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Getting Labor Relations Correct
By Tom Coyner
Korea Times
June 13, 2006
Korean democracy is a new and relatively recent development. Many Koreans feel
it is natural to protest as part of their newfound freedom. Marches and rallies
are part of daily life, albeit less intense than one might think from the
news coverage. Only a small percentage of these demonstrations ever get out
of hand. The press tends to focus on what makes up perhaps a mere 1% of the
story. Only on relatively rare occasions do some Koreans act unruly and out
of control. If the reality was as represented in the media, as one resident
foreign CEO challenged, why is Korea doing so well compared to
many other countries? His answer: the fact is 99% of the real story is
about a highly educated, very hard working labor force that is fiercely
loyal and committed to company goals
Still, the prudent manager needs to pay close attention to employee
sensitivities. This applies especially to foreign businesses that lack deep
roots in Korea
and, therefore, are more susceptible to labor problems among their
potentially skeptical local employees.
To acquire a basis for dealing with some sensitive labor issues, the
international executive may benefit from a summary of potential management
responses to common situations.
Collective Bargaining Agreement (CBA)
Employers are expected to go beyond the basic monetary compensation by
providing various other benefits that also satisfy their employees
psychological needs. These provisions can satisfy employee concerns and act
as preventive measures against potential labor agitation. At the same time,
its important to put a cap on anything that is negotiated -- never leave
anything open ended such as an open value of education assistance. This may
seem like common sense, but managers have often made this mistake. The real
danger comes from the turnover of expatriate managers, some of who may be
tempted to negotiate an easy close to a CBA session and let future general
managers deal with the fallout years later.
According to the law, each company’s collective bargaining agreement
with its union must be re-negotiated every two years. There is no legal
requirement on wage negotiations, but by established nationwide practice,
they are annual events -- all of which can be very draining on company
resources.
Also by law, the union must vote for new leadership every two years. This
makes things difficult for everyone since it means starting all over.
Management has to build new trust with the union’s new leadership,
who often comes in with a mandate to be tougher than the previous team.
This forced turnover of leaders often creates factions in a company’s
union. At best, union leaders have just two years in office and then they
must return to the work floor to wait two more years until the next
elections. Though some wage agreements have passed on the first vote last
year, one can often expect them to lose in the first vote due to union
factionalism rather than the contents of the agreement.
Social Ties
One stabilizing factor in labor relations is the recognition of
personal ties among the personnel in a business organization. The strongest
of these stem from clan, school, military and regional roots. Informal as
they may seem, these links conform to a strict hierarchy based on
seniority. They can often serve as a breeding ground for corporate or
office politics, but at the same time they can provide efficient, informal
communication channels up and down the organizational, hierarchical
structure. Employers may often utilize these ties in resolving the
conflicts that inevitably arise in human organizations.
However, according to my interviews with expatriate executives, the truly
effective manager is the one who personally takes the initiative to learn
about his or her employees by walking about and asking questions on both
personal and professional levels. Korean employees genuinely appreciate
senior managers taking a sincere interest in them as human beings, and they
are often proud to demonstrate their expertise in their professional roles.
Often the difference between a foreign manager who instills strong employee
loyalty and the more remote manager who is often at odds with the Korean
staff is that the former executive regularly takes the initiative to spend
time really trying to get to know the employees and learning from them how
they are each making a contribution to the company.
When labor relations become tense, management is required to develop
greater sensitivity and skill in negotiating and in resolving the growing
causes behind labor unrest. Since one cannot improve relationships
retroactively, the smart executive prepares the communication groundwork from
the beginning.
Communication
Maintaining lines of communication with employees is of the utmost
importance for a responsible executive. This requires both formal and
informal channels of communication. If already established, the
Labor-Management Council is an effective, official channel.
But it is also necessary, particularly for an expatriate manager, to open
natural, but discreet communication channels with the local staff,
preferably at different levels and departments. A deliberate avoidance of
bureaucratic protocol will make general management more accessible to the
employees, allowing lines of communication to develop. As long as there is
a conscious effort to remove all obstacles and restrictions to the free
flow of communication between labor and management, disputes can be
prevented or defused.
However, in communication with labor, management has to preserve a
benevolent but firm and consistent position. Koreans have learned how to
respect authority. When privileged information is shared with the union
leadership, it is not unreasonable to try to get some kind of quid pro quo
agreement from the union leader. The skillful manager maintains with his or
her union counterpart a relationship of mutual respect and trust, with a
sense of give and take. It is critical that the senior-most executive
maintains his or her composure -- no matter how exasperating the situation
may be -- by demonstrating maturity and sincerity while being clear in
consistently communicating and upholding the company’s principles.
This may require the patience of Job at times, but no one said managing at
the top is easy.
(Following section ultimately not printed due to newspaper page space
limitations)
A Leading Edge
Another way to dilute the possibility of labor conflict is to provide
employment benefits that are superior to those of other companies. If an employee
is sure he has a better compensation package than is possible elsewhere, he
will have no basis for pressing demands for additional compensation. Thus,
he will be less inclined to rock the boat where he obviously has a better
deal.
For sustained growth and success, it is imperative for a company to have a
competitive compensation scheme. For many foreign businesses of relatively
small size, it is often difficult to find out what comprises competitive
compensation. Therefore, some are below par in compensation, and sometimes
they lose key workers to other companies with higher pay systems.
Some foreign managers rely on survey reports published outside the country
that may be out-of-touch, providing a warped picture because of distorted
samplings. Sometimes these surveys do not take into consideration various
informal benefits, which are included in the compensation packages.
However, things have improved in recent years. Some international human
resources consulting firms have established Korean offices and can provide
assistance, including compensation advice. Also, the larger foreign
chambers of commerce have committees focused on personnel issues and these
groups can offer invaluable help.
In the case where budgetary restraints do not allow companies to provide a
basic pay system on the upper end, unique supplementary benefit schemes can
be devised. Such benefits as stock offers can be novel and attractive to
most white-collar workers.
Next week we will resume this overview, starting with the need to have the
right industrial relations manager and ending with the top 20 labor
relations recommendations made by experienced executives in Korea.
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