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Homegrown Management Patterns
by Tom Coyner
Korea Times
June 1, 2007
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With a multi-billion dollar turnover and tens of thousands of employees,
once exotic names such as Hyundai, Samsung and LG have become familiar
around the world. Their prosperity and success are, no doubt, the result of
the rank and file of those organizations.
A powerful drive motivates this teeming manpower in one of the world's most
densely populated areas, which has made them productive and loyal to the
industrial team. There must be something unique that unifies and motivates
the labor force of these huge organizations despite a relatively short
history of modern management.
Organizational Loyalty
Hard work and dedication to one's profession and organization is regarded as
a virtue and has become a social norm. Anyone who is not in conformity with
this value system is simply not accepted, sometimes not even by his wife.
She finds it difficult to understand the fact that her husband finishes his
work at 6 p.m. every evening, while other neighborhood husbands return home
late in the evening, apparently because of important business activities.
She wants to boast of the fact that her husband is involved in some
important business, even though it may detain him with late working hours.
Many large companies on the growing edge require a working day that begins
at 8:30 a.m. and does not end until about the same time in the evening. Some
departments of these companies find it necessary, during some special busy
season, to keep their office staff on the job until almost midnight and
occasionally check into a motel and burn the candle at both ends all night
long. These extended hours are gradually decreasing in some companies, but
somehow, the long workday verifies the sense of loyalty that the company
expects and receives from its employees. It should be noted that there is no
other force more powerful than peer pressure in formulating human behavior.
A sense of loyalty does not just happen. Traditional Confucian background,
as well as humane and paternalistic leadership, provides the foundation for
employee dedication to the company. Judging by the productivity and quality
results, it works. It's the bread and butter for the employee; the company
and, ultimately, for the nation.
This sense of loyalty and the reciprocal evidence of company concern for its
personnel even work at a Korean LG plant established at Huntsville, Ala.
Many doubted that Korean management philosophy known as ``in-wha’’
(meaning ``human harmony’’) could be applied to the American labor
situation. This two-sided coin of company loyalty and personnel concern has
resulted in a rate of absenteeism of around one percent compared to the
national average of five percent, and a profound improvement in the quality
control rejection rate on the production line, which emphasizes the concern
for excellence.
Founder's Conviction
As Korea’s industrialization history is short, the children of most founders
of major corporations are at the helm of their enterprises. Their fathers
were noted for a strong will to succeed, missionary zeal, self-sacrificing
dedication and vision for the future are common traits evident among these
pioneering, self-made entrepreneurs. Often even today, the first generation
of founders’ spirit remains fairly strong. It may not be like the past when
the founder’s spirit was contagious and permeated every nook-and-corner of
their organizations, but the next generation of corporate leaders tries to
emulate their fathers’ examples by personally communicating to their
workers. This is one reason for the driving force behind Korean
organizations even to this day.
Still, as these businesses have burst beyond the bounds of the founder's
personal supervision, and as the new generations have come up without
experiencing the hardships of the fifties and sixties, the founding spirit
of the companies has diluted. The initial zeal, the most conspicuous legacy,
was left to influence the mental and psychological backbone of the on-coming
generation, has dimmed.
Paternalism
Companies tend to function as a family: loyalty and long-term service are
expected from the employee in return for a secure position and a sense of
belonging. In Western companies, paternalism by the company toward employees
is considered objectionable by most people, particularly by upper-level
management and higher-educated professional specialists. In Korean
companies, however, it is rather expected and desired. The prospective new
employee looks beyond the basic financial remuneration to what additional
benefits, privileges and allowances are offered.
Management demonstrates this in giving personal attention to the individual
needs of employees and their families. Regular bonuses are proportioned to
be paid at special occasions; kimchi-making time, and at family
occasions like Chuseok. Special bonuses are paid at the
time of a family funeral and at school entrance-fee time. The employee would
be disappointed and feel ill-treated if these paternalistic considerations
were not provided _ even though these practices have been considerably
reduced as employment and compensations systems have become more transparent
and contractual.
A number of companies provide recreational facilities such as tennis courts,
etc. and dormitories for single employees working at factories. So,
paternalistic attitudes and activities are expected from management. In
spite of the relatively rare and violent labor disputes that are exaggerated
in the media, Korean companies have achieved overall a remarkable success in
their approach to labor management relations.
Hierarchical Organization
In a Confucian society each individual has a distinctive position in terms
of rank in the hierarchy. The business organization is no exception.
Most firms, especially those employing large numbers of blue-collar workers,
have adopted a military style system in their organization. Almost all men
are required to serve in the military. While this may be a hardship for the
individual and undesirable or disruptive for the company, the positive
legacy, which this experience has indelibly carved on the national psyche,
is the concept of establishing a clear chain of command, which is suited to
the Confucian social structure. Cultivating a sense of responsibility and
training in leadership are outer by-products of this national duty for local
managers and organizations. So, companies have adopted this basic
infrastructure essential for the administration of those large business
organizations.
In actual application, this business hierarchy system has an extensive
series of ``jang’’ or ``chiefs’’ or ``managers’’ with as many as a
dozen in some companies, though they vary. The ``jang’’ on the lowest level,
the ``gy-jang’’ may each supervise less than 10 people and usually have very
little decision-making authority.
In this hierarchical structure, the so-called seniority system also has
greater consideration than the merit system, even though it has gone through
some evolution due to the rapidly changing technology and the shorter life
cycle of products.
Carrot and Stick
While Korean companies may look humane and considerate of their employees,
the standard of performance is rather rigorously applied. The poor or
non-performers are subject to harsh disciplinary action, while the winners
are always pampered with generous prizes or various material benefits, as
well as recognition or citations usually by the top management.
Reward and punishment may be universal in managing people. They seem,
however, to be more strictly and extensively applied in Korean business
organizations. ``Shin Sang Pil Bol’’ is frequently adopted as one of
the major personnel policies by many companies emphasizing ``reward and
punishment.’’
The competitive spirit of Koreans, perhaps originating from early
educational training, as well as from their own higher aspirations, may make
them more susceptible to such stimuli as recognitions and incentives.
Tom Coyner is president of Soft Landing Korea (www.softlandingkorea.com),
a sales-focused business development firm, and co-author of Mastering
Korean Business: A Practical Guide.
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