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Business

Samsung remolds culture toward startup shape

Executives of Samsung Electronics unveiled their plan to change their corporate culture in March.

SEOUL -- Samsung Electronics is looking to match its solid global presence with a more international corporate culture, cultivating creativity with less focus on red tape in the mode of a startup.

The South Korean electronics giant will overhaul its personnel ranking system in March, replacing the existing seven-level framework with a four-level system.

Staffers currently spend four to five years in one level before being promoted. Details of the new system have not been released, but it likely will focus more on individual performance and merit rather than seniority.

The company also aims to raise efficiency by streamlining its procedures. Rather than having to go through midlevel managers, anyone will be encouraged to communicate directly to the person in charge when needed. Meetings should have a minimum number of participants -- with everyone expected to speak -- and wrap up within an hour.

Samsung intends to cultivate a culture befitting a global corporation. The company in March declared its resolve to forge a startup-like operation, breaking free of authoritarianism and creating a more horizontal organization. The event, attended by 600 managers and staffers, laid out the underlying vision for the reforms. The initiative also allows staffers to wear shorts to work in the summer and encourages them to take long vacations to refresh.

Samsung employs 330,000 people globally, and fewer than 30% are in South Korea. Foreigners also hold roughly half of the voting rights in the company. As the global leader in televisions and smartphones, the company serves diverse customers.

The "military-style" top-down corporate culture remains common in South Korea, but Samsung cannot afford to stick to such domestic customs when it has become so international. And employee creativity is needed to develop new services and products, with earnings from core operations such as semiconductors and smartphones having lost steam from peak periods.

Exchanging opinions without concern about titles is key to tapping creativity, said David Steel, Executive Vice President, Head of Global Communication Group.

The son of Samsung Electronics' hospitalized chairman is seen as having directed these culture reforms, even if from behind the scenes, as he gradually steers the smartphone giant. Vice Chairman Lee Jae-yong is expected eventually to succeed his father, Chairman Lee Kun-hee, who suffered a heart attack three years ago.

The company said the reforms were led by management executives and not members of the founding family. The younger Lee did not attend the reform pledge ceremony in March or issue a statement in his name for the occasion. This contrasted sharply to efforts in 1993 when the senior Lee directly called on employees to "change everything except for your wives and children."

But Lee Jae-yong has been performing as the de facto leader of the conglomerate, and it is unlikely that he had no involvement in the reforms. Affiliates such as Samsung Biologics and Samsung Life Insurance carried out similar personnel reorganizations earlier this year.

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