Korea

1
Korea Adaptive pressure

• Week 6

2
The management background

• Management practice cannot be separated from
  business entity type (Chaebols)
• Extremely close link between Chaebols
  government largely dictate strategy
• Therefore management of Chaebols
• Highly centralised
• Non-adaptive
• Emphasis on cultural expectations
• Pressure to conform (management?) via corporate
  symbolism

3
Management under stress

• Key event financial crisis of 1997
• Effects
• Deconstruction/rationalisation of Chaebols
• More power to employees
• Greater competition at home
• Pressure to decentralise management
• State withdrawal
• Increasing governance backed by legislation
• Largely cosmetic
• Not great deal of evidence of radical change
  within Chaebols
• Is Korean management static
• Because of business state development? Or
• Is management capable of making changes?

4
HRM abroad

• HRM approaches can be divided broadly into three
  categories
• Mechanistic control approach
• Which is
• essentially a simple transplant of the home
  country HRM practices
• Which means
• characterized by its focus on the external means
  of control (often punishment) to stimulate
  desirable behaviour from the local workers

5
HRM abroad

• Paternalistic human relations approach
• Which is
• cultural problems are handled by forming
  extensive close personal relationships between
  expatriate management and the local labour force
  and transplanting the formal HRM systems from
  home without substantial modifications
• Which means
• Emphasis on positive rewards and promotion to
  those who carry favour with management
• Developmental human resource approach
• Which is
• integrates home country customs with culturally
  appropriate HRM systems
• Which means
• typically includes a sophisticated reward system
  providing a range of culturally and contextually
  appropriate benefits which satisfy developmental
  needs of local personnel

6
Korean HRM in Mexican Maquilas

• Paik Sohn (1998) found
• Japanese US firms used mostly Developmental HR
  method
• Korean firms used
• Mechanistic control and
• Paternalistic human relations

7
South of the border

• The study suggests
• Korean management use control to get high levels
  of efficiency and affect
• Corporate goal-congruent behaviour
• There is little attempt to
• motivate/develop employees
• adapt HRM practices to cultural context
• Some attempt made to form relationships with
  employees to avoid labour conflicts
• But mechanistic inflexible HRM generates
  conflict
• Note correlates to Taylor, et al Korean
  companies in China

8
Basis for HRM culture traits

• Culturally ethnically homogeneous
• High work ethic (eui-yok)
• Preservation of group harmony
• Seniority-based systems
• Top-down decision making
• Cheong (loyalty/respect) the corporate employee

9
HRM recruitment determinants

• Song Meek (1998) quote 6 personnel managers
• Each describes what they look for in an applicant
• Each stresses
• Character
• Harmonious relationships
• Collectivism
• All above education

10
At interview

• In interview
• Recruits are often asked about their fathers'
  occupation and their own family background
• Applicants from broken homes are often passed
  over because they are considered to be more
  likely to cause problems and disrupt
  organizational harmony and unity
• In group interviews
• The evaluation committee also observes carefully
  how well each applicant listens to the opinions
  of the other candidates and adapts to other
  viewpoints
• Candidates who hold to their own opinions
  stubbornly and make few compromises receive a
  negative evaluation

11
Organizational Culture of Korean and Mexican
Companies Congruence and Conflict

• Dimensions Korea Mexico
• Work ethic Strong Weak
• Group harmony Strong Strong
• Seniority-based
• compensation Strong Weak
• Top-down decision
• making (authority) Strong Strong
• Paternalism Strong Strong

12
Characteristics/paradoxes in Korean management
13
Was the crisis the catalyst?

• Mensik et al stress the culturally based nature
  of Korean management
• Raise doubts about ability to respond to external
  change
• Rowley Bae (2001 2004) identify key changes
  in HRM practice

14
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15
Convergence v- Contingency

• Is this convergence or contingency?
• In period to 1997 Korean firms losing
  profitability
• 1997 did not just happen!
• Korean firms already making adaptations as result
  of
• Drive to profit (short-term)
• Cost cutting
• Influx of foreign workers
• Experience overseas

16
Convergence v- Contingency

• Post 1997
• Firms downsize
• RD budgets reduce
• Labour empowerment
• Need to re-attract Foreign Investment (crisis of
  confidence)
• Need to demonstrate western/international
  management
• Resolution of culture/business needs conflict
• Suggests that management is changing
• But as result of contingency not convergence

17
Transformation of leadership style

• Shin Zhou (2003) considered the link between
  transformational leadership employees
  creativity in 46 Korean companies
• Intrinsic (task)/Extrinsic (leadership)
  motivation
• Increased transformation leadership encourages
  employees to
• Challenge the status quo
• Boost follower creativity

18
New leadership?

• Study suggests statistically significant link in
  Korean firms between
• Transformational leadership employees
  creativity
• Prerequisite for adaptive management in Korean
  context
• Contrary to traditional management focus
• Suggests development needs in modern Korean firm