hankyoreh

2007. Protesters hold picket signs that means “Dissolve the republic of Samsung.”

A senior executive of Samsung Electronics Co., the flagship of Samsung Group, says the company has been suffering from a shattered image and a decline in its corporate culture after allegations of slush funds and other corporate irregularities rocked the world’s largest maker of computer memory chips. Corporate culture is one of the core components, along with products and human resources, used to gauge a company’s competitiveness. In the wake of the scandal, and following an investigation by an independent counsel to look into the allegations, Samsung, which turns 70th aniversary on March 22, is struggling with things that it has never experienced.

The corruption scandal was seen as a great shock to Samsung employees, who take a great deal of pride in working at one of South Korea’s best companies. In one orientation session for new employees, questions about the slush fund scandal arose. Some young and talented employees have quit the company.

A 39-year-old manager at Samsung Electronics said, “I don’t want to watch TV with my family members because bad news (about the company) is reported everyday.”

A 31-year-old graduate school student from Seoul National University said, “Recently, one of my friends quit Samsung. The attention on Samsung seems to mean that people are no longer looking at it as the most wanted employer.”

In a recent meeting with former Samsung executives, a former chief executive of Samsung Electronics, whose name is well known to the public, said, “We have worked extremely hard to build the Samsung of today, but the group’s corporate restructuring headquarters have spoilt it.” He called on Samsung Group Vice Chairman Lee Hak-soo and President Kim In-joo, who head the group’s corporate restructuring headquarters, to take responsibility for the scandal. Others say the responsibility should lie with Samsung Group Chairman Lee Kun-hee.

Kim Sang-jo, head of the civic group Solidarity for Economic Reform, said, “When I met a Samsung executive, I was surprised because he told me that Chairman Lee needs to take responsibility, rather than relying on the group’s strategic planning division, and citing similar scandals at Hyundai Motor and SK Group.” Samsung’s corporate restructuring headquarters, which serves as Chairman Lee’s secretarial office and is largely known to oversee management of the conglomerate, is now known as the strategic planning division.

For many years, Samsung has urged its employees to build a “clean organization” and root out corruption. Therefore, the turmoil among Samsung employees is seen as being a backlash from the anti-corruption initiative. In 1995, Samsung Chairman Lee told employees, “The thing Samsung hates the most is corruption.”

An executive of a Samsung affiliate, who recently moved head office to Seocho-dong, Seoul, said, “For new employees, the first thing they need to learn is the company’s ethical management philosophy, which bans any and all acts of corruption. Upon hearing this, most employees are shocked, while some say some corruption is unavoidable in the process of doing business”, the executive said.

Still, Samsung is awaiting the outcome of the independent counsel’s investigation. Some Samsung executives say the bigger problems may come after the probe ends. In the wake of the slush fund scandal, Samsung failed to carry out its annual management reshuffle, which usually takes place early in the year. “Hundreds of executives who were set to leave their posts unpacked their boxes as the reshuffle was put on hold,” another Samsung executive said.

A third Samsung executive, who had worked at the group’s corporate restructuring headquarters, said, “There are rumors that Samsung can’t carry out the reshuffle due to concerns that executives who are disgruntled with the reshuffle may blow the whistle on corrupt activities. Can a company grow if it doesn’t carry out a reshuffle please entire quote against check Korean text?”

If the group’s strategic planning division lobbies for the independent counsel to minimize the extent of the investigation, it could adversely affect the normal operations of the group, experts say. Some experts also advised Samsung to turn the crisis into an opportunity by making its corporate culture more competitive.

Park Oh-su, a professor of business management at Seoul National University, said, “The corporate culture of local companies should be changed to embrace transparency, autonomy, ethics, social responsibility, and management, in order to create core values, which are known as the global standard of the 21st century.”

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