Report on Samsung's Reward System: Issues, Solutions, and Theories

This report provides an in-depth analysis of the reward management practices within Samsung, focusing on the disparities in bonus distribution across different divisions. The report highlights the unfairness perceived by employees in divisions outside of the Mobile and Semiconductor divisions, ...Read More

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

1MANAGING HUMAN RESOURCES
Executive Summary
The following report is based on the unfair reward distribution practice of Samsung. The report
is conducted on the basis of the information provided in the case study. The purpose of the
report is to identify the potential issues of reward management of Samsung, develop suitable
solution, and justify them with appropriate theories and model. The employees of some
operational division of Samsung received poor reward benefits compared to firm’s Mobile
Division. Despite the accomplishment of operational goals, the employees received poor
benefits, which indicate unfairness in the system and motivation among the employees.
Moreover, such practice affects the coordination among the team. The issues have been analyzed
with some relevant academic journals conducted on employee motivation, performance
management and fairness on reward system. Similarly, equity theory discussed in the report
talks about how equality lacks in Samsung’s employee reward system. Eventually, suitable
recommendation such as, fair reward system, feedback system, employee learning and
development program have been provided.

2MANAGING HUMAN RESOURCES
Table of Content
1. Introduction..................................................................................................................................3
1.1 Background to the report.......................................................................................................3
1.2 Scope of the report.................................................................................................................3
1.3 Aim........................................................................................................................................4
2. Issues with current practices........................................................................................................4
2.1 Fairness..................................................................................................................................4
2.2 Bonuses..................................................................................................................................6
2.3 Other issues............................................................................................................................7
3.0 Suitable recommendation to resolve the issues-........................................................................8
3.1 Fair reward system-...............................................................................................................8
3.2 Feedback system-...................................................................................................................9
3.3 Learning and development..................................................................................................10
4. Conclusion.................................................................................................................................10
Reference list:................................................................................................................................11

3MANAGING HUMAN RESOURCES
1. Introduction
1.1 Background to the report
The following report is based on the unfair reward policies observed in the human
resource practice of Samsung. Reward management system consists of firm’s policies, processes
as well as practices for rewarding the workers based on their contribution and abilities. As put
forward by Došenović Dragana (2016) reward management is mainly concerned with the
development and implementation of strategies as well as policies that are determined to reward
properly, fairly, equitably as well as consistently with the value of the organization. Major
objective of the reward management is to support the strategy of the organization, recruit and
retain the key employees of the firm and motivate employees. However, the case study provided
on Samsung, indicates that organization did not proper and fair policies in its reward
management system as there is of disparity with respect to amount of bonus.
1.2 Scope of the report
The report has been conducted on Samsung considering the scenario provided in the case
study about the inequality in the reward system. Samsung is certainly a large electronic giant
providing electronic goods such as Samsung Mobile, Television, refrigerator, Air Conditioner,
etc. The vision of the firm is, “Vision 2020, Inspire the world and Create the Future”.
Samsung’s vision is at the cored of its commitment to develop a better world, which would be
full of richer digital experience through enhanced technology and products.

4MANAGING HUMAN RESOURCES
Figure 1: Samsung
(Source: Samsung au, 2018)
1.3 Aim
Primary aim of the report is to identify the issues existing in the reward management system of
Samsung and develop suitable reward management strategies.
2. Issues with current practices
2.1 Fairness
Even though Samsung acquires a large share of global electronic market, fairness in the
internal structure of the firm requires more attention. Each division of Samsung including
Samsung Mobile and battery division is established setting individual targets and goals, which
the divisions are supposed to achieve or meet. However, the given case study indicates that
employees of Mobile Division of Samsung are provided with 50% bonus of the gross salary,
while the battery division received bonus at 3%, consumer electronic division received the bonus
of 10% and some other divisions received poor percentage of bonus. This scenario appears to be
a significant internal organizational issue. Any additional benefits such as bonus fall under the

5MANAGING HUMAN RESOURCES
category of employee rewards, which should be equal to all major production divisions of the
firm.
Prioritizing any particular department in terms of rewards create the issue of fairness,
which should be avoided. Moreover, such issue could be the source of other significant related
issues such as lack of employee motivation, lack of organizational coordination (Parvin & Kabir,
2011).When particular department is prioritized in terms of benefits, and the employees of other
division might feel their efforts will remain unrecognized (Todorova, Mills & Welschen, 2012).
They might not take additional initiative for the betterment of the organization, as they are highly
unmotivated. Similarly, the managers could observe a lack of coordination among the divisions.
For example, the employees of Battery division might not interact with the employees Mobile
Division, which certainly implies poor organizational integration.
Equity theory exemplifies the inequalities affect employee motivation. This means the
employees who observe that they are receiving inequitable treatment would be motivated by
emotion to obtain equity (DeNisi, Murphy & Chen, 2017). As per the case study given, besides
Samsun Mobile and profitable semi-conductor division, other major division do not receive
equal bonus. This unfairness could decrease inputs, which they might put less effort to do less
work and push for the output from Samsung. In addition, they could become resistant to
organizational strategies or objectives. Such outcome could harm an organization’s bottom line
and when firm’s turnover comes in place, the loss remains two-fold. When the workers believe
that the workplace is unfair towards them, they tend to distrust firm’s leadership. Likewise, when
the employer avoids this distrust, workers’ morale as well as motivation could suffer. In this
context, Le Roy, Bastounis and Minibas-Poussard (2012) commented that as the most leaders are
operating in good faith based, the treatment just requires better communication. Thereby, the

6MANAGING HUMAN RESOURCES
leaders should manage the unrealistic expectation with more open as well as active
communication. The case study indicates that there is a state of inequality in the reward system
of Samsung, where the employees of some divisions did not receive adequate bonus despite the
achievement of divisional goals.
Employee retention is directly related to fairness in the reward system as employees
who are happy and satisfied with jobs show more dedication towards their work and they put
more effort to enhance organizational productivity. However, here employees’ satisfaction is
again dependent on how their employers are rewarding employees’ effort. When the
organizations positively meet the needs of the employees and pay the rewards for their effort in a
fair manner- such as providing them a stipulated amount of monetary reward equally
throughput the divisions of the organization (Parvin & Kabir, 2011). However, in the case of
Samsung, it is worth mentioning that the employer did not develop a fair reward system because
prioritizing Mobile Division in terms of bonuses would have been effective, had other divisions
provided with significant benefits such as extended career development and growth
opportunities, if not monetary rewards, along with existing percentage of bonus paid.
2.2 Bonuses
As put forward by Došenović Dragana (2016) neither total pay nor hike in salary has any
significant impact on employee’s concern regarding fairness. Apart from these two elements,
employee’s satisfaction also depends on other monetary benefit such as bonus. When it comes to
bonus, employee’s major concern is internal equity, in which employees’ perceived fairness
emerging from fair treatment compared to their fellow workers. On the other side, the concern
about external equity comes from the fact of fair treatment compared with the employees of
other firms in the sector. Nonetheless, Samsun did not maintain the equity in its bonus policies

7MANAGING HUMAN RESOURCES
because compare to other divisions, Mobile and semi-conductor divisions are provided with
extended amount of bonuses.
2.3 Other issues
Apart from the above-mentioned issues, some significant related issues such as employee
retention practices can be affected if one of the elements such as bonus is not implemented fairly.
As discussed above, long-term success of the organization depend upon the retention of key
employees and to some extent, satisfaction of customers, increased sales and organizational
productivity depends on organization’s ability to retain the key employees in the organization.
Now, the satisfaction of such key employees is further dependent on fulfillment of the basic
needs such as fair amount of bonus and other monetary and non-monetary benefits. Thus, given
unfair policies of bonus at Samsung could affect the retention strategies of the organization. An
employee could dismiss the contact of employment or leave the job, when his/her good work or
effort is not rewarded with bonus. Unfair reward could encourage employee to opt out better
opportunity in other organization. Likewise, in the e-commerce industry, due to lack of benefits
and poor attention to human resource development, employee turnover is rapidly growing. For
example, Amazon.com observed an unexpected employee turnover of 21% from in the last year
from 17% in the previous year (Danescu-Niculescu-Mizil et al., 2009). Similarly, Samsung
could face same fate if fairness is not maintained in its human resource management policies-
reward system.

8MANAGING HUMAN RESOURCES
3.0 Suitable recommendation to resolve the issues-
3.1 Fair reward system-
Perceived fairness in employee rewards remains as the root or source of why employees
leave organizations. As put forward by Younos Vakil Alroaia, and Zahra Najafi (2012), the idea
of fairness could determine if a worker makes an additional effort to achieve organizational
goals. For this particular reason, it is significant for the firms to ensure that their employee
reward system is based on the ground of fairness. Employees’ perception of fairness as well as
equitable treatment remains as the fundamental driver of retention, engagement and
performance. Here, Karasz, Bogan and Bosslet (2014) also mentioned that unfair treatment
could be corrosive. Therefore, following steps can be followed to develop fair employee reward
system. Thus, to resolve the issue, the following strategies have been provided.
As put forward by Došenović Dragana (2016), every organization needs a strategic
reward system for employee that must include the four elements such as compensation,
recognition, benefit and appreciation. This system must recognize and reward two different sort
of employee activity such as behavior and performance. Here, performance is an easiest process
to address, as the direct link between initial goals Samsung sets for its employees and the
outcome. For instance, Samsun could implement an incentive plan or recognize its top
productive employee for achieving periodic goals. However, rewarding a particular behavior
making difference to the organization could be more difficult but it could overcome the
challenge by setting some questions. The questions for example, “What am I compensating my
employees for?”, “What is the significant difference that I want to reward for?”. In other way, for
example, Samsung could compensate an employee for developing new ideas and innovative
ways for completing the task more efficiently.

9MANAGING HUMAN RESOURCES
3.2 Feedback system-
In order to maintain fairness in the performance management system, Samsung could
implement employee feedback system. The organizations need a more enhancing idea of
determining how happy and dedicated the employees are. The system should enable the
employees to understand the health of their organizational culture. To resolve employee
individual issues related to performance and reward, Samsung needs a system for eliciting
feedback and tracking satisfaction. This means if an employee perform well and achieves the
target within the given deadline, he/she should be appreciated for the performance (Roseman et
al., 2011). This feedback system also increases the frequency of interaction between the
employees and the leaders. With such feedback system, the leaders can address the issue,
implement change and enhance firm’s employee involvement. In addition to this, Boerner and
Catherine (2011) mentioned that on the completion of each project, if the employees are praised
for the accomplishment, and they feel motivated and observe the fairness in the system.
Moreover, if an employee is praised throughout the year for the performance, at the time of
review, the leader cannot deny bonus. For example, to identify the issues, as the activity of
proposed system feedback system, the following steps have been provided.
The manager creates an “Employee Assistance Request System” (EARS) form. A particular
action should be assigned to the system. The action leader should contract the manager on a daily
basis. Together, they would fill out the issue form. The team leader and the manager should
regularly give the updates to the coordinator, who has the responsibility of updating the EARS
log. Likewise, when the issue is resolved, the coordinator must put it a holding file and wait for
the follow-up. At the time of follow-up, the coordinator cross check to ensure the problem is

10MANAGING HUMAN RESOURCES
resolved and the coordinator signs off the form. However, if the form is not resolved, EARS
form should be sent back to the system for resolving it further. After a particular period of time
when EARS form is closed, the coordinator should convey the issues to the top executives about
how things have been resolved.
3.3 Learning and development
Even though, there is a state of inequality in the bonus system affecting employee
motivation, the firm could resolve the issue by providing intangible benefits. The organization
could provide proper training and skills develop program for the employees, which must include
the element of communication and technological skills. The training program should be provided
on a monthly basis. Such program would enhance employee’s skills, which eventually increase
their market value. Here, providing learning and development program is not the only task that
Samsung would do for its employees. The firm also needs to provide flexible learning option,
where the firm should ask their employees to engage in more learning and development activities
(Hollenbeck & Jamieson, 2015). However, the employees must be overburdened with work and
they do not have time. Hence, HR department of Samsung should respond by implementing an
“on-demand and mobile solution” that makes learning opportunities smoothly accessible for the
employees. In such process, employees can regularly go through new items such as the corporate
and technological skills whenever they check the screen of their mobile. The information comes
with a notification. Eventually, skills learning test should be taken in every 3 months to ensure
employees enhance their skills through the programs.

11MANAGING HUMAN RESOURCES
4. Conclusion
In conclusion, it can be mentioned that even though Samsung developed the reward
system to motivate their employees by providing them with annual bonus, but the organization
did not pay adequate attention to all its divisions. As the consequence, some divisions have
received high amount of rewards, while the employees of some divisions have to walk away with
limited amount of benefits, which is not theoretically and morally fair. The issues related to
fairness in the reward system have intensively discussed above in the report. Considering the
findings, suitable suggestions have been provided that could help Samsung to motivate its
employees and increase their dedication towards the organization.

12MANAGING HUMAN RESOURCES
Reference list:
Boerner & Catherine M. (2011). Employee compliance program surveys can be helpful on many
fronts: Getting employee feedback is an effective way to find and fix problems.(Electronic
Resources)(Survey). Journal of Health Care Compliance, 13(2), 29-30.
DeNisi, A., Murphy, K., & Chen, Gilad. (2017). Performance Appraisal and Performance
Management: 100 Years of Progress? Journal of Applied Psychology, 102(3), 421-433.
Danescu-Niculescu-Mizil, C., Kossinets, G., Kleinberg, J., & Lee, L. (2009, April). How
opinions are received by online communities: a case study on amazon. com helpfulness
votes. In Proceedings of the 18th international conference on World wide web (pp. 141-
150). ACM.
Djurdjevic, E., Rosen, Christopher C., Delery, John, & Gupta, Nina. (2013). The Effects of Social
Contextual Factors on Rater Motivation and Performance Ratings, ProQuest
Dissertations and Theses.
Došenović Dragana. (2016). Employee Reward Systems in Organizations. Economics
(Bijeljina), 4(1), 107-118.
Estes, B., & Polnick, B. (2012). Examining motivation theory in higher education: An
expectancy theory analysis of tenured faculty productivity. International Journal of
Management, Business, and Administration, 15(1), 1-7..

13MANAGING HUMAN RESOURCES
Fikret Ateş, Cenk Sözen, & Okan Yeloğlu. (2014). A Comperative Study on Perceptions and
Reactions of Workers: A Resear ch on Blue and White Collar Workers. İşletme
Araştırmaları Dergisi, 6(2), 106-124.
Hollenbeck, J., & Jamieson, B. (2015). Human capital, social capital, and social network
analysis: Implications for strategic human resource management. 29(3), 370-385
Karasz, H., Bogan, S., & Bosslet, L. (2014). Communicating with the Workforce during
Emergencies: Developing an Employee Text Messaging Program in a Local Public
Health Setting. Public Health Reports, 129(6_suppl4), 61-66.
Le Roy, J., Bastounis, M., & Minibas-Poussard, J. (2012). INTERACTIONAL JUSTICE AND
COUNTERPRODUCTIVE WORK BEHAVIORS: THE MEDIATING ROLE OF
NEGATIVE EMOTIONS. Social Behavior and Personality, 40(8), 1341-1355.
Ojha, Acharya, & Cooper. (2018). Transformational leadership and supply chain ambidexterity:
Mediating role of supply chain organizational learning and moderating role of
uncertainty. International Journal of Production Economics,197, 215-231.
Parvin, M. M., & Kabir, M. N. (2011). Factors affecting employee job satisfaction of
pharmaceutical sector. Australian journal of business and management research, 1(9),
113.
Roseman, M.G., Roseman, M., Patrick, J., & Valliant, M. (2011). Utilizing Employee Feedback
in the Development of a Corporate Wellness Initiative Results in a Customized
Program. Journal of the American Dietetic Association, 111(9), A86.

14MANAGING HUMAN RESOURCES
San Ong, T., & Teh, B. H. (2012). Reward system and performance within Malaysian
manufacturing companies. World Applied Sciences Journal, 19(7), 1009-1017.
Samsung au. (2018). Samsung Australia. Retrieved 6 February 2018, from
http://www.samsung.com/au/
Todorova, N., Mills, A., & Welschen, J. (2012). An Investigation of the Impact of Intrinsic
Motivation on Organizational Knowledge Sharing. International Journal of Knowledge
Management (IJKM), 8(2), 23-42
Wei, Y., Frankwick, G., & Nguyen, B. (2012). Should Firms Consider Employee Input in
Reward System Design? The Effect of Participation on Market Orientation and New
Product Performance. Journal of Product Innovation Management, 29(4), 546-558.
Younos Vakil Alroaia, & Zahra Najafi. (2012). Performance measurement of employee using an
integrated 360° feedback system and AHP method: A case study of
municipality. Management Science Letters, 2(5), 1655-1660.

15MANAGING HUMAN RESOURCES