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Understanding is Half the Battle in Doing Business in Korea
By Tom Coyner
KOREA IT TIMES
April 2006

Essays / Part II

The following article is the second in a six-part series, written by Tom Coyner, President of Soft Landing Korea Ltd.... Ed.

Even for so-called Old Korea Hands, knowing what to expect, without knowing why, can lead to needless frustrations and often delays in getting things done in business. As the old adage goes, time is money, so knowing the root causes of delays offers potential insights on how to clear log jams. While we do not have the space here to deeply explore this topic nor map out various work-arounds, we can give you a brief insight as to why Korean corporations often act illogically from a foreign business professional's perspective.

Promotion or Termination

When first dealing with corporate bureaucracies, certain aspects may seem almost quaint to the foreign visitor. However, in time the foreigner may conclude there are some illogical aspects that greatly affect the overall organization behavior - and often creating what seems to the unfamiliar Westerner as counterproductive behaviors.

A paternalistic, family-type corporate environment works fairly well so long as there is a constant demand for young, bright, malleable and lesser paid employees. However, as employees mature and assume greater responsibilities, there is the expected reduction in available jobs. Even taking into consideration of employee voluntary turn over as individuals seek their fortunes elsewhere, general management routinely faces the oversupply of middle-aged managers.

The solution seems to be a page out of the military. Most middle managers are ultimately involuntarily retired before they hit age 55. Some corporations have an unwritten rule that a certain percentage, say 10%, of all executives contracts are not renewed each January so as to allow a few of the best senior managers a chance to be promoted to the next, higher level.

At the same time, many middle managers in their 50s at the beginning of the New Year find themselves with termination notices. Since most corporate managers hope to work until age 65, termination coming in the early- to mid-50s comes as a traumatic event that is feared as many turn age forty.

Fear and Loathing in Departmental Politics

Given the overriding fear of early retirement, individual reputations become of paramount concern of department managers and their bosses.

Interdepartmental cooperation is minimized since to ask for advice and assistance from outside of ones work group or department is in effect to publicly admit that there is some lack of expertise or knowledge to the rest of the company. This situation is exasperated by the routine shuffling at least once a year so that the firm is well staffed with many generalists and relatively few specialists at the middle and senior levels of management.

Therefore, middle managers and often even executives will go to great lengths not to ask for direct assistance from personnel outside of their departments unless such a request is routinely expected without fear of loss of face or damage to one's reputation. And even in that case, what may be considered routine requests by Western standards to someone outside of one's department may be viewed in Korea as an admission of incompetence.

As a result, if information or assistance is ultimately required from outside of the department, the request almost never travels horizontally, say to a peer in another department. Rather, the request must travel upwards to a senior manager or executive whose span of management control extends over to the other department. From on high, the request then descends to that other department. If the request is acted upon at all, the reply traces its reverse course and almost never directly over to the original party. Needless to say, this approach is hardly time efficient and often it is one of the main reasons why foreigners are confused as to why simple requests take surprisingly long period of time to be acted upon.

Another consequence of this dilemma is that often projects are done on time without critical input from other departments such as finance, human resources, information systems, etc. Again, the fear of loss of individual manager reputation preempts what other countries may consider rational action. At the same time, anything, such a business transaction, that may touch a department demands visible action proving or validating that manager's worthiness to the corporation.

Consequently, extraneous requests for information or demands for modification are routine. To allow a matter pass through a department with minimal comment or action may be interpreted as to the irrelevance of the department and/or the incompetence of the manager.

All of these matters may at times seem a bit irrational in the short run, but each senior manager and executive routinely frets how he or she may be viewed - and what may transpire behind close doors each December as the top executives decide who is promoted, who stays and who is terminated.

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So should you be a foreign business professional and are wondering why things are taking as long as they do or facing delays for additional information or discovering your negotiated price is still not finalized, consider the plight of the one or more managers and executives whose career is on the line come each January. You may wish to rethink your strategies and take this sometimes overriding consideration of your Korean counterpart into account.