Being overfed, inefficient and wasteful is fine when profits are growing, but when sales start to fall, then it’s time to overhaul the corporate culture to improve efficiency and productivity.
Samsung Electronics, the world’s biggest smartphone and memory chip maker by sales, said Thursday it suddenly got religion after suffering a decline in its flagship smartphone business and realizing it has a stunning lack of new growth drivers.
Last year, sales fell 2.7% to 200.65 trillion won ($171.94 billion) from 206.21 trillion won a year earlier. Net profit plunged 19% to 19.06 trillion won from 23.39 trillion won.
Samsung earns more than 80% of its sales from smartphones and memory chips. As the prolonged global economic slowdown chips away at profits, the company has been under pressure to find a new growth engine. In the meantime, cutting costs seems the most prudent move.
In a statement released Thursday, the Korean electronics giant unveiled three major changes — moving away from a top-down culture, enhancing productivity and seeking a balance between work and family. The company said such “innovative” reforms will promote communication among employees, simplify reporting procedures and restore their “winning spirit.”
This has been a long time coming. Korea’s chaebols have become dinosaurs. Fat, lumbering Brontosaurs, not raptors ready to kill the competition without a second’s warning. Is this a story of too little too late? Has this overhaul come too late for Samsung?
Well, just a look at the comments by Samsung’s spokesman tells where they’ve been going wrong.
“Today, we have outlined three initial goals to re-emerge strong. In June, we are planning to announce a comprehensive roadmap to reform our corporate culture. It includes cutting the number of levels in the company’s staff hierarchy and performance-based promotion and bonuses,” the spokesman said.
“In a similar vein, unnecessary meetings and overtime work will be discouraged, while various vacation programs will be promoted to help with employees’ self-development,” he said.
All the changes will be gradually applied to all employees and executives from the second half of this year, he said.
So, let’s get this straight. They have to put up with unnecessary meetings for another three months? Why isn’t this starting today?