International Human Resource Management: Samsung - Case Study Example

IHRM – International Human Resource Management Case in Point: Samsung Cover Page Table of Contents IHRM – International Human Resource Management Case in Point: Samsung 1 Cover Page 1 Table of Contents 2 Introduction 3 Background of the organisation 4 Organisational: 7 Analysis of IHRM 9 Findings and conclusions 12 References 13 Introduction In the wake of globalisation, companies operating internationally need to function more effectively to be a cut above the rest and gain competitive advantage. Human resource management is an important contributor to provide them with this advantage and optimise their operations (Dowling et al. 1993). Creation of skills, innovation, and knowledge is HRM-dependent; this is being cited as one reason why internationally operating companies lay special emphasis on international human resource management or IHRM (Brewster 1991). An effective IHRM provides a company a critical factor to succeed in a globalised and international context. However, what sets IHRM apart from general human resource management is that while it is developed from the company headquarters, which is localised and influenced by one demography and culture; it has to be widely applicable and adjustable locally in a territory in which the company is operating. Internationally operating companies work in different territories which are influenced by different cultures. That puts the onus of developing HR guidelines and practices which meet the twin purpose of global integration and local responsiveness. Harzing et al. (2004) has remarked that this is best met when internationally operating companies ask their subsidiaries to develop HR systems locally for strategic reasons. This tends to make these systems both context specific and context generalised so that they are made adaptable to any work environments. Björkman (2006) has stated that human resource policies refer to training and development policy, pay and performance policy, employee communication and involvement policy and even policy towards trade unions. IHRM can be defined as “The set of distinct activities, functions and processes that are directed at attracting, developing and maintaining an MNC’s human resources. It is the aggregate of the various HRM systems used to manage people in the MNCs, both at home and overseas” (Beechler et al. 1996:960). Furthermore when IHRM is used in conjunction with strategic focus and a firm's performance the gamut shifts entirely to SIHRM or strategic international human resource management, which talks about human resource management functions, policies, issues and practices that come to limelight on account of strategic activities in which multinational enterprises are involved and their international goals and concerns. Background of the organisation Samsung lays special attention on men and women who work in its different offices throughout the world. This special emphasis on its workforce is not a new concept that the company upholds but one that has been coined by its founder, Lee Byung-chul way back in 1938. Samsung's three fundamental principles are said to be the reason why the company places so much of value in its employees and does so good. The company’s three principles came into existence in 1973 that read: ``engaging in business for national service,'' ``man and talent first'' and ``pursuit of logic and reality.''. It follows from this principle that Samsung should: help each employee to develop his potential and make the best use of his abilities; pay and promote on merit; and maintain two-way communication between manager and employee, with an opportunity for a fair hearing and equitable settlement of disagreements." Historically, it has been seen that Samsung managers have paid as much attention to their teams as they have paid to their products or anything else. The same sentiment was throughout his tenure echoed by Lee. He had remarked that however big the company became, he wanted that right people should be put in right places, their right professional acumen highlighted and explored and the company must be known as one that has utmost respect for the individual. This is seen as the core value of the company and over the years it has created a number of policies, innovative practices and programs that reflect what its founder had envisaged. Some of the well-known programs that it has implemented include the "Samsung Medical Center". There also have been other initiatives like comprehensive employee opinion surveys, Samsung Sports Sponsorships, and internal communications and informational media, apart from Olympics and Winter Olympics sponsorships in Seoul. These human resource initiatives run across all of Samsung’s domains and in all locations worldwide since it is actively seeking candidates that can live up to these standards among a diversified group of workers. The company serves many markets and the workforce includes minorities, women, and people with disabilities. Samsung has a novel way of recruiting from these constituencies as its recruiters attend as many diversity-focused career fairs and conferences each year as possible. Since 1990 it started a global reach programs in a big way backed by a marketing campaign based on a compelling Samsung-centric dialogue designed to reach the professional talent and brightest campus recruits. The dialogue is based on Samsung's rewards, people and its world presence. A number of provocative methods are used by the company so that recruiters are able to assess the caliber of its future employees. From being a trading company in 1938, it has gone viral by 2013 when it build world's largest mobile phone factory in Vietnam's Thai Nguyen province. Its history from 1938 to this year has been very interesting and exerts a great influence over South Korea's economic development. As on date the conglomerate has Samsung Electronics, Samsung Heavy Industries and many more companies under its belt and is giving stiff competition to its nearest rivals, including Apple. Another human resource initiative by Samsung is concern for the well-being of its employees and the company is into some joint programs with other organizations so that its employees can reap benefit of such programs. This is considered as Samsung's illustrious initiative since it puts on pedestal young but disabled people and prepares them for community and corporate leadership by initiating them into business and industry. This program is further complemented by its other program which promotes increased representation of women at the company. The company thinks that its employees are its greatest assets. It is no wonder because of programs and initiatives as these the company has been acknowledged by various agencies for the contribution it is making to the society. Since Samsung is by and large a technical-based company, around 80 percent of its workforce comes from technical backgrounds. Each year it hires a couple of thousand interns and co-op students. Though that is not to say that it leaves other streams of finance, business or administrative graduates unattended. It caters to people holding masters degrees in finance, business and human resources too. It was on account of its human resource management initiative that it just like many other global giants it has been able to create a dependent network on work/ life balance for its employees. Since then the program has become a hit among its employees and in times of distress they know they can bank on their company. The company donates substantial amounts of money to its medical initiatives to be used in communities where its employees work or live. The fund was mainly meant to create and encourage work/life programs that included science/technology camps for school-age children, new child care centers and associations with other organisations having similar interests to foster better living conditions for its employees, their families and their communities. It’s Solve for Tomorrow awards millions of dollars to US grade 6-12 children with awards and sponsorships program invested million in the recent years to either develop or expand existing elder care or child care programs and facilities. The human resource goal behind all these programs is to help its workforce mange their professional and personal lives comfortably. Internationally Samsung is known for its individual-centric initiatives and the company has gone a step beyond the conventional in defining work paradigms. Its famous telecommuting programs are a hit among its employees since the company offers them an option to work from wherever they are. It could be the customer's location, at home, or on the road. That is the best a company can get on its human resource initiatives given the extent of flexibility the program offers. Under this program employees can decide on their time of arrival and the number of work hours they are willing to put in in a day after proper approval from the management. Similar approvals can be sought for its leave-of-absence programs which can be sought up to three years for several reasons including parenting and dependent care. If that does not suit an employee, the company even provides part time employment to its people willing to take up the same on account of their other pressing engagements. Commitment to women is another feather in the cap of Samsung's international human resource management. It has the credit of employees Ki Sung-hwa, as its first woman president in 2008. As part of its global initiative Samsung has started employee work/life surveys in several of its locations. These surveys led into the constitution of several policies and practices that the company is implementing from time to time. By the end of 2012 Samsung employed nearly 221,726 people and it has operations in more than 88 countries. The global statistics of women Samsung workers is around 31,864 by the end of 2011. The company is known for abiding by labour and human rights rules within the host and other countries and upholds the best possible work ethics wherever it operates (Samsung.com, 2013). Organisational: 1. Mission Samsung's mission statement is short and simple. It strives to lead in development, invention and manufacture of most advanced technologies in its segment, which include electronics items, TVs and smartphones alike. The statement says the company uses technology such that the value can be transferred to its customers through professional services, solutions and consulting businesses through its several offices worldwide. 2. Vision Samsung's vision statement reveals it is a company of three values which are driven by its 200,000 plus employees. In keeping up with its three values, its vision concludes client-specific dedication, use of innovation in a manner that benefits both the company and the world, and personal responsibility and trust in all its dealings and relationships. 3. Values Samsung assesses its value system periodically in grueling and reexamination systems. Its values are pretty simple that envision researching and developing superior products so that they can be used for the benefit of the global community in the following ways: Long-lasting and strong client relationships. This meant Samsung goes "far and beyond" on what is expected by its clients. Its range of electronics items is a testimony to this fact. Focused professionals. Even though they sell services, products and solutions to their clients; clients, in turn, measure value being served to them. Personally dedicated to each client. This means Samsung exhibits similar behaviour to all, whatever their size, strength, corporate standing or individuality. Ready to work anywhere: this means they think if clients succeed, they do by applying the ubiquitous Samsung expertise. 4. Goals Samsung's 2020 goal is to "Inspire the World, Create the Future." Samsung wants to help its clients more value for money to be competitive and efficient and thus succeed through the use of Samsung's information technology solutions, innovative products and technological insight. 5. Strategies Samsung's business strategy is impeccable. It helps understand and define market drivers, risks, value propositions, technology strategies, M&A activity, globalisation and creation of new business model through innovative use of technology. These offerings drive real value by leveraging core competencies by formulating implementable, leading-edge strategies that yield profitability and result in sustainable growth. Samsung's marketing strategies assists organisations in the areas of strategy-based growth and business model innovation; develop further and reap benefits from a range of product line that it has on the offer. The company works on sustainability strategy by clarifying economic logic being actions that are sustainable and by setting up strategies pertaining to carbon, energy, corporate social responsibility and water, and smarter business solutions to companies desirous of excelling and gaining a market edge. Apart from this Samsung's strategy is to provide state-of-the-art technologically-driven consumer items. Analysis of IHRM Issues When businesses are international, their human resources management too attains an international connotation; which is different from what it would locally. In international context, businesses run on diversity of people and places. So accordingly practices and policies have o be in tune with i) the company's culture, mission, values and goals, and ii) in tune with the local interests of people and places in which these companies operate globally. Many issues are bound to arise in IHRM if the difference between domestic and international HRM are not understood in the right earnest. IHMR means more HR activities. It necessities a broader perspective. It means extra involvement in employees personal lives. It means changes in the emphasis points as international businesses are managed by local and expatriates alike and in combination. There is a risk of exposure too and a number of external influences are at work when businesses run globally. Issues are bound to arise if different variables that differentiate between international and domestic HRM are not taken into proper consideration. These variables are i) cultural environment, ii) the type of industry in which the business operates, iii) how much a company is dependent on its domestic market or home-country, iv) what are the attitudes of senior management, and v) the nature of complexity involved in operating in different countries while employing diverse groups of people (Kase, nd). One important issue that IHRM faces is the management of expatriates. Their management needs strategic approach throughout the expatriate cycle, which starts at the planning stage. Of the companies fail to link foreign assignments strategically with the operational requirements, then there are a number of problems that arise (Brewster and Harris, 1999). As mentioned above internalisation of business also means internationalisation of HRM, and while internationalisation promises more reach and profits, it also brings with it many challenges to organsiations in terms of organisational structure, management, and workforce and cultures utilisation. Globalisation is the buzzword of any business today willing to touch foreign shores in quest for new markets, slowing of domestic trade, increasing profit margins and resource management. The trend is palpable and prominent. But from a HRM point of view there is one issue that needs to be contemplated; that is the very dynamics of HRM changes as it starts operating in an international context. The internationalisation has an impact on all functions of HRM. The issues are faced from several areas like recruitment, selection processes, compensation, regulatory and legal environments. IHRM has to deal with a 'global workforce' than a 'domestic workforce' and that is fraught with a number of pros and cons with regard to standardisation of pay and perk packages, IHRM practices, policies, and approaches (Andries et al, nd). Harzing & Ruysseveld (1995) have stated that there is not much difference between HRM and IHRM and if there is any it is with how things are done than how much is done. IHRM means more functions, for example, international relocation, international taxation, host government relations and administrative services for expatriates. IHRM also means more heterogeneous function, for example, functions become more complex and diverse since there are different groups of workers working in a single workplace. These include host-country nationals, parent-country nationals and third-country nationals. IHRM also faces issue of dealing with employees personal lives. An added component of selection, management and training of, for example, expatriates, includes the management of their personal lives too. Personal lives components seep into international HRM in a more pronounced manner than what it is if employees are working in their own countries. Points of emphasis also shift when human resource management is to deal with people hailing from different cultures. That also means more external influences at play in the international context. According to Dowling and Welch (1991) the environment in which IHRM operates is more complex and thus involves greater diversity in population and activities. They state that in order for HRM to operate in international context, it is important for it to understand various international variables. Schuler et al. (2002) has emphasised the criticality of IRHM for companies' successes and failures. If IHRM is effective it can divide extinction from survival. Furthermore IHRM issues can also be debated in terms of intraunit and interunit challenges and needs. It is important for companies to balance competing pressures for integration and differentiation. They must also have a thorough knowledge on and be sensitive to the demands of the environment which have a unique nature. They have further stated that international compensation policies are another key issue multinational companies face. Schuler et al (2002) add that the problem merits sensitive address because employee compensation can be as important as an appraisal so that companies can attain their international strategic objectives and foster interunit linkages between employees. As a result of this these companies are faced with a number of situations where it becomes difficult for them to either attract or retain skilled professionals for overseas appointments, facilitate country-to-country transfers, maintain a healthy relationship with employees throughout their tenure and fix reasonable compensation on the basis of either locations or competitor analysis on salary comparatives. International compensation field offers many issues to these companies and one of them is inequality in bonuses and pay, promotions, job recognitions and assignment responsibilities (D'Netto and Sohal, 1999). IHRM at Samsung Samsung is known for its SMART culture, which is an acronym for Speed, Morality, Assurance, responsibility, and Truth. Samsung is a people-centric company and puts its employees at the core of its successes. Internationally, it has been able to provide such environment and opportunities for its teams that they feel being happy at their workplaces. One of its arm, Samsung SDI has created its corporate culture around the slogan of "So Good Company", which fuels employee mindsets with positivity and innovation. Besides this Samsung runs variety of programs from time to time that facilitate positive communications among its employees and encourage work/ life balance. The company offers secure platforms and opportunities to showcase their capabilities without prejudice and discrimination (Samsungsdi.com, 2013). Samsung's IHRM has evolved drastically as the compnay makies foray after foray into territories that were uncharted before and in the recent years it has implemented newer human resource standards on wage structure, promotion system, position class, and training programs (Sohn, 2002). It is measures as these that have catupulted Samsung as a unique business house on Korean corporate scene. Its contribution to Korea’s economic acceleration is considered to be significant during the last four decades (Chang, 2006; Jeong 2000; Kim, 2006; Kim, 2006). Samsung, being a chaebol firm, recruits best manager for its international positions, irrespective of their his place of irigin. The most effective HRM strategy used by Samsung is 'attraction and retention' strategy for its top talent or core employees. For contingent workers the compnay employs short-term, contract-based teams. In other words the strategy used in this case is that of outsourcing and transactional nature (Rowley and Bae 2004). Findings and conclusions Looking at the topic of international human resource management, it can be said that only a thin line divides domestic HRM from international HRM. It is apparent from the findings mentioned above that it does not matter what is done, but what matters is how are human resource management practices executed in international context. 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Toward an integrative model of strategic international human resource management. The Academy of Management Review, 21(4), pp. 959-985. Read More