Samsung to adopt flatter hierarchy to lure young talent

Samsung Electronics Co. on Monday announced a set of drastic steps to reduce bureaucracy and hierarchical management at the world's top memory chip maker, a move aimed at attracting and retaining young top talent.

From 2022, Samsung will abandon its decades-long requirements such as a minimum period of years to serve in a certain position before being promoted, allowing talented employees to move up to an executive position at Samsung regardless of age and period of years having worked there. 

The revamped personnel system could pave the way for a thirtysomething executive or a fortysomething chief executive taking the reins of the South Korean tech giant, in the face of fierce competition to secure top talent among global tech giants and startups.

As part of an effort to reduce management layers, Samsung is merging the two titles of senior vice president and executive vice president into the vice president. It is also eliminating the division head title, which the company said would mark its first step toward a "New Samsung" under the leadership of Vice Chairman Jay Y. Lee.

"We are removing qualifications for climbing up the (corporate) ladder and reducing the number of steps to get there, too," said a Samsung Electronics official. "The fastest and hardest worker will now be able to climb to the top first."  

By adopting Silicon Valley's flexible and horizontal structure, Samsung aims to improve management efficiency and facilitate cooperation between employees. 

"Within Samsung, young talents will play a more active role in a wider range of areas," an industry source said.

The following are other key steps to be taken to shift into a flexible and horizontal organization:

* Employees have to add the Korean honorific suffix "nim" to the first name of their colleagues, or "pro," short for professional, to their family name, when referring to each other. 

* The relative evaluation system, its employees' No. 1 complaint, will be abolished and replaced with the absolute appraisal system, excluding top-performing 10% of its workforce. Additionally, peer reviews will be introduced to supplement the manager-based evaluation system.

* The annual release in March of the employee promotion list will be abolished.

* In a free agreement system, employees serving in the same position for at least five years will be able to transfer to a different position or another business department.

* Under a new talent exchange program, employees in Korea will be provided an opportunity to work in Samsung's overseas offices for a certain period of time.

* Shared offices will be created in key locations, as well as workplaces in cafeterias and libraries within its office buildings.

SILICON VALLEY STYLE

The revamp of the personnel system was announced shortly after Lee returned from his business trip to Canada and the US last week. During his visit to Samsung's US operations, Lee was quoted as saying that the company would no longer be able to tide over the current challenges posed by the industrial transformation by sticking to its management slogan of "keeping a wide distance with followers."

In the US this month, Lee met with Google CEO Sundar Pichai, Microsoft CEO Satya Nadella, Verizon CEO Hans Vestberg and Moderna Chairman Noubar Afeyan, and shared opinions on nurturing talents in the era of the fourth industrial revolution, according to Samsung.

Ahead of Samsung, other South Korean conglomerates LG, Hyundai Motor and SK have cut their management layers. LG Electronics Inc. in 2017 adopted a more streamlined hierarchy for low-level employees. Both Hyundai Motor Group and SK Group cut the hierarchy for both top management and lower-level employees from 2019.

Samsung Display Co., an organic light-emitting diode (OLED) panel maker, will also implement the new human resources management system from next year, alongside Samsung Electronics.

Write to Su-bin Lee and Hyung-suk Song at isb@hankyung.com
Yeonhee Kime edited this article.