Twenty Years in and out of Korea
George is an old friend from Korea. We talked recently via Skype. He was in Seoul, and I was in Metro Manila.
In Korea the business legal environment is much fairer to foreigners than it was in the past, when our attorneys used to be embarrassed. They were truly our advocates, but they’d have to say, “Yes, this person didn’t follow the contract and you are being harmed. But as a foreigner you probably won’t get a fair shot in the court system.” Often we just had to comply with whatever our business partner or supplier or service provider was forcing us to do. Now, the same attorneys in the same law office are more ready to pursue legal action. If we are truly being discriminated against or if the other party isn’t fulfilling the contract as written, we feel we have a much better chance at getting a remedy in the court or in negotiations. The foreigner is not automatically wrong. Sometimes we still feel we’ve got to cater to our adversary, but we’re in a much stronger position than we were twenty years ago.
For example, our company has three drivers. In the past if there was an accident and the other party found out the vehicle was foreign-owned, suddenly everyone in the car had medical problems and needed medical expenses and three weeks’ pay and rehabilitation. That’s $40,000 to $50,000 or more, with the requirements growing as long as we cooperated. In contrast, recently one of our drivers was in an accident where both people were at fault. This time we were able to decide that the responsibility was 50-50, and each company took care of its own medical expenses and repairs.
Even though foreign businesses are treated more fairly, one of the challenges is banking regulations, which sometimes make it almost impossible to invest much in Korea. Let’s say you put $100,000 in the bank to start a company. That 100K must stay in that account for the entire life of the company. You can never pull it out. Any business proceeds—actual cash—you put in your Korean bank can’t be sent out of Korea until you’ve received a tax document saying you paid taxes on it. For instance, maybe you have 300K in the bank from money we made in 2012. You can’t send that money out of Korea until March, 2013, when you file taxes on it. If your company’s home office in the States needs money for equipment or office space, you still can’t access those profits until March. You can move it around in Korea and pay your expenses with it, but you can’t take it out. You’ve got to do a lot of planning to ensure that you don’t need that cash flow for maybe 15 months. That’s very, very limiting. We tried to withdraw money in September, and the bank wouldn’t let us have it.
I’ve only been company president for 26 months. My predecessor had been with the company for twenty years and was a little more old school, very top-down, making a lot of decisions on his own without consulting the senior folks, He’d announce, “Here’s what we’re doing,” and then walk out. Very slowly, I’ve started to make changes in how we operate and how we communicate, which I think helps the group feel more involved. In Korea you’ve got to be careful not to make too many changes too fast. We don’t operate as we would in the States, where there would be more lateral communication at all levels, but we do operate like a US company here. We’re a technical engineering business, and I’m not an engineer. I often call in the team of our eight senior folks, either individually or together, to get as much feedback as I can before I made a decision. We have both Americans and Koreans on our staff, so it’s sometimes challenging to manage the cultural differences. Some of the senior folks, especially the Koreans, are not comfortable being asked to give an opinion because they bear some responsibility if things don’t go very well, whereas formerly they could say, “Well, the president told us to do it that way. I guess it was the wrong decision.” This collaboration is different from the typical Korean company, where the president decides. Not that I always go what the group wants, because they may not be fully aware of the political-social environment. But we’ve come up with our own company culture.
One of the big reasons my wife and I decided to come back was to raise our children in Korea. They’re in an international school where they have friends from Africa, Japan, Canada and the States. We feel the exposure to different ideas and different cultures prepares them for so much more when they grow up. They’re probably going to go to college in the United States, and I can see that they’ll have a much broader world view than students who spent their whole lives in the United States or in their hometown. They’ll know there’s more than one way to do things.
When I first came to Korea in 1993, I had just graduated from college with a finance degree. I had the typical American thinking: we’re the ones with the solutions that the rest of the world needs. I was in charge of a small administrative support department. My communication was aggressive and to-the-point. I wasn’t aware of the context, like delivery style and general approach to people. I’d call people out in public if they were not doing their job. Basically, I was breaking every one of the rules I now try to communicate to my senior staff. I would be screaming and yelling in the hall, which is just not acceptable here. Every day I was in conflict with my staff. It just wasn’t working.
Then I watched Mr. Lee walk into the office, pause, raise an eyebrow and look at something he didn’t approve of. At times he didn’t say a word. The entire office would get together to figure out what Mr. Lee was upset about. People would go to him and ask, he’d tell them quietly, and the entire office would change their approach. Eventually I said to him, “Mr. Lee, I am screaming and yelling every day, and my staff has stopped listening. I get no response. But you walk in, pause and raise an eyebrow, and the entire office comes to you to find out what you need. How do I do that?”
“You know, I can help you, but you’ve got to listen to me.”
“Mr. Lee, I’m ready. Just teach me what to do.”
He had a whole list of people I needed to apologize to that day. I started coming to him, and he’d say, “Why don’t you take this person into your office and ask how you can help with this problem?”
Over the years I was able to model Mr. Lee’s approach. Now I’m the senior manager, and I’m starting to acquire this company. On the organization chart Mr. Lee my vice-president, and I am the president. But I still go to him with all major decisions about very level of the organization. I still see him as a mentor. After twenty years I’m much more like Mr. Lee than I am the old me. I’ve learned so much more from Korean culture than Koreans have learned from me.
You know, in the United States we’re so much more aggressive, much more contract-driven. If it’s written down, that’s the way it is. It’s very black and white. When I went back to the States having learned from my Korean mentor how to think and communicate differently, at first I was perceived as kind of weak. I owned a small business with a partner. We had about 400 employees, with about 20 people at the corporate office where I was the Chief Operating Officer. If an employee didn’t meet performance standards, a typical US approach was to write it down, document it, give the employee a few chances and that was it. My business partner, who no overseas experience, would tell an employee, “You’re not cutting it. If you don’t get better in two days or two weeks, you’re gone.” But I’d become less formal in the beginning. I brought the employee in, the supervisor would also be involved, and I’d say, “Here’s what we see. Are we doing something that’s preventing you from doing better? Is something happening at home?” Some people perceived me as a pushover, but I still thought that was the right approach. When people didn’t respond appropriately I still terminated them. After a year or so the staff realized that they were going to be held to performance standards.
A lot of people truly appreciated the softer approach to management, and eventually our staff would slay dragons for us because they felt connected with me and the company. What I learned from Mr. Lee turned out to be one of our strengths. We had a very tight-knit group which worked very hard to stay in an environment where the management and the ownership felt an obligation to treat them as family, kind of like companies do in Korea, where society is based on collectivism, rather than individualistic all-for-themselves.
In the States, with the black and white, individualistic approach, at five o’clock staff members might feel no obligation to stay late even though we had a project we needed to get out. At some point before I took over as Operations Chief, our managers were going to our employees on bended knee saying, “Look, we’re almost done. Can’t we finish it out tonight?” They’d actually have to pull people back in on a Friday night. But then eventually, as I implemented a more collectivist approach, they felt they needed to get the project done that evening or work Saturday. We didn’t even have to ask them. Because the ownership cared about them, they felt they needed to care about the company. It improved the quality of our product, and we won a lot more work.
Now that I’m back in Korea again, I see a broader middle class emerging than before, a lot of people at a middle level with a lot more means, while I used to see either the very wealthy or the very average lifestyle. The folks we hire are doing better. I’ve also heard that because of social changes some of the older children don’t feel as obliged to take care of the older folks, so we’re seeing the emergence of a few old folk’s homes where the children used to take care of their parents at home. I’m not sure that’s progress.
I’ve seen a pretty dramatic change in the society’s accepting women in more managerial and responsible positions. We now have a female section chief, which never would have happened before. I have a very senior Korean-American in another section who’s been mentoring a female Korean national over the last ten years, a Korean national. He’s about ready to retire, and I’m very seriously considering putting her in as the section chief for our US company, where she would be supervising both men and women. She’s nervous about it, so I’m going to let her decide if she wants the job or not. Unfortunately, in the past I never could have considered putting a woman in charge of a section because the Korean men wouldn’t have tolerated having a woman placed over them. We’ve probably prepared the battlefield, in that she’s been here ten years and her technical capabilities have earned respect. We’ve continued to nurture her professional growth by paying for her to go to classes and getting her registered as a professional engineer within her industry. So it’s been a joint effort, and she’s kept up her end of the bargain.
In the past the women employees would never have come into my office to share what they wanted changed. If a female employee was disappointed with her pay or her working hours, she’d just resign. So we’d lose a quality employee because she was afraid to come and talk to me. But in this last year I’ve had two instances where a female Korean has come to me and said, “I think I’m really doing a lot, and I would really like to make more money. Here’s what I plan to do.” Then we put together a six-month plan which could give her the raise she wanted.
The business is improving because the quality of life for foreigners has also improved dramatically. Ten years ago, if you needed a product like a mop, as a foreigner you probably had no idea where in Seoul you could find it. Each industry or each product had its own little section of town. Everything was condensed into one area: mop heads in one place, sewing machines in another, large pots to boil food somewhere else. Now just down the street from us is a mall where just about everything can be found. The grocery stores are providing much better food—still at a higher price than we would pay in the States, but at least it’s available.
Those things are really important when I’m recruiting and retaining staff, especially from the United States. Before, they found it hard to find what they felt they needed to live comfortably, particularly food products. It’s strange what people miss—like frozen peas. In the past, a person might have been here for two months and gotten tired of being yelled at by taxi drivers and kicked out of taxis in the middle of nowhere. The significant difference in housing made their frustration rise. Well, you know, the standard Korean apartment or villa [house with a few large apartments and balconies], has no walk-in closets. Some folks have lived in a four-bedroom, 3800-square-foot house with three and a half baths and two living areas and walk-in closets. Especially when the spouse comes over, they start adding up all these frustrations, and at some point they just say, “This isn’t worth it, I’m leaving.” That’s happened three or four times with very senior people. But it’s not happening anymore, partly because we’re doing a better job of explaining what to expect before they get here. We take the gloves off and say, “Here are the good things, and here are the bad things.” But it’s also is much easier to live here now than it was before.
Korean job applicants are much better at communicating than they used to be. Their English may not be better, but they seem more comfortable interacting with me during an interview. In the past, female candidates would come in, put their hands on their laps and look down the entire time. They wouldn’t elaborate on anything. They would say yes or no or give no answer at all because they were too afraid of making a mistake. Now I see folks who are much more comfortable trying to communicate, asking questions and answering my questions. I guess that’s just the social change that we’ve seen over the last ten years. Some entry-level people still lead the interview by asking about the salary, but they don’t anymore at the mid and upper-level positions in the engineering industry. Or at least it’s not their first question.
I think Korea is doing well. The economy appears to be very strong. We want to stay here for many years to come. Personally, we like it here better. I guess the biggest thing that’s changed in Korea over the last twenty years is me. The older I get, the less things are black and white, but a gray area where you have to stand back. Sometimes that’s the hardest thing to do, just stand back and let the situation develop. Often it takes care of itself, and often you have very little influence anyway.
Being comfortable in that ever-changing risk is what separates people who’d rather be employees from the entrepreneurs and those who succeed in business. It’s not easy. I left another company where I had a six-figure job plus benefits—401K, you name it. I went from that to a year of pulling out every bit of our savings, trying to build our business in the States. My salary for the first year was a thousand a month with no health insurance. I had a wife, a 9-year-old and a 7-year-old. Often that’s the kind of risk and commitment it takes. But we were in the right place at the right time and doing the right thing, and in about two years we were able to build it off the kitchen table with no employees to about 400 employees. It was fun. Then we sold our portion of that business in the US to move back to Korea and start to acquire the company I had worked for off and on since 1993. We feel that it was good for the company and good for us. We love Korea.