agreements, multiple business agreements and greenfield agreements for both the employee and the employers bear a great influence on the general success of industrial relations programmes for organisations (Meyskens et al. 2009, p. 1443). Regarding the industrial relations system, organisations seek to take into account the effect of different factors that are caused by changes in the geographical, technological and legal environment in managing the process of industrial relations. Such changes play a key role in influencing the key components of the process of industrial relations which entails the parties, the conflict, the process and the rules (Aguilera & Dencker 2004, p. 74). 5.0 FINDINGS 5.1 Organizational Culture The organizational culture of Samsung Electronics has been based on the mission to value human resources within the company (Samsung Electronics 2013). Through years of management reforms and changes in strategic objectives, the company has developed a corporate culture that is dependent on the accuracy of execution of all projects. This approach to organisational culture has fostered an atmosphere of loyalty within the workforce of the company in all its subsidiaries. The organizational culture at Samsung Electronics is based on a number of key competencies which have been developed in the course of time. These include creativity, professionalism, humanity and leadership (Samsung Electronics 2013). It is because of the need to maintain this culture that the organisation endeavours to test the suitability of potential employees during the recruitment process. A high degree of loyalty among the employees towards the organisation is the reason as to why the company does not have a labour union for its employees. With a good compensation system that exceeds what many other similar organisations offer as well as the availability of numerous other welfare programmes for its employees, the company has managed to maintain a high level of organisational loyalty thus doing away with the need for labour unions for employees in its subsidiaries. Apart from a high degree of loyalty, the organisational culture of Samsung Electronics emphasises the need for professional discipline, integrity and ethical considerations (Samsung Electronics 2009). With education and training, the company has managed to instil in its employees ethical values which prohibit profiteering, bribery and other unethical practices. It is observed that the tremendous growth of the company has been as a result of a successful culture that emphasises on integrity and loyalty while at the same time prohibiting all manner of unethical behaviour among the employees of the company. 5.2 Human Resource Development Samsung Electronics has developed a comprehensive system for the normal functioning of its human resource management department. This system has laid much emphasis on the need to offer training and development opportunities to employees. Such an approach augurs well with the traditional roles of human resource management systems which, after ensuring that the right employees have been recruited, seek to provide the right environment for professional development and training. The training programme for employee of Samsung Electronics is based on a two-fold approach as follows: getting the right individuals for the right positions and motivating them by use of incentive compensation (Atkinson & Shaw 2006, p. 188). This approach reflects a fundamental shift in the practice of human resource management from the traditional approach that rewarded seniority within the company with promotion to the current one which seeks to reward performance and creativity. The company has developed an effective training programme to which all new employees are subjected. By seeking to transform the new employees into well trained professionals who are able to perform at the standards of the company, the training programme emphasises on several issues. These include the organisation and corporate vision of Samsung Electronics, the general history of the company as well as the technical aspects within the company. As such, the company has ensured that its employees are exposed to the highest standards of effective training as part of the strategic international human resource management practice. It is important to note that the training programme at Samsung Electronics has been used as a means of developing its workforce in all its global branches and subsidiaries. For employees in regional offices of the company, the training programme has aimed at achieving the following objectives: shaping personal ties within the workforce, developing a global workforce and enhancing knowledge about the local business environment (Samsung Electronics 2013). As a result of these activities, it is worthwhile to conclude that Samsung Electronics has succeeded in developing a training and professional development system that enables training and development of excellent business leaders for the future. 5.3 Employee Compensation and Reward System The issue of rewarding employees plays a key role in determining the success of an organisation in its practice of human resource management within a multinational context (Burris 2013, p. 45). Traditionally, Samsung Electronics used a traditional compensation system that emphasised differences in pay with regards to different parameters such as gender, the level of education and seniority within the internal structures in the company. However, with increasing competition, internationalisation and the effects of globalisation, the company has abandoned this reward system and embraced a system that is based on the competence and performance of the employees. The reward system at Samsung Electronics is divided into two basic types. The first one guarantees an equal increase in basic pay to all employees twice a year (Samsung Electronics 2009). This increase is not based on the performance of the employees. The other type of reward is based on the performance of individual employees and seeks to grade employees based on the results of their work. Following appraisals for competence and performance, employees are guaranteed a corresponding increase in their compensation packages. Samsung Electronics provides incentives for its global workforce in three different ways: the strategy development incentive; the target development incentive; and lastly, market development incentive (Samsung Electronics 2009). These incentives seek to develop the capacity of the manpower of the company to increase performance in the areas of research and development, marketing and general administration within the company. In addition to these types of incentives, Samsung provides its employees with general performance incentives that seek to enhance the role of the workforce in achieving the general objectives of the company. Since these incentives are based on the evaluations done by specific divisions, their efficiency depends on the role of global business managers who are charged with the responsibility of organising the company along major product divisions on a global scale. This arrangement has ensured that all employees within the company receive incentives and bonuses based on the performance indicators for their divisions within the company. 5.4 Aligning the Human Resource Management Functions In order to achieve it objective of being a global leader in the electronics industry, Samsung has adopted a strategy to human resource management practices that ensures that it has an aggressive approach to recruitment, appraisal, promotion and compensation for its employees (Williams 2002, p. 20). In its recruitment process, the company seeks to tap into the global pool of talent that has been made available by globalisation. As such, the company has succeeded in globalising its recruitment process by focusing on overseas recruitment processes, implementing international internship programmes and accepting a highly diverse pool of applicants for different positions that are available. Because of this, the company seeks to attract and retain a workforce that is highly talented and that has been derived from across the world to fill its key positions. To reflect this strategy, the company has been utilising an open employment system that makes all employment opportunities that are available open to the public. Samsung uses a complex system for grading its employees. For general manpower, grading is based on five levels: the general manager, the deputy general manager, the manager, the assistant manager and the general staff. On the other hand, the grading system in accordance to research and development is based on four ranks: the staff, the assistant manager, the seniority and the head. Currently, employee promotion is based on the length of time spent at the company, evaluation of job performance and the prior awards received during the years of professional service. For staff holding managerial positions, promotion is based on their abilities on the job as well as the additional recommendations and rewards received. This means that factors such as performance appraisal, years of service and the extent of professional training are taken into consideration when grading the performance of managers in the company. 6.0 CONCLUSION This report has examined the practice of international human resource management at Samsung Electronics. From the findings of the report, several conclusions can be drawn. For instance, the company has sought to align its traditional function of human resource management in accordance with the demands of operating in a highly globalised and competitive environment. By doing this, the company has adopted an open door recruitment policy that taps into the global pool of talent as opposed to focusing on a small clique of potential employees. This has enabled the company to develop a strong approach to not only towards recruitment but also with regard to the processes of training, grading and promotion of its employees. Apart from realigning its human resource management functions, Samsung Electronics has developed a complex reward and compensation system for all its employees. The current system represents a shift from the traditional seniority-based approach to the present system where rewards and compensation to employees are based on their performance and the performance of the company in general. As such, this approach reflects the need to enhance the performance of a diverse workforce of the company in terms of origin, geographical location and skills. Lastly, Samsung Electronics has established a culture that enhances performance and employee loyalty. These aspects are ingrained in the workforce through in-house training programmes that are aligned to regional and cultural differences. It is this high level of loyalty among the employees of the company that has enabled Samsung Electronics to effectively manage its industrial relations issues in all the countries in which it operates. REFERENCES Aguilera, R V & Dencker, J V 2004, ‘The role of human resource management in cross-border mergers and acquisitions, International Journal of Human Resource Management, vol. 15, no. 8, pp. 1355 – 1370. 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