HRM Report: Samsung's Bonus System, Employee Morale & Retention

This report analyzes Samsung's human resource management practices, focusing on the distribution of bonuses and its impact on employee motivation and retention. The report identifies issues such as inadequate pay structure, lack of a proper reward system, discrimination among divisions, and cost-cutting measures. These issues are examined through the lens of relevant HRM theories, including equity theory, Maslow's hierarchy of needs, distributive justice theory, Hertzberg's two-factor theory, and the ProMES theory. The report proposes practical solutions for Samsung, including implementing a competitive salary structure, establishing a fair reward system, ensuring equal bonus pay across divisions, and developing an effective performance appraisal system. The ultimate goal is to improve employee morale, enhance performance, and promote long-term retention within the organization. The document is available on Desklib, a platform providing study tools and solved assignments for students.

Running head: MANAGING HUMAN RESOURCES
Managing Human Resources
Name of the Student:
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Author’s Note:

1MANAGING HUMAN RESOURCES
Executive Summary
Human resource management deals with the management of human resources, which is actually
designed for maximizing the employee performance as per the strategic goals of an organization.
This study has chosen the news story of Samsung, where the employees of mobile division are
receiving maximum bonuses despite of their poor performance. From the identification of issues,
it has been found that the organization is discriminating among the employees from different
divisions in terms of providing bonuses. Such discrimination of bonuses is actually de-
motivating the employees and hindering their performance level. The study has also provided
solution to Samsung, where the organization has been suggested to provide equal bonuses to the
employees from different divisions.

2MANAGING HUMAN RESOURCES
Table of Contents
1.0 Introduction................................................................................................................................3
2.0 Description of News Story.........................................................................................................3
3.0 Identification of Problem and Theoretical Perspective.............................................................4
3.1 Inadequate Pay Structure.......................................................................................................4
3.2 Lack of Proper Reward Structure..........................................................................................4
3.3 Discrimination among Divisions...........................................................................................5
3.4 Cost Cutting Issue..................................................................................................................6
4.0 Practical Solution for Future......................................................................................................6
4.1 Competitive Salary Structure.................................................................................................6
4.2 Fair Reward Structure............................................................................................................6
4.3 Equal Bonus Pay....................................................................................................................7
4.4 Effective Performance Appraisal...........................................................................................7
5.0 Conclusion.................................................................................................................................8
References........................................................................................................................................9

3MANAGING HUMAN RESOURCES
1.0 Introduction
Human resource management (HRM) is a formal function used in an organization for
managing the employees and their performance towards achieving desired organizational success
(Albrecht et al., 2015). Human resources are considered to the most valuable organizational
assets for getting organizational success (Shahzadi et al., 2014). This study will discuss the
human resource issues in Samsung. The news story chosen in this study has revealed the reward
system issues residing within Samsung. Moreover, the study will identify the human resource
issues of the news story in respect to Samsung. The issues of the news story will also be aligned
with relevant theories of human resource management. Apart from that, the study will provide
appropriate solution to Samsung for reducing their issues of human resource management.
2.0 Description of News Story
The news story of Samsung is based on the matter of providing maximum reward to the
employees of mobile division despite of their poor performance. As per the news story, Samsung
typically does not pay so adequately and fantastically. Moreover, the organization supplements
the base salary of the employees with their annual salary. Samsung usually provides bonus of
50% of employees’ salary and it is usually paid on exceeding the internal profit of each division
(Android Authority, 2016). However, this news story has revealed that the employees of
Samsung’s mobile division are getting maximum bonus despite of the poor performance of the
division. As per the management executives, the employees are getting maximum bonus for their
sincere contribution in keeping the division running in spite of various challenges. Moreover, the
management executives of Samsung provided maximum bonus to the employees of mobile
employees for preventing mass exodus of employees (Android Authority, 2016).
The rise of cheap Chinese vendors has become an extreme challenge for the mobile
division of the Samsung. Such challenge has also reduced the profit level of the organization.
The employees of this division still got maximum bonus despite of its less earnings. In such
situation, the maximum bonus to the mobile division employees has been a bitter pill to swallow
for the employees of other divisions of Samsung. Moreover, the employees of Samsung’s
Electronic have not been treated so favorably. Furthermore, the employees of Samsung’s battery

4MANAGING HUMAN RESOURCES
division have got just 3% bonus because of their poor performance through the year 2015
(Android Authority, 2016). Such discrimination of bonus distribution can reduce the motivation
of the employees from other divisions of Samsung. Such lack of proper reward to the employees
of other division can also influence on the performance level of those employees and their
retention trends. Cost cutting is another issue for Samsung’s employees, where the organization
has earned increased profit through reducing the salary structure of the employees (Android
Authority, 2016). Such cost cutting can also lower the morale of the existing employees and lead
them to seek better job opportunities in other organizations having better job security.
3.0 Identification of Problem and Theoretical Perspective
3.1 Inadequate Pay Structure
From the news story, it has been revealed that Samsung does not pay fantastically to its
employees. The organization supplements the base salary of the employees with their annual
rewards. Such inadequate salary structure has reduced the motivation level of the employees.
According to Jackson et al. (2014), as per the equity theory of pay structure, the employees
always compare the fairness of their pay structure with those of employees in other organizations
in the same industry. However, in this case, the pay structure is not just as per the equity theory,
as the employees are getting quite less salary as compared to other organizations (Anitha, 2014).
Moreover, the statement of one official of Samsung in this news story has revealed the adequate
pay structure of the employees. In this statement, the official has declared that Samsung should
try to motivate their employees through proper compensation. On the other hand, Cerasoli et al.
(2014) opined that Maslow’s theory of motivation suggest adequate pay as the basic and
physiological needs of the employees. As per this theory, Samsung is not even fulfilling the
basics needs of the employees. Hence, the employees are highly de-motivated to perform better
and seeking to leave the organization for getting better job opportunities.
3.2 Lack of Proper Reward Structure
Samsung is more likely supplement the basic salary of the employees with their annual
bonuses. It means that the reward structure of the organization is not fair enough and not as per
the actual reward system. The organization has no intension to improve the performance level of
the employees for their poor performance (Bhuvanaiah & Raya, 2015). Moreover, it is more

5MANAGING HUMAN RESOURCES
likely to penalize the employees for their poor performance through reducing their annual
bonuses. However, the mobile division of the organization is not following this trend of bonus
distribution, where the employees in this division are getting maximum bonuses despite of poor
performance (Alagaraja & Shuck, 2015).
As per Malik et al., (2015), the distributive justice theory suggests distribution of rewards
as per the contribution level of the employees. However, in this case, apart from the employees
of mobile division, all other employees are getting less reward because of their poor
performance. They are not being provided adequate rewards despite of their sincere contribution
in keeping up the business (Van De Voorde & Beijer, 2015). Hence, such employees are getting
high de-motivated and the organization is facing challenges for retaining such employees. On the
other hand, Bradler et al. (2016) opined that Hertzberg’s Two Factor Theory suggests that
rewards act as the motivators for the employees towards better performance. However, in this
case, the employees of Samsung are not getting proper rewards for their sincere contribution,
which is actually hampering their motivation level (Nica, 2016). Hence, it would be extremely
difficult for Samsung to retain sincere employees in long run for getting sustainable business
profit.
3.3 Discrimination among Divisions
The news story of Samsung is clearly indicating that the organization is discriminating
among different divisions in terms of providing bonuses. In has been found that the employees of
mobile division are getting maximum bonuses despite of their poor performance. However, the
employees of other division are getting very less bonuses for their poor performance. Such
discrimination of bonuses is creating disruption of employee relation among the employees of
different division (Yoon et al., 2015). Such clashing employee relation can hamper the
willingness of the employees towards staying in the organization for longer period. As per the
theory of ProMES (Productivity Measurement and Enhancement System) theory of performance
appraisal system, the employees are get paid on the basis of the overall performance level of
organization as a team (Nyberg et al., 2016). However, the organization is not providing bonuses
to the employees as per the overall performance level of the organization. Such ineffective
performance appraisal system is actually hampering the performance level of the employees on
other divisions.

6MANAGING HUMAN RESOURCES
3.4 Cost Cutting Issue
As per the financial report of Q4, 2015, Samsung earned 15% increased profit from their
previous earning volume. The reason behind such increased profit level was cost cutting, where
the organization has reduced the pay structure of the employees (Boxall & Macky, 2014). Such
cost cutting system of the organization was quite frustrating for the employees, which hampered
the performance level of those employees. Moreover, De Gieter and Hofmans (2015) stated that
the cost cutting system is just ineffective against employee motivation as per procedural justice
of compensation. The organization is not fair enough in their method to determine the
contribution level of the employees apart from the employees of mobile division. Hence, the
organization can face extreme challenge in managing the performance level of the employees
and retaining them for longer period.
4.0 Practical Solution for Future
4.1 Competitive Salary Structure
As per the news story, the pay structure of Samsung is not attractive enough for
motivating the employees. Hence, the employees are more inclined to seek for better job
opportunities in other organizations, which are providing competitive pay structure. In such
situation, Samsung should immediately set competitive salary structure for the employees. Such
competitive salary structure would competently meet the physiological needs of the employees.
Moreover, the organization would be able to retain the talented employees for longer period for
long term organizational success through competitive salary package. Moreover, competitive
salary package would also encourage the employees towards high level of performance for
organizational success.
4.2 Fair Reward Structure
It has been found that Samsung does not provide adequate reward to the employees. The
employees of mobile division are getting maximum bonuses despite of their poor performance.
However, the employees of other divisions like consumer electronic and battery division are
getting very less bonuses as per their low performance level. The organization is more inclined to
penalize the employees for their poor performance through providing very less bonus. However,

7MANAGING HUMAN RESOURCES
such reduced bonuses are actually hampering the retaining rate and performance level of the
employees in Samsung. Hence, the organization should provide adequate reward to the
employees for respecting their sincere contribution just like mobile division towards keeping up
the business. It will help the organization in long run towards long term retention of the
employees and their increased performance level. It will give the hope to the organization to
keep up the business despite of several challenges in the market.
4.3 Equal Bonus Pay
From the news story, it can be seen that Samsung is discriminating among the employees
from different divisions. It has been found that the employees of mobile division are getting
maximum bonuses despite of their poor performance. However, the employees from other
divisions are getting little bonuses for their poor performance. Such situation is indicating
discrimination of rewards system among the employees. Moreover, the organization has no clear
structure for providing rewards to the employees. It is actually creating clashing employee
relation among the employees, which is de-motivating the employees through hindering their
performance level. Hence, the organization should immediately initiate equal bonus system,
where the employees of each division would get equal bonuses as per overall profit of the
organization. It would definitely reduce the clashing relation among the employees from
different divisions, which would ultimately enhance their performance level.
4.4 Effective Performance Appraisal
The new story of Samsung suggests that apart from mobile division, most of other
divisions are more likely to penalize the employees as per their poor performance level.
However, such penalize system is actually disrespecting the sincere contribution of the
employees despite of different challenges. Moreover, the organization has no intension to
improve the performance level of the employees through enhancing their skills and knowledge
level. In this way, motivation level of the employees is getting down gradually and they are
being more inclined towards leaving their current jobs. In such situation, despite of cost cutting,
the organization should arrange proper training and employee development programs for
improving their performance level. Such training and development program would definitely
encourage the employee towards working hard for organizational success. Hence, training and

8MANAGING HUMAN RESOURCES
development program would help the organization to enhance the performance level of the
employees and retain them for longer period.
5.0 Conclusion
While concluding the study, it can be said that Samsung is providing maximum bonus to
the employees of mobile division despite of their poor performance. However, the employees
from other divisions are getting less amount of bonus because of their poor performance level. In
this way, such discrimination of bonuses is creating clashing relationship among the employees
from different divisions. Such clashing employee relationship is actually hampering the
performance level of the employees. Apart from that, Samsung does not provide competent
salary to the employees. Hence, the employees are more inclined to leave their current job, which
may create challenge for the organization towards retaining the employees. Hence, the
organization should distribute annual bonuses to the employees of different divisions equally. It
would reduce the clashing relationship of the employees, which can help them in concentrating
in their work for increasing their performance level. On the other hand, the organization should
also increase the compensation package for the employees, which will encourage them to stay in
the organization for longer period.

9MANAGING HUMAN RESOURCES
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