Lee Jae-yong Faces 'Harsh Reality' as 'New Samsung' Executive Appointments and Organizational Innovation Enter Final Countdown

Abolition of Standard Stay Period and Introduction of Peer Review System Under Scrutiny
Attention on Whether Samsung Electronics' Three-Person Team of Kim Ki-nam, Kim Hyun-suk, and Ko Dong-jin Will Be Maintained

Samsung Electronics Vice Chairman Lee Jae-yong is returning to Korea on the 24th through the Seoul Gimpo Business Aviation Center at Gimpo Airport in Gangseo-gu, Seoul. Vice Chairman Lee, who departed on the 14th, is reported to have held various discussions with key executives of major local companies during his visit to the United States, his first in five years. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Lee Hye-young] Samsung is set to begin internal reforms this week to leap forward as the 'New Samsung,' starting with a revamp of its personnel system and regular executive appointments. Given Vice Chairman Lee Jae-yong's confirmation of a 20 trillion won investment in a semiconductor plant in the United States and his mention of the "harsh reality," there are expectations that this restructuring and personnel changes will be carried out on a relatively large scale.

According to business circles on the 28th, Samsung Electronics plans to announce its personnel system reform plan soon.

Samsung Electronics had previously prepared a reform plan for the evaluation and promotion system as part of its mid- to long-term personnel system innovation process. After explaining the reform plan to its members and collecting feedback, the final plan was prepared. It is known to focus on thorough meritocracy, compensation, and the establishment of a horizontal culture.

In particular, the abolition of the 'standard tenure period' by rank is considered the most radical change. Currently, Samsung Electronics' rank system consists of four Career Levels (CL1 to CL4). Under this personnel system, promotion to the next level required fulfilling a standard tenure period of 8 to 10 years, but with the new reform plan, this criterion will be eliminated.

With the abolition of the standard tenure period by rank, bold promotions can be made if performance is recognized through 'promotion sessions' conducted by team leaders. This means executives in their 30s could emerge.

Absolute evaluation will also be expanded in employee performance assessments. Apart from the top 10% high performers (EX), the achievements of the remaining 90% will be evaluated on an absolute scale. Currently, employee performance evaluations consist of five grades: EX (Excellent), VG (Very Good), GD (Good), NI (Need Improvement), and UN (Unsatisfactory). Previously, the VG grade was limited to 25%, but now a much larger proportion of VG grades can be assigned.

Alongside this, Samsung Electronics will no longer expose ranks or employee numbers on its internal communication network. Promotion announcements at the end of the year will also be discontinued. Only the individual and their department head will know about promotion status, and others will not be able to see the rank or year of joining of their colleagues. Titles, except for executives, will be unified under the existing term 'Pro.' This is interpreted as a measure to establish a horizontal culture and improve communication methods as part of organizational reform.

Samsung is also considering introducing a 'peer evaluation system' to move away from the unilateral evaluation by superiors. This aims to diversify evaluation methods through mutual assessments among colleagues.

Along with the announcement of the personnel reform plan, personnel appointments for Samsung Electronics and other Samsung affiliates will be carried out in early next month. Considering Vice Chairman Lee’s meetings with executives from Moderna, Verizon, and Google during his U.S. trip, focusing on Samsung’s future growth businesses such as bio, 5G, and artificial intelligence (AI), it is expected that his realistic awareness and future vision will be significantly reflected in this personnel reshuffle.

In the case of Samsung Electronics, attention is focused on whether the current three-CEO system?Vice Chairman Kim Ki-nam of the Device Solutions (DS) division, President Kim Hyun-suk of the Consumer Electronics (CE) division, and President Ko Dong-jin of the IT & Mobile (IM) division?who were reappointed at the March shareholders' meeting this year, will remain unchanged or if there will be some changes.