Samsung, the South Korean tech giant, is enforcing a novel strategy to combat its financial downturn, by extending executive workweeks to six days.
In response to its worst financial performance in over ten years, Samsung has mandated a substantial change in its executives’ work routine. The corporate executives are now required to commit to a six-day workweek instead of the traditional five. This change is aimed at instilling a sense of urgency to help overcome the financial crisis the company is facing, according to The Korea Economic Daily, which first reported the story.
The decision comes after Samsung reported a significant drop in earnings in 2023. The primary factors contributing to this decline include geopolitical tensions in Russia, Ukraine, and the Middle East, affecting global economic indicators like borrowing costs and oil prices.
The semiconductor business of Samsung, which brings in about 80% of the company’s earnings, suffered a loss of nearly $11 billion last year. Moreover, the company’s operating profit plummeted by 85%, amounting to $4.7 billion, the weakest since 2009. Net profit also fell by a staggering 72% to $11.24 billion, marking the lowest since 2011, The Wall Street Journal earlier reported.
Samsung executives can choose whether to work on Saturday or Sunday for their extra workday. This adjustment is part of the company’s emergency mode in response to the falling profits. The decision does not extend to employees below the executive level.
Since the start of the year, many Samsung executives have already been working six days each week, setting a precedent for other Korean conglomerates.
Despite the financial crisis, Samsung appears to be on the path to recovery. According to recent data from the research firm IDC, Samsung has overtaken Apple as the top phone maker in the first quarter of the year.
While Samsung is implementing extended work hours, there’s a contrasting trend in the US. Senator Bernie Sanders has been advocating for a 32-hour workweek as the national standard.
Samsung is set to announce its next quarterly earnings on April 30. As the company navigates through this crisis, it remains to be seen how this new work culture will translate into its financial performance.
The bill would pare the length of the standard working week over the course of four years, while reducing the threshold for overtime compensation at time and a half to workdays that last longer than eight hours and double pay for shifts of more than 12 hours.