Employment details in Korea and overseas (Samsung) Harvard Case Solution & Analysis

Why is Samsung successful in attracting Korean Employees?

Question No.1:

            Korean applicants are now getting higher wages than Japanese; this has happened for the first time in 3,000 years. Korean hourly wage rates have been increasing sharply since last eight years. Their average wage rates are 5580 KRW/hour as compared to 3100 KRW/hour in 2006. The average growth rate in the minimum wage rate is above 7% in Korea (Korean wage rates, 2015).

            The employee’s ratio of the total number of Korean employees in the company is decreasing while it is not the case for international employees. Samsung is a Korean companyand for that reason most of its employees are native employees (Samsung Sustainability Report 2014, 2014).

            Due tothe decrease in Korean employee’s ratio is due to higher minimum wage rates in Korea is high as compared to other more skilled countries like Japan and China. The ratio has decreased from 46% (101,973/221,726) in 2011 to 33.4% (95,798/286,284) in 2013 (Samsung Sustainability Report 2014, 2014).

            The decrease is due to higher wage rates in Korea, therefore Samsung is moving towards other countries that charge lowerrates and high productivity to Samsung. Samsung uses to dislike Korean employees as the statement regarding the preference of Korean employees is false.

            Samsung is moving most of its operations to China and Southeast Asia as itsratio of employees is increasing and the number of employees as wellin Chinese and Southeast regions (Exhibit no. 1). The reasonbehind switching is the lower wage rates in the above given regions and the quality they provide is of higher standards as compared to Korean regime.

            In Korea, the labor cost is around 122.70 index points, whereas, its productivity index is just 101.4 in the second half of 2014 (South Korea minimum wages). The productivity index is very low as compared to productivity index. The output of Korean employees is not up to the extent of their salaries. This is a reason due to which Samsung is switching from Korea to China and Southeast Asia.

            The average rate of salaries in Samsung US is good for those that have an experience of 5 to 9 years; the salary structure is made in accordance with their experience years. The average rate for those employees get with less than one year experience an average salary of $21.5 per hour, employees with an experience between 1-4 years gets only $20.16 per hour, employees with experience between 5-9 years gets $23.24 per hour, and experience between 10-19 years gets per hour wage rate of $20.6 per hours (Samsung average salaries). The chartrelated to salaries is also given in exhibit  2.

            The reason behind such discrimination is the level of skills and efficiency as Samsung considers that fresh employees gives their maximum input just because to have quick growth in their job. The most paid classes are having experience between 5-9 years, the reason can be that the person has got all the skills required to work for Samsung and those are paid most. Employees with experience above 10 years are paid less than those having experience less than 10 years, the reason is that Samsung is working in the technology industry and it requires latest skills that cannot come from a person with experience above 10 years as his skills may be outdated.

            The structure may change from country to country, but the general assumption remains same as these are general assumptions of Samsung. As Samsung is operating in the telecommunication industry that requires continued innovation, therefore it focuses on applicants with the latest skills.

Employment details in Korea and overseas (Samsung)n Case Solution

Question no. 2:

            At Samsung, theemployment turnover ratio was of 2.9% in 2013 as compared to 4.9% for the year 2011 in Korea. The turnover ratio is declining and it wasaround 3% in 2013, latest sustainability report (Samsung Sustainability Report 2014, 2014). The ratio is good as most of the employees working at Samsung use to continue their career with Samsung for more than 5 years.

            The employees’ retention ratio in Samsung is good in Korea, due to the high reputation of Samsung in Korea. Samsung is paying itsemployees moreas compared to Korean competitors along with an innovative work that is taking place in the Samsung since recent years.

            The average retirement age of Korea is around 58 years, but for Samsung employees, the retirement age of 60 years. Samsung triesits best to retain employees but most of the time period possible for employees to work for it..............

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