14 DAY TRIAL // Job cuts are always bad news for a company as a whole, but more so for the people getting the pink slip, especially if every other company in the field has similar problems. Samsung is about to prove this once again.
Firing people is both a symptom of things going less than well and a cause for them getting worse due to the share price drops and reputation hit that is always suffered in the aftermath of the announcement.
Although with so many instances of corporations firing hundreds or thousands of people at once, a case can be made for this being normal by now. Whatever camp you agree with, there's no denying that job cuts rarely mean anything good, if ever.
Samsung's poor mobile profits prompt workforce reduction
South Korea-based technology group Samsung has had its ups and downs, and 2014 has definitely been more of a down than an up.
The mobile division has proven to be more than a bit problematic, with a 74% profit drop registered during the past quarter.
Sure, it was still a profit, but the decline was still massive, especially considering that sales are supposed to go up during the back-to-school season.
So far, Samsung still leads the smartphone market, so things aren't all bad. Nevertheless, they will go from bad to worse if some corners aren't cut, or so the company itself seems to feel. More precisely, it expects smartphone sales to fall for another 30% in 2015.
That's obviously a large percentage, and Samsung wants to cut workforce before it has a chance to turn out more products than it expects to sell. Not having to pay as many wages will also work in its favor.
It won't warm the hearts of the workers themselves, of course, especially since the people will be fired in December, the month of the winter holidays.
Alas, this has happened before, with Samsung making personnel changes more or less every December. This year's will just be a lot more severe than usual.
The job cuts will be focused at the executive level
Cited inside sources say that 20% of executive positions will be cut. That's 30% of all mobile division executives (including the head of the business) plus whoever else the leadership is dissatisfied with.
The tensions inside the company have been driving both higher staff and normal employees to distraction. Some major strategic initiatives have even been put on hold until it's clear who will be left to oversee them once 2015 comes around. More details next week.
