Big changes ahead for Samsung Electronics

Samsung Electronics is bracing for major changes as it struggles to tackle stagnated growth. The tech giant has relocated employees to different campuses in and outside Seoul to improve efficiency, and is set to proclaim a new corporate vision today.

Around 300 administrative and human resources workers moved to Suwon Digital City, its main headquarters, and some 100 investor relations and public relations employees were relocated to Samsung’s Taepyeong-no building near Seoul City Hall over last weekend.

Some 5,000 research and development and design workers moved to the newly established Samsung R&D Campus in Umyeon-dong, Seocho District, southern Seoul, at the end of last year. But the Future Strategy Office, which serves as the group’s top decision-making body, will remain in the Seocho building.

The reshuffle is part of Vice Chairman Lee Jae-yong’s initiative to concentrate employees in Suwon, where R&D and manufacturing facilities are.

The heir-apparent at Korea’s most valuable company is being closely watched as the world’s No. 1 producer of smartphones, TVs and memory chips is on the verge of being outpaced by formidable Chinese competitors.

Lee has been playing the role of de facto chairman on behalf of his bedridden father, Samsung Group Chairman Lee Kun-hee. Management decisions by his only son will define the future of Samsung.

“Management will be centered at the place where things actually happen following the relocations,” a Samsung executive said. “We expect the closer distance between management and manufacturing will facilitate communications and workflow.”

Samsung is also poised to come up with a vision for a new corporate culture called “Start-up Samsung,” to make its hierarchy more like that of a start-up. That will revitalize communication between employees - regardless of position - and spur more creative ideas. Samsung Electronics already got rid of offices allocated to executives in its Silicon Valley office recently.

Employees will operate on the basis of their assignments rather than their positions and assessments of individual workers and salary increases will increasingly depend on performance and achievements.

The overhaul comes as what has been considered Samsung’s strength - controlled management - backfired. It has bureaucratized the tech company and stifled innovation and creativity.

Samsung Electronics’ operating profit in the first quarter could retreat below 5 trillion won ($4 billion), according to analyst estimates, the worst level since the third quarter of 2014.

Established in 1969, Samsung Electronics has kept its main headquarters in Suwon, southeast of Seoul, since 1973, and it was home to manufacturing and R&D facilities.

But administration and management staff have been forced to move several times. They relocated to the Seocho complex in November 2008, taking one of three separate buildings.

BY SEO JI-EUN[seo.jieun@joongang.co.kr]