Case Study: Samsung rewards Mobile division employees despite poor performances in 2015
The purpose of this study is to evaluate as well as to demonstrate the issue that is associated to the unfair distribution of bonus among the employees of Samsung Company. There is an important need to discuss this problem as it leads to cause dissatisfaction among the employees. The main issue behind it was that Samsung was not offering fair amount of bonus to the employees as it has offered 3% battery division, 10% electronic division, 20% network division, 45% software centre and lastly 50% to mobile division. As the maximum reward was offered to mobile division the other divisions have faced the biasness that led to develop a negative impact on the company. In regard to this, there are various solutions that are also provided on the basis of skills, performance and efforts of the employees in the company.
This study highlights the drawback of adopting the unfair reward system and the effect it creates on the satisfaction level of the employees. It also gives the in depth understanding regarding the lack of motivation caused because of the unfair bonus distribution among the different divisions. It is clear that there is a due importance of the reward system in an organization as it helps in motivating the employees or the entire division. The level of satisfaction also affects or creates an impact the level of performance of the employees. In earlier times it was depicted that the financial monetary rewards hold significance in motivating the employees as well as managing their performance but currently both the rewards monetary or non-monetary hold due importance in influencing the performance of the employees in a positive and effective manner (Carlon, 2016). If such practice is not adopted then it might create a negative impact among the employees along with the company. This same thing happens with the Samsung company where there was unfair reward system created dissatisfaction among the employees as unfair bonus was been distributed among different divisions. At the same time, this report will help to discover the issues and the problems with different theories. These theories will be in context to motivation and based on the issues various solutions will be provided. Thus, this report will be using the secondary methodology to attain the significant facts and to achieve the aim of the study.
The study demonstrates the problem which is faced by the employees at the Samsung Company. The problem is of the inequality been identified in the reward system among the various divisions of the Samsung company. This shows that the company was not effective in impressing its various divisions including the media research, customer electronic, network business, etc. This case study has helped to highlight the issue or the problem which is associated to the ineffective equality in the area of the reward system among the various divisions in the Samsung Company. This illustrates that Samsung was not able to impress the various division’s media research, customer electronic, network business, etc. The main reason behind it was that the highest bonus was been provided to the mobile division leaving others behind (Edmans, 2011). The bonus provided to different divisions is in this order: 10%, 20%, 21% and 45% bonus to consumer electronics, network business, research lab and software centres etc. However, Samsung had provided 50% of the bonus to the mobile division which has led to create a state of dissatisfaction and lack of motivation among the employees of the company. On the basis of this case study, the issue that is identified in the Samsung case study goes to the ineffective as well as the poor rewards system or policy. Another issue that is discovered is that Samsung used to capture 50% of the salary of the employees in a way to provide it as a bon us to the employees. But the company only provides bonus to the employees when any division attains the internal profit targets (Freyssenet, 2010). It is very clear that the role played by the different elements such as compensation, reward and recognition helps in motivating the various employees in the company to perform much better and effectively as well as it also helps to retain the employees and make them loyal towards the company. There are other factors that also help to motivate the employee which include recognition, advancement, growth, appraisal etc. Hence, this case study has shown that reward system play a significant role for retaining the employees in the company for a long time. However, the ineffective compensation policy leads to bring dissatisfaction and poor performance among the employees.
On the other hand, there are various other factors that also lead to bring dissatisfaction in the employees of the company. These include the ineffective equality in the bonus distribution to the employees of the company in which the least bonus is been offered to the battery division which is just 3% and 10% is been offered to the consumer division (Olafsdottir et al., 2014). This in return also leads to affect the performance of the employees as they get de-motivated and are not able to perform as per the expectations. Thus, there is an important need to develop and enhance the reward system so that the employees start to feel that the company cares for its employees. Thus, these are the various issues or problems which are identified in the Samsung Company.
This part of the case study will be dealing with the issue of having an ineffective compensation strategy at Samsung with the help of various theories. For analyzing or evaluating the problem one of the best things that can be used is the practice of applying theory. In regard t this situation in Samsung, the theory which is most effective for providing the solution is the equity theory which helps the company to analyze the issue as well as the problem based on the comparison with other value. As per this theory, a person is required to compare the result which he perceives with the other. Thus, the end results are dependent on the perception (Yu & Zhang, 2015). With respect to this theory, it can be identified that Samsung has failed to study the perception of the various divisions as it had fixed the amount of bonus to be distributed. It had a perception that the bonus is based on the profits that means that the division which contributes the highest division will be entitled to have the highest bonus. This practice or this perception by the company has resulted to bring negative outcomes as well as consequences for it. It is discovered that Samsung has fixed the amount of profits on the basis of the generation of profits instead of focusing its perception or giving a thought on the efforts, performance, competency, ability or experience of the employees in the various divisions. This situation gives rise to cause dissatisfaction or de-motivation among the employees as they feel that irrespective of being so talented or skilled they are not getting the right amount of recognition in the company (Jham & Van, 2015). However, this de-motivation or dissatisfaction caused to the employees is the biggest reason behind employee turnover. Employee turnover leads to bring negative consequences for the company as well as it does not contribute to the efficiency of the company or its organizational suitability. Pay structure concept in the equity theory is very essential to be3 discussed in the Samsung case. The reason for it is that Samsung is only lagging behind in analyzing the worth of the job. This results in describing that the decision in respect to the pay scale holds a key [position for improving the employee performance. thus, it is clearly described that ineffective pay strategy or poor rewards system leads to create difficulties for the company in the long term. At the same time, it is also discovered that the motivational theory is also having a due significance in analyzing the problem of the ineffective reward system or the unequal distribution of bonus. According to the Maslow’s need of hierarchy theory the needs are been framed in the structure of a pyramid (Lee & Tu, 2011). The various needs depict different features. In the case of Samsung Company, the company is able to provide its employees with the basic physiological, safety as well as the social needs, but somehow is not able to provide them with the esteem and self-actualisation needs. The reason behind this is that Samsung has provided bonus to the employees despite of the poor performance in year 2015. This activity is somehow been appreciated but at the same time the internal staff was dissatisfied with this action taken by the company. The main cause behind this is that there is an unequal distribution of the bonus among the different divisions of the company. For instance, only 3% was allotted to the battery segment and 10 and 20% in the consumer products and research centre accordingly. This directly creates an impact on the performance of the employees as they are been de-motivated (Etemadifard et al., 2013). In today’s tough competition it is mandatory or essential for the company to handle its performance management model. This model explains that the strategy of the organization should be created in a way that includes the behaviour of an individual, the aims and objectives, etc. In similar manner, this model also address that equal distribution of the authority as well as responsibility is also essential to handle the performances. Hence, these models or theories are able to analyze the unfair or unequal distribution of bonus among the various division of the Samsung Company.
The practical solutions to be provided in respect to the problem of unequal distribution of bonus to the different divisions are to be followed by the HR manager in the company. The company should develop or try to improve its poor compensation system which will in return help to decrease or reduce the dissatisfaction among the employees. Samsung needs to adopt the equity theory in a way to provide solutions for the problems (Adler, 2011). This theory states that the HR manger is required to make a comparison in the performances of the employees and then on the basis of the outcomes should decide the bonus to be given to the employees. For this the company is required to adopt the pay structure in which the job structure and the pay level is to measured for deciding how much of bonus to be distributed. On the basis of the pressure from the market, the pay scale can be decided. It involves the labor market competition as well as the product market. In this study, market survey is helpful to discover the employee actual rate in the market (Werbel & Balkin, 2010). At the same time, Samsung should decide the rewards to be pay in accordance with the performance of each employee. This practice will help the company to distribute the equal amount as well as to fairly distribute the bonus. The bonus can also be distributed to the employees fairly if the bonus system is been effectively designed which records the performance and the Excellency of the employees. At the same time, the most crucial job tasks to be performed must be recognized effectively (Hau et al., 2013). These all solutions are helpful in providing efficiency for Samsung in order to satisfy its employees and to increase their motivation level.
From the above case study, it is concluded that there is strong need to adopt a fair or effective compensation policy in the company that will help the company to retain the employees in different areas like Australia. There is a constant issue been faced b the Samsung company i.e. the ineffective distribution of the bonus among the various divisions in the Samsung. The bonus that is provided by the Samsung to the various different divisions was not equal as the highest was 50% which was given to the mobile division leaving the rest to be distributed among the rest. The company has given 3% to the battery division, 45% to the software centre, 10% to the consumer electronics and 20% to the network business. Samsung’s aimed to become leader in the mobile division segment by providing them with the highest bonus. This decision taken by the Samsung company didn’t prove out to bring success for the company as it had expected to be. On the other hand, this decision leads to bring dissatisfaction among the employees because of the unequal distribution of bonus. Thus it is concluded that, Samsung should provide bonus on the basis of the performance, skills, competency and the efforts of the employees instead of division. This practice will help the company to retain its employees and will also motivate the employees to perform more effectively and much better as well as contributing to the high productivity and efficiency in the form of profit.
Adler, R. W. (2011). Performance management and organizational strategy: How to design systems that meet the needs of confrontation strategy firms. The British Accounting Review, 43(4), 251-263.
Carlon, K. (2016). Samsung rewards Mobile division employees despite poor performance in 2015. Retrieved from: https://www.androidauthority.com/samsung-rewards-mobile-division-employees-669904/.
Edmans, A. (2011). Does the stock market fully value intangibles? Employee satisfaction and equity prices. Journal of Financial economics, 101(3), 621-640.
Etemadifard, M., Kafashpoor, A., & Zendehdel, A. (2013). The Effect of Brand Communication and Service Quality in the Creation of Brand Loyalty through Brand Trust (Case Study: Samsung’s Representatives Company in Mashhad City). International Journal of Advanced Studies in Humanities and Social Science, 1(8), 1067-1077.
Freyssenet, M. (2010). Transformation and Choices of European Automobile Industry Post-Global Financial Crisis. DAEHAN Journal of Business, 23(5), 2899-2914.
Hau, Y. S., Kim, B., Lee, H., & Kim, Y. G. (2013). The effects of individual motivations and social capital on employees’ tacit and explicit knowledge sharing intentions. International Journal of Information Management, 33(2), 356-366.
Jham, V., & Van Genderen, E. (2015). MIDCOM: a strategic initiative in the Middle East and Africa. Emerald Emerging Markets Case Studies, 5(1), 1-16.
Lee, W. S., & Tu, W. S. (2011). Combined MCDM techniques for exploring company value based on Modigliani–Miller theorem. Expert Systems with Applications, 38(7), 8037-8044.
Olafsdottir, A. E., Mayumana, I., Mashasi, I., Njau, I., Mamdani, M., Patouillard, E., … & Borghi, J. (2014). Pay for performance: an analysis of the context of implementation in a pilot project in Tanzania. BMC health services research, 14(1), 392.
Werbel, J., & Balkin, D. B. (2010). Are human resource practices linked to employee misconduct?: A rational choice perspective. Human Resource Management Review, 20(4), 317-326.
Yu, D., & Zhang, Y. (2015). China’s industrial transformation and the ‘new normal’. Third World Quarterly, 36(11), 2075-2097.