It’s bonus season at Samsung: Expect defection

When it comes to employee bonuses, the Samsung Group has only one metric: performance. What the group thinks about its employees came to light yesterday, when it handed out “personal incentives,” which are distributed every six months, to employees of its subsidiaries. Personal incentives are bestowed when management goals set at the beginning of the year are achieved. Depending on performance, divisions are given grades ― a division that receives an “A” gets 150 percent of its monthly wages, “B” gets 100 percent, “C” gets 50 percent and so forth. Given that the scale of personal incentives reflects what the company’s goals were at the beginning of the year, Samsung does not like to publicize the figures. Samsung Electronics, the cell phone division, reportedly received an “A” for its hit new models, as did the liquid crystal display TV division for its “Bordeaux” TV, which has a base shaped like a wine glass stem. Grades, however, can differ even within divisions; in the semiconductor division, memory chips received an “A,” while system LSI got a “C.” The LCD panel team’s grade fell from “A” late last year to “B” this year. Samsung Techwin received an “A”for better business in digital cameras and Samsung SDI stayed at “B” for plummeting plasma display panel prices. Aside from personal incentives, the company also does profit sharing, which takes place at the beginning of every year. The profits shared come from 20 percent of what the group considers its “additional” profits. Earlier this year, Samsung Electronics’ semiconductor and cell phone divisions received about 50 percent of extra profits; the subsidiaries Samsung SDI and Samsung Card, however, received none. Despite the secrecy, the data suggest that Samsung Group cares only about performance. The system, however, means that after a few years of working at a productive Samsung subsidiary, an employee can earn far more than colleages at other companies, though both start out with similar wages. For example, in 2004, the average annual income of a Samsung Electronics employee was 71.3 million won ($75,690). In 2000, before the group incorporated the incentive plan, the average income was only 36.7 million won. However, such incentives come at a price. Every year, about 5 percent of the employees who receive the lowest rankings from human relations leave the company. “In the first several years, 30 percent leave the firm. At the senior executive level, only two or three out of 100 survive,” a Samsung Electronics human relations spokesman said. by Kim Chang-woo