Is It the Shadow of Strict Performance-Based Culture? Samsung's Performance Bonuses Show Clear 'Rich Get Richer, Poor Get Poorer' Pattern

Up to 50% of Annual Salary Paid to Core Organization DS Division
Semiconductor Industry Maintains Last Year's Compensation Despite Harsh Conditions
Home Appliance Division 5~7%, Up to 10 Times Difference
Many Employees Express Relative Deprivation
Amid Global Complex Crisis, Growing Interest in Whether Performance-Based Policy Will Apply in Next Year's Labor Negotiations

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chaeseok] After Samsung's major affiliates announced how much performance bonuses they will pay this year, many employees have expressed feelings of deprivation. What is clear is that the 'rich get richer, poor get poorer' phenomenon between thriving business units and struggling organizations has become more pronounced.

Samsung's key affiliates in electronics, electrical, and display sectors recently announced their Excess Profit Incentive (OPI) payout rates simultaneously. Samsung Electronics' DS (semiconductor) division and Samsung Display are paying 47-50% of annual salary, Samsung Electronics' DX (Device Experience) division MX (Mobile Experience) business unit 29-33%, Network business unit 22-26%, and Samsung Electro-Mechanics' FC-BGA (Flip Chip Ball Grid Array) semiconductor substrate package solution business unit 18-19%. Meanwhile, Samsung Electronics' DX division VD (Visual Display) business unit is at 18-22%, and the Home Appliance business unit only at 5-7%. Samsung Electro-Mechanics' MLCC (Multi-Layer Ceramic Capacitor) component business unit receives 15-16%, and the Optical Communication Solution business unit responsible for camera modules gets 12-14%.

Performance bonuses are, as the name suggests, money paid based on performance at the time. Unlike predetermined annual salaries, there can be significant differences. Industry insiders are paying close attention to the fact that Samsung, Korea's largest company, has performance bonuses that differ by up to tenfold between business units.

Last year, when Samsung achieved a record-high sales of 279 trillion won, the DS division received 50% of their annual salary as a bonus. This year, Samsung Electronics is trembling amid a semiconductor winter. Employees are being squeezed to the extent that even printer paper usage is restricted. Yet, they paid performance bonuses at the same level as last year. This is seen as recognition of the core organizations with high performance, accounting for 47.2% of the company's operating profit. There is little disagreement about the high payout rates for Samsung Display, which is relatively smoothly restructuring its business toward small- and medium-sized next-generation displays, and Samsung Electro-Mechanics' Package Solution business unit, which has smoothly landed in the new FC-BGA business.

However, there are voices suggesting the need to examine whether this performance-based system could cause side effects. Corporate analysis firm CXO Research Institute estimates that Samsung affiliates' sales account for about 16-20% of South Korea's Gross Domestic Product (GDP). Money is power. Samsung's organizational culture, merit-based rewards, personnel system, and corporate social responsibility (CSR) activities are benchmarks for all Korean companies.

Those who view Samsung's performance-based system positively say it was somewhat predictable through executive appointments that significantly promote the 30s and 40s generation. They also evaluate that differentiated performance bonuses have an excellent effect on motivating talented personnel. Given the headache caused by overseas technology leaks, it is argued that such a system is necessary from a talent management perspective.

The problem is that the entire Korean economy is struggling amid a complex crisis of the 'three highs' (exchange rates, interest rates, inflation) and a sharp decline in semiconductor demand. DS division employees will likely be satisfied receiving substantial performance bonuses despite difficulties. However, the sense of deprivation felt by employees of the Home Appliance business unit, who worked hard with pride as fellow 'Samsung men,' is believed to be beyond imagination. Many employees question whether those who received the minimum 5% and those who received the maximum 50% are really from the same company.

Attention is also focused on whether the company will apply this policy to next year's wage and collective bargaining agreements. The idea is that 'performance bonuses are a taste, and the real thing is the annual salary.' Many expect the company to convey to labor representatives that even the 9% increase planned for this year is difficult amid the emergency management system crisis. There is concern that overall wages may see only a slight increase while only high performers receive favorable treatment.

This content was produced with the assistance of AI translation services.