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Nerves Jangle as Annual Review Looms at Crisis Hit Samsung

Nerves Jangle as Annual Review Looms at Crisis Hit Samsung
At the South Korean firm's annual performance review, executives wait to see if their work over the year is rewarded with promotion and hence the next few weeks are traditionally a tense time at Samsung Electronics Co.
As the year-end ritual comes on the heels of the debacle over Samsung's flagship Galaxy Note 7 smartphone, this year therefore the tension has been ramped up several notches. After phones overheated and caught fire, the world's top smartphone maker this month pulled the plug on the near-$900 device. Samsung has forecast a $5.4 billion hit to its operating profits with some replacement phones suffering the same problem. The smartphone business may post a first quarterly loss for July-September, some analysts predict.
"Everyone's afraid to be heard even breathing. There will be punitive measures; someone will have to take responsibility for this," one Samsung employee was quoted in the media.
Despite being a common practice in South Korea around December, Samsung's annual personnel decisions is a secret more closely guarded than even details of its new products. it is only at the last minute that executives are told about any changes.
With a cull both in the executive suite and on the ground level, Samsung insiders say there is more nervousness this year than normal, and talk internally of sweeping changes.
"There's a lot of talk there could be major turnover in the executive ranks on the hardware side. There's also a lot of concern among the working-level employees about a major restructuring," an insider at the mobile division was quoted as saying.
Any management changes or restructuring in response to the Note 7 crisis was not being considered by the company, Samsung had told Reuters.
Insiders said that the company's inability to find the cause of the fires in replacement Note 7s that began shipping last month with what Samsung said were safe batteries has heightened the sense of frustration among Samsung staff this time around.
"We are working around the clock to analyze the causes of the reported cases," Samsung said in a statement to Reuters, adding it is premature to speculate on what went wrong.
The "big wound" the scrapping of the Note 7 would be for executives and employees was written in an internal Oct. 11 email apologizing to staff by mobile chief Koh Dong-jin - who has been in the job for less than a year. Samsung confirmed Koh wrote to staff, but did not comment on what he said.
Rumors about which executives might be ousted were already circulating internally, some Samsung workers were quoted as saying. Top executives including Koh may be held responsible at the year-end review, some investors and analysts have said.
Insiders said that discussing with employees how to deal with the Note 7 crisis were being carried out by Koh and other Samsung executives on internal messaging boards.
Among the more than 325,000 employees at Samsung, about 70 percent work outside South Korea. While Samsung said it has no plans to cut jobs this year in Vietnam, a major smartphone manufacturing base, it is not clear how overseas jobs or those at subsidiaries might be affected by the Note 7 storm.

Christopher J. Mitchell

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