In this episode I’d like to share “Ten Insights into Korean business.” This is something I often incorporate into one on one coaching and mentoring sessions. It was also developed in collaboration with a senior Korea manager specifically to explain to his team’s Westerners on the company—the Westerners lacking first hand knowledge in the mother company and seeing the Company only in their local operations. In particular, there was a gap between how things were executed in Korea and had evolved locally– to a model less efficient and with time-consuming procedures.
To begin,
Trust There is a very strong trust within teams and in the company. This is often because of a legacy in achieving many bold accomplishments—often seemingly impossible tasks.
Family Traditional family norms permeate the work culture (Elder brother as boss, senior managers, etc.) and the related concept that co-workers are seen as family.
Challenge A one-word summary of the Korean workplace would be Challenge–both in what it has overcome and in what it expects of its global employees.
Input Companies are very hierarchical, but actively demands input from all levels. In fact, top management make decisions based on the expectation that the lower levels have considered all possible outcomes and challenges.
Teamwork Once a decision is made all dissenting or differing opinions unite to embrace success.
Solution In Korea, employees do not bad mouth or put down their company. In fact, employees feel that such an attitude is “part of the problem” and not “part of the solution.” Even among friends, negative thoughts are not shared.
Relationships From higher ranks to the lower ranks, they are very hierarchical. But, here are also very protective organizations. On one level, norms dictate that Seniors are demanding of their Junior employees. One reason is to make sure Juniors learn the work expectations, practices, and culture.
On another level, workers must ensure that mistakes are not made that could reflect badly on their Seniors the department, or the company. Once a Junior works for a Senior that Jr. is part of a network of other employees under the umbrella or protection of the Senior.
Expectations There are very high expectations that must be met. Doing a great job is what you are paid to do….
Collaboration The American workplace process is often to receive an assignment, clarify details, go off, work hard, and come back to the manager with the result.
The Korean staff will take a different approach. They will receive an assignment, work and discuss it collectively with others, and go back to the manager on multiple occasions informally to make sure they are following the path the manager wants. This method takes times, but Korean workers know when the manager sees the result, it will be what the senior requested.
Adaptability Flexibility and acceptance of change. Projects are subject to lots of change—some speed up, while others stall.
Questions, Comments? Want to chat?
To facilitate and with my rather demanding workload and travel, Stacey, my personal assistant at stacey@koreabcw.com can schedule us for a time.
Don Southerton, CEO and president of Bridging Culture Worldwide, a global consulting firm that focuses on Korea business ventures, is one of 10 companies that rents and operates from Perc. Photo by Amy Woodward
I was on a conference call last week when asked how best to describe my work—and do I provide consulting for CEO and C-level management—her organization’s international development committee made up of a number of CEOs.
My short answer was that a client and long friend, then a CMO for a major company best described my practice to others as Everything Korea… I also like having been introduced as “ a high power consultant” or Don is “the guru, the guy CEOs want to have their voice heard with, “ the later shared on Seoul’s eFM tbs Koreascape.
Pondering over the weekend on the question from the conference call much of what I do is provide context and a strategy to decision-makers involved in Korean facing business projects that range into the hundreds of million of Dollars.
In particular, I provide counsel and solutions based on my years working with Korean business—a good part in the international expansion into new markets and the challenges that surface and as a client once asked “ where are the landmines he needs to be aware of and avoid.”
So this gets to why I post weekly Vodcasts, frequent media commentaries, case studies as well as books on Korea facing topics. They all serve as channels to support and educate.
This said, in my consultancy each engagement needs to be approached on a case-by-case basis—no two situations identical.
If you feel you might benefit from my C-level insights, I’ve blocked out availability to chat and discuss….
To facilitate and with my rather demanding workload and travel, Stacey, my personal assistant at stacey@koreabcw.com can schedule us for a time.
In closing
A great book on the reshaping of the American economy and the New Order… check out Richard Florida’s The Rise of the Creative Class, Revised Edition. I prefer the hardcover.
And the music on Repeat Song listened to while drafting this week’s episode—Pink Floyd, “Wishing You Were Here” Re-mastered Available on iTunes.
Links
Seoul eFM Koreascape: Korean Corporate Culture insights
Where to begin? What are the essentials to better understanding the Korean mindset with regard to Korean business? I fall back on to three fundamentals
Hierarchy—place and order
Hierarchy is one of the most distinguishing characteristics of Korean culture and deeply embedded in the Korean workplace in Korea and overseas.
Reaching back to Korea’s Neo-Confucian past, social stratification is apparent in Korea’s top companies. More so, South Korea’s authoritarian military regimes of the 1960s, 70s, and 80s reinforced the model.
For Koreans hierarchy brings place and order to society and the workplace. Unlike the West, within this hierarchy no two individuals have the same place within the social matrix–age, education, family, employment and title /position with a company or organization determining where one stands within this matrix. So deeply does it impact Korea that rankings from one’s class standings to consumer rating of the major Group global brands matter considerable.
Status—Upmarket and Lux
Traditionally Korea was a status conscious society. For the elites this manifested in a wide range of status markers from Celadon pottery, refined behavior, ritual robes, distinct cuisine, and table manners. Today a former rigid class structure no longer dominates—class distinction and status more determined by one’s education, employment, job position, and personal income. More so, we have seen considerable upward social mobility within Korea—a direct results of the nation’s economic successes.
Going hand and hand with the upward mobility has been the demand for luxury and premium goods and products. In fact, these (most often Western) lux items have taken on the role of status markers. This list can include designer eyeglasses, handbags, and watches, as well ties, scarfs, belts and name brand clothing.
Although some Koreans have shown concern over the desire for pricey goods, in the eyes of many Korean customers, the more expensive and the rarer, the more desirable the brand. Consumers equate value with a high price tag.
All and all what we see unfolding is an ever growing demand for upmarket goods and product in Korea—this consciousness driving a repositioning of Korean brands globally, too, — Korean brands wishing to be seen as premium and among world’s leading consumer goods from cars to home appliances to electronics.
Generations—shared experiences
South Korea’s dominant age groups have great impact on Korean business culture, so there is value in understanding the differences in Korean generations. In South Korea, a generational group is defined more by its shared experiences than by a specific number of years.
For instance, older Koreans (50:60ers) who lived through the Korean War and its aftermath are more conservative, strongly allied with the U.S., and uncompromising towards North Korea.
In contrast, a group called Generation 386 (a phrase coined more than a decade ago, and comparable in some aspects to American baby-boomers) grew up in a period of great student unrest and tend to be more socially conscious and liberal than their forbearers. 386, no longer literally accurate term, stands for Koreans in their 30s in the late 1990s, born in the 1960s, and educated in the 80s. (Re-coined now as 486’s in some circles.)
A third generation of South Koreans, those in the age group of 26-35, is commonly referred to as the New Generation or Shinsedae. Many of this group have studied abroad, worked most of their careers on overseas support and projects, are fluent in English (and often another language or two), and have a global perspective.
This group grew up after the 1997 economic meltdown in Asia, which strongly impacted South Korean culture. This younger generation of Koreans is less concerned about ideology and more pragmatic. Their primary concern is finding a job. They are also a strong “gotta have it” consumer class and individualistic as a result of the impact of globalization, the Internet, television, and the high percentage of students who attended U.S. schools and universities.
All three noted, I see hierarchy, status and generations as a lens to better understand the Korean mindset, both within their society and in the workplace across their global organizations.
For more insights, questions or comments, I am available to discuss.
In this episode I’d like to share “Ten Insights into Korean business.” This is something I often incorporate into one on one coaching and mentoring sessions. It was also developed in collaboration with a senior Korea manager specifically to explain to his team’s Westerners on the company—the Westerners lacking first hand knowledge in the mother company and seeing the Company only in their local operations. In particular, there was a gap between how things were executed in Korea and had evolved locally– to a model less efficient and with time-consuming procedures.
To begin,
Trust There is a very strong trust within teams and in the company. This is often because of a legacy in achieving many bold accomplishments—often seemingly impossible tasks.
Family Traditional family norms permeate the work culture (Elder brother as boss, senior managers, etc.) and the related concept that co-workers are seen as family.
Challenge A one-word summary of the Korean workplace would be Challenge–both in what it has overcome and in what it expects of its global employees.
Input Companies are very hierarchical, but actively demands input from all levels. In fact, top management make decisions based on the expectation that the lower levels have considered all possible outcomes and challenges.
Teamwork Once a decision is made all dissenting or differing opinions unite to embrace success.
Solution In Korea, employees do not bad mouth or put down their company. In fact, employees feel that such an attitude is “part of the problem” and not “part of the solution.” Even among friends, negative thoughts are not shared.
Relationships From higher ranks to the lower ranks, they are very hierarchical. But, here are also very protective organizations. On one level, norms dictate that Seniors are demanding of their Junior employees. One reason is to make sure Juniors learn the work expectations, practices, and culture.
On another level, workers must ensure that mistakes are not made that could reflect badly on their Seniors the department, or the company. Once a Junior works for a Senior that Jr. is part of a network of other employees under the umbrella or protection of the Senior.
Expectations There are very high expectations that must be met. Doing a great job is what you are paid to do….
Collaboration The American workplace process is often to receive an assignment, clarify details, go off, work hard, and come back to the manager with the result.
The Korean staff will take a different approach. They will receive an assignment, work and discuss it collectively with others, and go back to the manager on multiple occasions informally to make sure they are following the path the manager wants. This method takes times, but Korean workers know when the manager sees the result, it will be what the senior requested.
Adaptability Flexibility and acceptance of change. Projects are subject to lots of change—some speed up, while others stall.
I was very pleased that my favorite Korean food brand Mad for Garlic is expanding into the Middle East. Here are some links sharing more. The brand would do well in the US.
As a trusted friend constantly reminds me, “Don, no one does what you do.”
Share and inform…. aspects of Korea facing business.
This noted…Contracts, legal agreements and negotiations go hand in hand with business. I was once told that in Korea the purpose of signing a contract or agreement was essentially to formalize the partnership. Over time terms would be subject to change and re-negotiation.
My Korea facing experience has been that the contract fundamentally solidifies the working relationship. However, to maintain the partnership contractual obligations the contract will require on-going changes to reflect business conditions. In contrast terms in legal agreement in the West are seen as immutable.
Challenges
Major differences in how Korean and Westerners perceive legal agreements can surface during the negotiation stage and even after the contract is in place. In particular, requests by Korean teams for changes to a Western company’s standard agreements and contracts can cause considerable frustration, especially for their legal counsel. In the West some “red lining” of a document may take place but legal teams may see unprecedented levels of questioning the most basic contractual language. Great patience may be required to walk Korean teams through the Western legal terminology and clarifications of what cannot be changed within the document to maintain compliance with international laws.
Finally, it is not uncommon for terms to be re-visited and questioned by other departments—often with limited or no international legal or business experience— despite months of work between the Western and Korean lead teams!
Oh, one more thing
Ensuring success and sustainability in dealing with Korea-facing business partnerships will require well-communicated expectations and cross-cultural understanding. In particular any business plan and strategy needs to take into account differences in the cultural realities between the West and Korea. It’s here I can help., and echoing my opening statement. “Don, no one does what you do.”
In a June Vodcast I shared a “short answer” describing my work consulting for CEO and C-level management as well as the teams.
My short answer has been what client and long friend, a CMO for a major company best described my practice to others as Everything Korea… I also like having been introduced as “ a high power consultant” or Don is “the guru, the guy CEOs want to have their voice heard with…
In particular, I provide counsel and solutions based on my years working with Korean business—a good part in the international expansion into new markets and the challenges that surface.
I also shared why I post weekly Vodcasts, frequent media commentaries, case studies as well as books on Korea facing topics. They all serve as channels to educate and inform.
This said, in my consultancy each engagement needs to be approached on a case-by-case basis—no two situations identical.
If you feel you might benefit from my Korean business insights, I’ve blocked out my availability to chat and discuss…. Just go to http://www.meetme.so/southerton
In closing, I’ve included a “Long Answer” List of varied media resources and interviews that share and highlight the scope of my work as well as advise for Korea facing companies.
Links
Wall Street Journal Korea Real Time
“Southerton Advises Non-Koreans in Overseas Korean Offices”
It’s hard not to be a watchdog for Korean facing issues that grow in concern and could potential have a global impact on the organizations and clients I support.
In an interview for an upcoming segment for the Korean media show “Koreascape” on globalization, I was also asked for my opinion on the recent drama within Lotte, Korea 5th largest chaebol over control of the Group. The host Kurt Achin, a seasoned journalist, shared concern over the bold move by one of the Founder’s son to take control of the Group, which has drawn considerable media and popular notice to the ongoing issue of succession among the chaebol. This media attention has not only been limited to Korea, but showed up on Page 1 of the WSJ as well as AP and the other leading wire and new service. [BTW Lotte is Korea’s largest retail, distribution, tourism and construction Group with a growing international presence and annual sales estimated at more than $100 billion. Also, Chaebol is a common South Korean term for their conglomerates, often multinational, global enterprises led by a Chairman and in most instances family controlled.]
This brings us to a media summary on the topic of Korean Family Succession, as well as a FAQ sharing my thoughts.
To prefix my comments, in her book, How to tell your story so the world listens, Bobette Buster author and USC Adjunct Professor notes:
“It has been said that Industrial Age ended after the end of World War Two. Then, it was superseded by the Age of Information via the computer, the 1960s boom in Madison Avenue advertising…and television. Then with the Internet boom of the 1990s, there followed in 2003 with viral explosion of the social media. With this a new deceiving conceit arose: anything worth knowing is available at our fingertips. This immediacy has curiously, made people less curious about discovering the world, at least to any depth.” The author then points out; we often “… know the facts, but not the context in which they happen.”
Let’s start with what we know and specifically fueling so much concern, and then I will share some context in a FAQ.
An editorial on the Lotte controversy in Yonhap, the Korean newswire service, writer sums up popular sentiment:
“Koreans are sick and tired of these internecine fights when the managerial control of a chaebol moves between generations.” More so, “who will succeed a family decision, rather than a formal shareholders’ meeting.”
Fuel to the fire… In July, amid considerable media attention, Samsung C&T and Cheil Industries agreed to an $8 billion merger that essentially consolidated the Samsung Group’s Lee family sway over Samsung Electronics, the Group’s flagship. This move sparked the ire of activist shareholder Paul Singer, CEO of U.S. hedge fund Elliott Associates. The American firm publically felt the deal would undervalued their substantial stock holdings in Samsung C&T while overvaluing Cheil to the benefit of the Lee family successor. Samsung rallied their supporters to win over Elliott in a heated vote.
Noting, I have prepared a three point FAQ look at context behind Korean succession, past and present.
1. What’s driving Korean family succession?
Looking back, Korea’s chaebol model is strongly rooted in their past. Neo-Confucianism, the dominant secular ideology of the nation going back to 1392, required all government officials and bureaucrats to pass rigid civil service examination for local, provincial or court positions. The Korean monarchy was the exception, male primogeniture used to determine the next ruler. Likewise, within Korean families, the eldest son and his descendants take precedence over siblings and their descendants. Elder sons took precedence not only over younger sons, but all sons took precedence over daughters—even elder daughters.
With the modern era and end of Japanese Colonial Rule, Korean business groups emerged. Family run, they gained considerable momentum during the 1960s, 1970s, and 1980s under the state-run policies mandated by the government.
At times this was a love/ hate relationship between the Groups and Government—with transfer of family wealth becoming an issue as the first generation of Founders handed over control to their children.
It is here we also see the first controversies surface. Following Korean traditional Confucian norms that dictated the eldest son be granted control over the family holdings as the next patriarch in some cases as with Samsung and Hyundai, a sibling or relative other than the eldest was selected by the Founder. In some instances, the elder sibling(s) fell out of favor of Founder, while in other cases a younger son assumed the role following the death of an elder son or if there was no son, a relative would take control.
2. How is the recent merger at Samsung associated with succession?
A second set of issues with wealth transfer centers on inheritance taxation—a tax levied up to 50% of the patriarch’s assets. To avoid the hefty tax, defacto holding companies allowed the second generation to gain control over the Groups with a marginal investment and little direct inheritance of the patriarch’s holdings.
As we move into a 3rd Gen of family control Groups like Samsung and Hyundai Motor have been engaged in similar lengthy and well orchestrated fiscal moves to transfer wealth and control. Much of this is through merging smaller companies, which the future successor has a substantial interest, with a larger Group’s firm, gaining control with no investment of monies. i.e. Samsung C&T and Cheil Industries.
A second method is work funneling.
In this process, Korean chaebol families have considerable ownership stakes in many of the privately held sister companies.
Next, the other subsidiaries give these smaller companies a huge amount of business to increase their revenue. Finally, these smaller companies grow considerably over time and can move to an IPO or sell some of their holdings to outside investors. i.e. Hyundai Glovis and Innocean Worldwide.
The families can then use the revenue stream to buy stock in other key publically traded subsidiaries and their chaebol’s defacto holding company.
In both cases, ownership stake along with circular, cross and pyramid (radiant) shareholdings give them direct and indirect control over the entire Group.
3. Noting public sentiment regarding succession, how likely is it for the South Korean President Park Geun-hye to toughen corporate laws?
As I note above, there has been a longtime Love/ Hate relationship between the chaebol and the Government. Despite the chaebols’ dominance and influence, they are increasingly coming under pressure from new laws and regulations designed to increase financial transparency and accountability of family members.
For instance, the government recently enacted a “deemed inheritance tax,” so that family members can’t get around South Korea’s inheritance tax laws, and has revised commercial laws to tighten requirements for reporting internal transactions.
This said, at time when addressing Korea’s sluggish economy is a priority for the current administration, few feel President Park Geun-hye will lash out at against the Groups. I see pressure being exerted on Lotte to resolve their family differences. I also see succession plans by Samsung and Hyundai continuing, with the reins of control and ownership transferred as planned—with hope to draw as little attention as possible.
To conclude, as a colleague expressed recently that for succession plans still in the works, their transition will come late in the cycle. As others bring attention to the issue, transitions that must and will occur from the current and aging leadership to the next generation will gets more a legal focus and public scrutiny.
I’d add this means focus and resources the Group’s leadership should have on running their business will be re-directed to dealing with succession. Decisions impacting their global operation could be delayed as well as the approval process, which require a high level sign off.
Deconstructing key aspects of western workplace in contrast to norms in South Korea continues to draw my attention. This week I add U.K. workplace insights since it, too, has a strong entrepreneurial and creative class–taking risks and learning from mistakes as seen there as part of the process going hand and hand.
In some ways I am personally draw to the British and specifically a Wales’ spin on business. This was well captured in a David Hieatt, Co-founder of The Do Lectures & Hiut Denim, 2011 workshop titled “Love Luck and Ideas got a town making jeans again.” So take some time listen, it’s well worth the time. More so, for my Korean friends in Korea and those Koreans working in overseas operations the video shares values that are actually tied to business like Love, Luck and Sentiment.
BTW I love David’s quote that jeans are “the creative uniform for the creative man”. Captures something I was missing, but so true,
This said, we all recognizing there is a gap in norms, values, and attitudes between the West (and in this case Wales in the U.K.) and South Korea, so what are construction steps can be taken to bridge the gap and lead to solutions.
Frankly that where my expertise comes in. I provide a strategy, coaching, and training to overcome cultural impasses that if not addressed do lead to frustration, stalled momentum and high turnover of the best staff and leadership.
I’ve just begun compiling feedback from the new case study. Contributions from readers, like you, show highly engagement in the study as well as many dealing with some common issues.
One that surfaced was although they have achieved much success Korean brands in their overseas operation need to adopt MORE to local norms including accepting failure and missteps. If not, and as a consequence growth will stall and be unsustainable–something of recent concern that we see occurring globally amid strong competition by rivals and changing markets.
To paraphrase one well thought out response that nailed it dead center with this profound statement. With regard to their local Korean business operations “[a] company needs to foster innovation rather than just be a fast follower.
Adding, “The challenge is with ‘Acceptance of mistakes’, which as you noted [ in the case study] is one of the foundations for American’s success. Culturally, failure [for Koreans] is not an option. Until they realize that it can serve as a foundation for success, they won’t be able to go much further.”
Again, in the next few episodes look for a more well thought out feedback, which I share on the case study.
Meanwhile, changing the topic slightly, but sharing as solutions…I’ve offered considerable content over the past several years in video format—first are a series of 5 concise videos, and second a more recent 2015 presentation—all captured in high resolution and quality audio. I strongly encourage you to view.
For the 1st five videos they run 2-3 minutes, and the last video about 26 minutes.
This week we have something special, a preview of a new case study.
Over the past month I have been sharing the role of the creative class in the workplace–Korea and America. To clarify I looked at the “culture” needed to foster the Creative Mind in the workplace, and in particular recognize their values, norms, and attitudes. The new case study is the result of this study and research.
This said, I have attached a link to this new Case Study. Please take a moment to download and read. I would appreciate any feedback and comments before we offer it to a wider Korea facing distribution.
And by the way…
If you and your company would like to discuss challenges, I would be happy to chat. I’ve found each company has its own dynamics and I approach this case-by-case crafting an approach tailored to the client.
Everything Korea: September 21 Episode, Where to Begin
Where to begin? What are the essentials to better understanding the Korean mindset with regard to Korean business? I fall back on to three fundamentals
Hierarchy—place and order
Hierarchy is one of the most distinguishing characteristics of Korean culture and deeply embedded in the Korean workplace in Korea and overseas.
Reaching back to Korea’s Neo-Confucian past, social stratification is apparent in Korea’s top companies. More so, South Korea’s authoritarian military regimes of the 1960s, 70s, and 80s reinforced the model.
For Koreans hierarchy brings place and order to society and the workplace. Unlike the West, within this hierarchy no two individuals have the same place within the social matrix–age, education, family, employment and title /position with a company or organization determining where one stands within this matrix. So deeply does it impact Korea that rankings from one’s class standings to consumer rating of the major Group global brands matter considerable.
Status—Upmarket and Lux
Traditionally Korea was a status conscious society. For the elites this manifested in a wide range of status markers from Celadon pottery, refined behavior, ritual robes, distinct cuisine, and table manners. Today a former rigid class structure no longer dominates—class distinction and status more determined by one’s education, employment, job position, and personal income. More so, we have seen considerable upward social mobility within Korea—a direct results of the nation’s economic successes.
Going hand and hand with the upward mobility has been the demand for luxury and premium goods and products. In fact, these (most often Western) lux items have taken on the role of status markers. This list can include designer eyeglasses, handbags, and watches, as well ties, scarfs, belts and name brand clothing.
Although some Koreans have shown concern over the desire for pricey goods, in the eyes of many Korean customers, the more expensive and the rarer, the more desirable the brand. Consumers equate value with a high price tag.
All and all what we see unfolding is an ever growing demand for upmarket goods and product in Korea—this consciousness driving a repositioning of Korean brands globally, too, — Korean brands wishing to be seen as premium and among world’s leading consumer goods from cars to home appliances to electronics.
Generations—shared experiences
South Korea’s dominant age groups have great impact on Korean business culture, so there is value in understanding the differences in Korean generations. In South Korea, a generational group is defined more by its shared experiences than by a specific number of years.
For instance, older Koreans (50:60ers) who lived through the Korean War and its aftermath are more conservative, strongly allied with the U.S., and uncompromising towards North Korea.
In contrast, a group called Generation 386 (a phrase coined more than a decade ago, and comparable in some aspects to American baby-boomers) grew up in a period of great student unrest and tend to be more socially conscious and liberal than their forbearers. 386, no longer literally accurate term, stands for Koreans in their 30s in the late 1990s, born in the 1960s, and educated in the 80s. (Re-coined now as 486’s in some circles.)
A third generation of South Koreans, those in the age group of 26-35, is commonly referred to as the New Generation or Shinsedae. Many of this group have studied abroad, worked most of their careers on overseas support and projects, are fluent in English (and often another language or two), and have a global perspective.
This group grew up after the 1997 economic meltdown in Asia, which strongly impacted South Korean culture. This younger generation of Koreans is less concerned about ideology and more pragmatic. Their primary concern is finding a job. They are also a strong “gotta have it” consumer class and individualistic as a result of the impact of globalization, the Internet, television, and the high percentage of students who attended U.S. schools and universities.
All three noted, I see hierarchy, status and generations as a lens to better understand the Korean mindset, both within their society and in the workplace across their global organizations.
For more insights, questions or comments, I am available to discuss.
Just go to http://www.meetme.so/southerton