Article: Leadership turbulence in Samsung

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Leadership turbulence in Samsung

Will the change in the old guards bring in opportunities for a new generation to emerge?
Leadership turbulence in Samsung

Amidst a major leadership crisis looming within the company, The Board of Directors of Samsung Electronics may be given more corporate power to manage the current turbulent times. The surprise resignation of Samsung’s chip and display head, Kwon Oh-Hyun - co-vice chairman and co-chief executive officer of Samsung Electronics Co. has deepened many concerns over the leadership vacuum prevailing in the company. Earlier this year, Samsung Group’s chief Jay Y. Lee was arrested on the charges of bribery and corruption. He was accused of giving donations worth 41 billion won (USD 36 million) to a non-profit organization owned by a friend of former South Korean President for political favors in return. In August, he had been convicted and sentenced to five years in jail. This Leadership turbulence has paved a way to speculations related to the management of the current workforce as well as how the potential successors will be able to drive this giant chaebol in the unforeseeable future.

Behind the scenes

Samsung Electronics is made up of 60 interlinked companies and considered as the jewel in the crown of the Samsung Group. It is also one of the biggest family-run business houses of South Korea and known as chaebols which refers to a South Korean form of a business conglomerate that are typically global multinationals and owns numerous international enterprises, controlled by a chairman with power over all the operations.

Kwon, 64, is seen as Samsung Group No. 2 and heads the components business chips and the display business. Kwon is one of the three co-chief executives of Samsung Electronics along with the other two co-CEO’s named BK Yoon and JK Shin. Although Samsung has not decided on Kwon’s successor as yet, it is expected to be one of the co-CEOs.

Surprisingly, the resignation came on the same day when the firm released figures for the increase in quarterly profit owing to higher memory chip prices. The figures show an increase of 179% growth in the operating profit for the quarter ended on 30th September 2017 as compared to the same quarter last year when the results were impacted due to the discontinuation of the Galaxy Note 7.

The Changes Ahead

The company has been deliberating on restructuring the company under the holding entity since the arrest of the Mr. Lee. It is also planning to abandon the control unit for centralized decision-making which also became the topic of criticism during Mr. Lee’s arrest.

Many employees located across the globe still report to the head office in South Korea on a regular basis. Due to ambiguous reporting structure in the company, they are struggling to strike the right balance.

The company employees’ feel that the scope for creativity is very limited as the decision-making is driven from the top to bottom and it takes long hours even for small approvals.

Moreover, the frequent changes in the management has led to a lot of unwanted speculation and has increased the uncertainty about company’s growth strategy and long-term sustenance plans.

Speculation on Impact of changes on existing employees

1.    Reorganization – Although the company will go for some restructuring and reorganization of roles, however, the Korean culture will still dominate the company’s overall work culture across boundaries.

2.    Culture – The new chief will most likely be a Korean. Irrespective of who comes in; the nuances of long working hours and other aspects of Korean work culture may continue to prevail.

3.    Job Security – The Company is one of the top brands in mobile phones and as an OLED supplier to Apple iPhone. It offers growth trajectory to its employees in the long run as the operational efficiencies are strongly rooted.

4.    Status Quo – The overall decision-making and approval structure is also not expected to change to a greater extent unless some decentralization of entities and authorities takes place, which looks even more difficult due to the looming crisis currently.

Nicknamed as Mr. Chip, Kwon Oh-Hyun believes that the “time has come for the company to start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry.” It will be interesting to see how employees’ react to the new CEO and what all will unfold in the future for employees at the South Korean office of Samsung in March 2018.

 

Topics: Leadership

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