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MAINTAINING THE “SINGLE SAMSUNG” SPIRIT: NEW CHALLENGES
IN A CHANGING ENVIRONMENT
Shaista E. Khilji, Chang Hwan Oh and Nisha N. Manikoth wrote this case solely to provide material for class discussion. The authors
do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain
names and other identifying information to protect confidentiality.
Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written
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of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca.
Copyright © 2011, Richard Ivey School of Business Foundation
Version: 2011-07-08
In 2009, the world economy was hit hard by the financial crisis that unfolded in the United States. A
number of industries, including the financial, automotive and real-estate industries, were engulfed in this
meltdown. The electronics industry was not an exception. Sony, the leading global electronics company,
announced that it was likely to post net losses of ¥228 billion1 for the fiscal year 2008 and, in preparation,
laid off 16,000 of its employees.2 However, Samsung astounded everyone with its impressive financial
performance. Although Samsung predicted a 100 billion3 deficit in the first quarter of 2009, it emerged
with a 40 billion surplus for that period.4 A critical factor that contributed to Samsung’s superior
performance was its strong investment in its employees. The fact that South Korea, the home base of
Samsung, made deliberate national efforts to develop its human resources provided for a rich environment
in which Samsung’s intense focus on effective human resource development (HRD) practices didn’t strike
anyone as extraordinary.
Despite its impressive financial success, management at Samsung was faced with a challenging situation in
socializing its new groups of employees. This was the result of Samsung’s active recruitment of diverse
employees, including more experienced and foreign (non-Korean) employees, in addition to the fresh
college graduates whom Samsung had traditionally relied upon. At the same time, Samsung had also
become aware of the stark differences in values between the older employees, who were obedient and
easily followed rules, and the younger “digital native” employees, who were more individualistic and
preferred egalitarian and open policies. Management was concerned that the “Single Samsung” spirit,
which formed the core of Samsung culture, was being threatened from within.
1
¥ = Japanese yen.
Moonhwa-ilbo, “Cars in danger: TOYOTA,” www.munhwa.com/news/view.html?no=2009042701071624025003, accessed
April 3, 2010.
3
= South Korean won.
4
“Samsung Annual Report 2008,”
http://www.samsung.com/us/aboutsamsung/corporateprofile/download/SamsungProfile2008.pdf, accessed April 10, 2011.
2
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A HISTORY OF SOUTH KOREA
In the early 20th century, South Korea was ruined by the 40-year Japanese occupation and in 1954, after
the Korean War, it was considered the second-poorest country in the world.5 South Korea set itself on a
path of economic recovery and development in the 1960s, during General Chung Hee Park’s rule. After
General Park’s assassination in 1979, a brief period of political and economic instability followed.
However, in 1987 free elections started the democratization process, which along with the heavy
industrialization of the 1960s and 1970s provided a solid foundation for rapid growth of the South Korean
economy. In particular, the information technology boom of the 1990s was taken full advantage of. In
1998, South Korea announced its arrival on the global stage by successfully hosting the Seoul Olympic
Games. In 2011, it was recognized as one of the most technologically advanced and digitally connected
countries in the world.6
Faced with a scarcity of natural resources, South Korea had intentionally tapped its national human
resources. A National Human Resources Development (NHRD)7 policy was pursued in order to accelerate
its economic development, and strengthen its national competitiveness. The stellar performance of South
Korean students in international standardized tests8 was just one example of the commitment and
dedication of South Korean society to educating its youth and maximizing their potential through early and
continuous development. For example, South Korea was ranked first in problem solving and in reading,
fourth in mathematics, and 19th in science in 2009.9 In addition, it was ranked as the 12th-highest country
on the Human Development Index10 and 22nd in terms of its global competitiveness according to 2010
rankings.11 Despite its few natural resources, South Korea was also ranked the world’s 15th-largest
economy in 2010,12 which it attributed to a long-term investment in its people.
SOUTH KOREAN CULTURE
South Korea was one of the oldest continuous civilizations in the world.13 Although its long and rich
cultural heritage had been influenced by many other cultures, including Chinese, Japanese and most
recently American, and religions, including Christianity, the earliest and the most lasting influence was that
of Confucianism. Confucianism played a critical role in upholding social order and justifying South
Korean royal authority. Family values, emphasized in the Confucian philosophy, combined with high
regard for intellectuals, were the driving force behind South Koreans’ commitment to education and
learning. South Korean culture was hierarchical, and had a high power distance. All relationships were
considered unequal and the junior/younger members were expected to yield to the senior members. The
status differences were built right into the Korean language, which had different levels of formality
depending upon age. This caused Koreans to be very age-conscious, since even a difference of one year in
age would require a different level of formality when speaking. However, recent studies indicated that
5
Ibid.
“The Global Information Technology Report 2007-2008,” World Economic Forum,
https://members.weforum.org/pdf/gitr/2008/Summary.pdf, accessed January 31, 2011.
7
G.N. McLean, K.R. Bartlett, and E. Cho, “Human Resource Development as National Policy: Republic of Korea and New
Zealand,” Pacific-Asian Education, 15, 2003, pp. 41-59.
8
“PISA 2009 Results,” OECD, www.oecd.org/dataoecd/54/12/46643496.pdf, accessed January 31, 2011.
9
“Highlights from PISA 2009,” National Center for Education Statistics, http://nces.ed.gov/pubs2008/2008016.pdf, accessed
November 24, 2010.
10
“Human Development Report 2010,” UNDP, http://hdr.undp.org/en, accessed November 22, 2010.
11
“The Global Competitiveness Report 2010-2011,” The World Economic Forum,
www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2010-11.pdf, accessed November, 22, 2010.
12
“World Economic Outlook Database October 2010,” International Monetary Fund,
www.imf.org/external/pubs/ft/weo/2010/02/weodata/index.aspx, accessed November 22, 2010.
13
L.R. Kohls, Learning to Think Korean: A Guide to Living and Working in Korea, Intercultural Press, Boston, 2001.
6
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South Koreans appeared to be ready to cast off their traditional ways and embrace a more egalitarian
society.14
South Korean culture was also collectivist. It encouraged the collective distribution of resources, and
emphasized pride, loyalty, and cohesiveness among members of the family and organization. This was
consistent with Confucian traditions and values that emphasized harmonious, family-like values. In
addition, South Korea was a high context culture, and stressed principles such as diligence, pride, selfsacrifice and delayed gratification. South Koreans tended to avoid open conflicts, often masked their strong
feelings and kept communication with other members concise.
SOUTH KOREA AND SAMSUNG — HAND IN HAND
The basic ingredients of South Korea’s recovery and economic growth (in the past five decades) were its
values of “hard work” and “speed.” The average weekly working hours for South Koreans was 45
(compared to 36 hours in the United States and 35 hours in Canada) in 2010. This was the longest among
all OECD countries.15 In addition, South Koreans lived by “ppally-ppally,” i.e., “hurry up first and
foremost;” they worked fast, talked fast, moved fast, thought fast and even made decisions fast. Given that
South Korea had only a few natural resources, and given its geographical proximity to three Asian giants
(Japan, China, and Russia) who were not always friendly towards it, South Koreans were forced to work
hard and with speed in order to achieve a national competitive advantage. The third ingredient of South
Korea’s impressive economic success was often considered to be Samsung. Indeed, Samsung had been a
major catalyst for South Korea’s remarkable economic growth.16 It held 15.7 per cent of the total market
capitalization and contributed 20 per cent of the total South Korean exports in 2007. Samsung’s sales
contributed 18 per cent of the national GDP in 2006. It was generally believed that if South Korea had
another Samsung, it would be the world’s fifth-largest economy.17
Samsung had gradually grown to become one of the world’s leading global companies. In 2007, Samsung’s
revenues were US$162 billion and had a total of 263,000 employees in 68 countries around the world (see
Exhibits 1 and 2). Samsung’s brand value was estimated to be US$18 billion dollars and overall it was
ranked 21st among the world’s leading companies.18 Samsung Electronics had risen to the position of the
world’s biggest technology company by sales, pushing ahead of HP with reported sales of 136,290
billion (US$117.8 billion) for the 2009 calendar year, and was expected to retain its top spot with 2010
sales forecast at US$127 billion.19
14
R.J. House, P.J. Hanges, M. Javidan, P.W. Dorfman, and A. Gupta, Culture, Leadership, and Organization: The GLOBE
Study of 62 Countries, Sage, Thousand Oaks, California, 2004.
15
“OECD Factbook 2010,” OECD, www.oecd.org/site/0.3407,en_21571361_34374092_1_1_1_1_1.00.html, accessed Jan
17, 2011.
16
S. Kim and D.R. Briscoe, “Globalization and a new human resource policy in Korea,” Employee Relations, 19:4, 1997, pp.
298-308.
17
“Samsung Annual Report 2006,”
www.samsung.com/us/aboutsamsung/corporateprofile/download/SamsungProfile07_Full.pdfl, accessed April 11, 2010.
18
“The Best Global Brands 2009,” Interbrand, www.interbrand.com/de/best-global-brands/best-global-brands-2008/bestglobal-brands-2009.aspx, accessed April 2, 2009.
19
“Samsung beats HP to pole position,” Financial Times, January 28, 2010, www.ft.com/cms/s/2/c48d477a-0c3b-11df-8b8100144feabdc0,dwp_uuid=0e8db19e-d52b-11df-ad3a-00144feabdc0.html#axzz160Z3AXme, accessed November 22, 2010.
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THE SAMSUNG PHILOSOPHY
Samsung lived and breathed the nation’s philosophy of an intense development of human resources.
Samsung’s strong foundation lay in its values. Byung-Chull Lee founded the company on three values:
“economic contribution to the nation,” “top priority to the people,” and “pursuit of rationality.” These
values were then used to develop the Samsung culture and develop various organizational systems.
Economic contribution to the nation ensured Samsung’s businesses served and contributed to the national
economy and the global community. Byung-Chull Lee was driven by a passion to make a meaningful
contribution to Korean society. He was convinced that Samsung’s entry into the semiconductor sector and
shift to a more high-tech-oriented structure, although risky, would afford that opportunity.20 Top priority to
the people became the cornerstone of creating an environment where humanity was respected and
individuals were allowed to exercise their full potential for both individual and societal development. The
founding chairman’s belief that “a company is its people” inspired Samsung to value its people and
fostered a strong commitment to attracting, retaining, and training talent.
Samsung endeavored to recruit the best talent, whatever the cost. Byung-Chull Lee believed that hiring
competent people was the key to the development of Samsung as a company. Once employees were hired,
Samsung aimed to provide them with the best working conditions and used monetary and non-monetary
incentives to retain them. In a country that was ranked 138th in terms of the most difficult relations
between employers and workers,21 Samsung offered a refreshing perspective towards labor relations. The
pursuit of rationality indicated conscious efforts to develop mindsets for rational decision makers with the
purpose of ensuring sustainable growth for the company. Samsung’s commitment to observing ethical
principles, eliminating inefficiencies and cleaning up irregularities was the outcome of its long-standing
heritage of rationality.
When Byung-Chull Lee died in 1987, he left behind a company with a solid reputation and a strong
corporate cultural heritage. The new chairman, Gun-Hee Lee, revitalized the Samsung Philosophy in an
effort to redefine Samsung’s ideological foundation and realize its vision of being a first-class global
company. In 1995, he emphasized the importance of human resource development and organizational
culture:
The 21st century will be a knowledge-based society where intelligent creativity rules. In
this society, quality and contents of education will matter so much. Since it would be the
era of education and culture, decent education and unique culture will be the crucial
weapon for one to become the true winner of the world. In the 21st century, one genius
would be able to feed tens of thousands of people.
Subsequently, Gun-Hell Lee strove to make Samsung a genius company with a creative culture, and
maintained an intense focus on educating and developing its people. The Samsung Philosophy read, “We
will devote our human resources and technology to create superior products and services, thereby
contributing to a better global society.” Gun-Hee Lee articulated the Samsung Spirit as the need “to
actively participate with our customers, to recognize and confront the global challenge and to create a
better future for all.” The Samsung Philosophy and Samsung Spirit were instrumental in establishing
corporate values and developing employee behaviors that facilitated building a first-class company in the
21st century with the time-honored corporate heritage of Samsung.
20
Y. Choi, Dynamic techno-management capability: The case of Samsung semiconductor sector in Korea, Avebury,
Aldershot, England, 1996.
21
“The Global Competitiveness Report 2010-2011,” The World Economic Forum,
www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2010-11.pdf, accessed November, 22, 2010.
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THE SAMSUNG CULTURE
Samsung’s corporate philosophy perpetuated a culture where employees felt pride in what they were doing
and a sense of accomplishment in contributing to the well being of society. They exhibited a complete
devotion to work, and Samsung’s growth gave them the confidence to challenge foreign technologies with
enthusiasm and energy.
Samsung developed a culture that remained open to ideas, technology, and innovation from the outside. Its
policies encouraged knowledge sharing and transfer through aggressive recruiting and networking.22 Its
management found creative ways of technology transfer through carrying out R&D activities right in the
heart of the country of the original technology. This helped overcome inferior in-house technology bases
and reduced technology gaps in a relatively short time frame.
Another strong feature of its culture was Samsung’s ability to foster cooperation among various functional
organizations. This was most apparent in its strategic decision to couple technology and management by
enforcing positive interactions between technology and management. Top management involved technical
managers in decision making. Technically savvy employees were given responsibilities in management and
thus provided key inputs to corporate strategic decisions. The result was a fast, dynamic, flexible, and
performance-oriented culture, created as a benchmark with companies like Toyota, GE, and Nokia.
SAMSUNG VALUES
Since its foundation, Samsung had stayed faithful to its mission of contributing to the South Korean
economy and the global community by challenging and exploring the impossible. However, in 1993
Samsung decided to establish a centralized initiative that could unite all of its employees globally to
collectively address upcoming crises in the face of ever-intensifying market competition and rapidly
changing business environments around the world. A “Single Samsung” initiative was rolled out. It was
aimed at unifying its 26 businesses, which ranged from insurance, credit cards, and securities to household
electronics and appliances, and focused upon improving efficiency across business lines through creativity,
change, and the adaptability of employees.
Samsung’s values consisted of five factors (see Exhibit 3): “People, Excellence, Change, Integrity, and Coprosperity.” “People” meant that Samsung valued its people and strove to provide them with opportunities
to perform to their fullest potential. Byung-Chull Lee’s famous statement from 1980, “What sets a
company apart from others is its people who are committed to work for the company,” was used to instill
the philosophy that “a company is its people.”
“Excellence” indicated that Samsung should give its best efforts with endless passion and a spirit of
overcoming challenges to become the world’s best company in every possible way. “Change” represented
Samsung’s commitment to taking the initiative to execute change and innovation with risk awareness:
Samsung believed it could only survive if it constantly strove to innovate. “Integrity” signified that
Samsung acted in an ethical way, and ensured fairness with honor and grace. “Co-prosperity” meant that
Samsung was a good corporate citizen who took responsibility for the prosperity of its community and
nation and the larger global society.
22
“PISA 2006: Science Competencies for Tomorrow’s World,” OECD, www.oecd.org/dataoecd/30/17/39703267.pdf,
accessed November 24, 2010.
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Samsung’s values provided a centripetal force for its people and emphasized that they played a critical role
in elevating the company to global prominence. Reinforcing the unity of “Single Samsung” helped
promote Samsung’s success around the world, and offered insights in efficiently managing daily activities
and making management decisions. Samsung’s focus on people in its philosophy, spirit and values was,
therefore, considered to be the most basic ingredient of its success.
SAMSUNG’S HUMAN RESOURCE DEVELOPMENT PHILOSOPHY
A strong commitment to Samsung’s values was achieved through Samsung’s human resource development
(HRD) philosophy, which focused upon respecting people and living by the belief that “a company is its
people.” Byung-Chull Lee had modeled the HRD philosophy on his deep involvement with his employees.
He was said to have spent 80 per cent of his personal time developing talent at Samsung. He often sat
down with several groups of middle managers to share his ideas and/or seek their input. He was a regular
visitor to the production plant and the R&D laboratories. Whenever the business was at a critical stage of
growth, his visits became even more frequent. He handed out gifts to encourage employees and express his
appreciation for their extraordinary efforts. Subsequent Samsung leaders followed his example and stayed
involved and openly appreciative of the company’s employees. Samsung’s management philosophy and
traditions became the key driving force in ensuring its continuous growth and making it one of the world’s
best companies.
Samsung was a pioneer among the chaebols in the development of formal HRM systems. It was the first
chaebol to depart from a tradition of recruiting employees through referrals and connections, and started
using a competitive recruiting system in the 1960s. Among chaebols, it had the highest ratio of non-familymember executives.23 This was the result of Byung-Chull’s practice of “People First,” whereby Samsung
exercised zero tolerance for nepotism and cronyism. Similarly, Samsung was the only chaebol that
rewarded its people on the basis of their performance and abilities.
ROLE OF THE SAMSUNG HUMAN RESOURCE DEVELOPMENT CENTER (SHRDC)
Samsung continued with its tradition of developing people in earnest. The Samsung Human Resources
Development Center (SHRDC) was formally established by HoAm-Kwan in 1982 to implement the
“Samsung with high potentials” vision, and foster its commitment to employee development. As the
birthplace of cultivating Samsung’s employees, SHRDC played an important role in maintaining and
developing a cohesive Samsung culture through its people.
When Samsung entered the semiconductor business in the 1980s, its management realized that South
Korea had no expertise in the field. Management began targeting Korean-American engineers working in
the United States, and recruited them by compensating them handsomely. Samsung supplemented high
compensation with emotional and material support for its employees in helping them adjust to a different
lifestyle in South Korea. These employees were also given full autonomy in developing new products. The
end result was a dedicated group of project leaders with high levels of technical abilities and managerial
insights, who subsequently led many complex and large-scale projects for the company.
Another example of Samsung’s commitment to development can be seen in its strategy of recruiting highcaliber operators who were ranked among the top at leading high schools in South Korea. Samsung’s
23
S. Kim and D.R. Briscoe, “Globalization and a new human resource policy in Korea,” Employee Relations, 19:4, 1997, pp.
298-308.
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culture and HR practices helped develop a committed group of operators who were very proud of the work
they did. They worked diligently at Samsung to help it succeed in a competitive market. Exposure
Challenging assignments and autonomy honed their skills so well that within a few years, these operators
were training newly hired graduate engineers.
As Samsung’s global ambitions strengthened in the late 1990s, it realized the need to build competitiveness
in its management and HRM practices for greater success in the global marketplace. In order to address
this challenge, Samsung adopted a new management paradigm to foster an environment of creativity and
innovation. A new HR policy (Shin In Sa) that revamped a number of critical HR functions, including
promotion, compensation and performance appraisal, was introduced in 1995. Its purpose was to create the
maximum possible value for the employees and the company through a strategic alignment. The most
important aspect of Shin In Sa was the implementation of a new individual incentives and reward system
that was based on individual performance. It replaced the old group-based reward system.
SHRDC nurtured human resources through three programs: Samsung Shared Value Program (SVP),
Samsung Business Leader Program (SLP), and Samsung Global Expert Program (SGP). SVP was targeted
at ensuring that the entire company followed one direction by sharing Samsung’s values; SLP helped
develop leaders of the next generation in order to guarantee Samsung’s position as a global leader; and
SGP focused upon developing global competencies amongst its employees in order to make Samsung a
truly global company. By operating SVP, SLP, and SGP, Samsung aimed to attain global competitiveness
and become the most admired company in the world (see Exhibit 4). It neared this goal in 2003, when it
was ranked fifth among the world’s most admired companies by Fortune magazine.
NEW EMPLOYEE ORIENTATION (NEO)
