Lady Luck Helps Make Changes, Part 1

I interviewed my friend Scott in 1994 about his experience as an American executive connected with a Korean company, where he immediately ran into some major cultural differences between Western and Korean society. In 1997 when the Korean won fell flat on its face, I wished the interview had also included his skepticism of the economy. Some of this interview appears at the end of the post on the Korean women’s movement.

Scott’s story

My company in the States sold several licenses—one package—to a Korean company which was supposed to be established over a period of five years. Its primary business would be to offer management and technological services. I was sent over in response to the Korean company’s request for help because my company wanted to see some royalties from the licenses they had sold.

American companies typically start small and grow as the revenue grows. But in Korea, from what I’ve seen, a company is set up as if it were already a multi-million-dollar business. In the two years before I arrived, this one had purchased a small office building in a prime area of Seoul, probably worth fifteen million dollars, and had hired thirty-five employees. The company hierarchy was built from the top down, based on where somebody had gone to school and how old he was, not his business experience and how successful it was. They bought a fleet of vehicles. In this “planning phase,” the people on the lower levels who did the actual work wrote plan after plan, memorized technical manuals and translated things. There was no pressure to make sales, to implement any business, to meet with anybody out in the marketplace. Basically, they weren’t really working, and they had become used to not having to work. They sat around reading newspapers. However, they spent an enormous amount of time in the office, maybe a seventy hours a week on the average, sometimes a lot more.

So I was sent over in January, 1993. I had read everything I could find on Korea—at least twenty books—and maybe twenty more on Asia, as well as information sent me by the American Chamber of Commerce in Seoul and the U.S. State Department. So I thought I knew a lot about Korea when I got here. But one of the things I’ve learned since then is that you can’t really learn about a country or a culture or an economy just by reading. You can’t understand the idiosyncrasies and the relationships in broad terms.

When I arrived I was ready to roll up my sleeves and dive into the problems and make quick changes. However, I promised myself that I would devote two full months of analysis in order to understand the problems and then prepare a plan to turn things around within six months. I had been very successful in the United States as a result of doing things that way. At my first meeting with the employees, I told them about our new goals—all tangible goals. It really scared people.

My plan included motivating employees through recognition and bonuses, which tend to set people apart from the rest. I wanted to move the good people along, get some of the poor performers in line and cause some of the really poor performers to leave. I completely forgot about the intangible things that are important in Asia. For example, inhwa, or group harmony, which is really hard to describe in Western terms, means having everybody moving in a direction without losing anybody or making anybody feel unimportant, unsuccessful, or apart from the group.  Trying to implement something like the changes I wanted in one fell swoop is a disaster waiting to happen.

Later I came up with a plan to recognize the Employee of the Month, which included a fairly substantial bonus and recognition from the American and Korean company executives. Everyone kept kind of quiet about it, and I thought, “Wow, this just might work.” As the little ceremony approached, the recipient of this award found out he was going to get it, and so did everyone else.

Then the day before it was supposed to happen somebody came to me and said, “You can’t do this.”

“Why?”

“Well, you just can’t. This is Korea. You’ve got to recognize everybody. And you’ve got to give everybody a bonus.”

I said, “That defeats the purpose of what I want to do. And I don’t think everybody has worked as hard as this person or has been as responsible. He sets an example that we all need to follow.”

He left.

Then somebody from senior management came in and said, “You can’t do this in Korea.”

I think they waited until the day before because they didn’t want to cause me any discomfort. Rather than bring up a problem or even talk about it, Koreans would much rather avoid it, forget it or put it off.

At the beginning I was very frustrated and I wondered how people could be so stupid they couldn’t understand these concepts. Of course, I know now that it had nothing to do with stupidity. In this culture for thousands of years only a few people were singled out. Everyone else abided by decisions made for them, and that included the colors of clothing people wore, the kinds of food they grew, where the roads and the houses went, where a certain class of people lived and who they married. It’s not “natural” for them to make critical decisions under pressure or be creative, because tradition punished that kind of behavior and punished it severely. Also, people have had some success with everyone following along after one person in an almost military type of corporate structure.

The other thing that I had to learn was the importance of age. A young man cannot go to his boss and say, “We’re making a mistake.” It’s career suicide. Let’s say that a company has decided to develop a new automobile, and a good analyst finds out that the market research was flawed because they’ve miscalculated the barriers to the market. He knows the investment will be a fiasco big enough to take the whole corporation down, but he would never go upstairs and say he found a mistake. It’s almost unheard of. There are very clearly defined power levels of social status and corporate status, and people don’t cross those barriers. It’s very, very strict.

Right after I arrived, I had to insist that much of the planning done in the past was completely unusable. I read five or six planning reports completed for the same piece of business. They provided details on everything—marketing, engineering, keeping track of things—but the demographic information was inaccurate. All five reports had different figures for how many facilities there were or how many facilities of a certain size there were. It was unbelievable. Instead of checking government statistics, the person would make a phone call to a friend from school who worked for a company that sold medical equipment.

“How many are there in Seoul?”

“Oh, about two hundred.”

Or, worse yet, the writer of the report would make something up. Instead of climbing over the wall he had run into, he’d try to find a way around it. This is accepted in Korea, but I would not accept it.

Anyway, here I am in my late twenties and looking ten years younger, trying to implement radical changes in an organization. It reached a point where a fair-sized group in the office decided to make sure I wasn’t successful. I think the idea was to make things so difficult that I would leave Korea. They would sit in meetings and nod yes to what I said and then not do it. There were always hundreds of excuses: they didn’t have the right software, they couldn’t translate something, they needed more data. I’d come up with an answer, and the excuse would change. They knew I was dependent on them. They controlled my apartment, my utilities, and my car. For almost everything I needed a translator.  At one point my car was suddenly missing and nobody knew where it was. The same day my home phone was shut off.

The whole thing finally came to a head one evening when I took the group out to dinner. They got very, very drunk, and the ringleader of the troublemakers threw a beer bottle that broke on the wall above my head. In doing that he crossed the line and lost face. Even though I wasn’t the most senior person in age, I had a very senior title. The lines get blurry with foreigners, but not that blurry. A number of people came to me individually after that and apologized and made it clear that they did not condone his behavior and would no longer be a part of undermining what I was trying to do. Then within about a week and a half, five people quit, including the ringleader. I replaced them with people I hired, all of whom spoke English and had some Western education, and I started to form my own team.

I was lucky. I’ve heard of a number of cases where foreigners have just lost and not even known what happened. One week they’re here, and the next week they’re gone. I was able to start over with a new team. This time, instead of trying to do everything in three or four big steps, I set things up so for every big step I took four little steps first. For instance, rather than give special recognition to an individual, we recognized a small team. First we set up the teams with the best people together, then the next-best people, then the poorest people. There was resistance to that, but the recognition and the performance bonus was implemented, and after some time people said to themselves, “Hey, I can make a little more money if I come to work and do my job instead of reading the paper.”

One of the reasons why productivity is so low is that people put in such long hours. It’s expected. If a Korean salaryman comes home at seven, his wife might wonder if he’s having a problem at work. Putting in long hours shows how diligent he is. If I give somebody an assignment at eight-thirty in the morning, I might say, “I need to have this information in this form, and I need to have it tomorrow morning because I’m meeting somebody.” Almost always that person will gather a little information during the day but not start to put the report together until eight or nine at night. Then he’ll work until midnight or one o’clock. The next morning I’ll have my report, but everybody in the office will know that he had to work late—when he could have had it done by noon if he’d really worked on it instead of sitting around, reading the newspaper and shuffling papers around.

People think that the more hours you put in, the better an employee you are. We’ve got mediocre employees who spend a lot of time in the office, and they’re treated very well. We have people who do whatever is asked of them—getting somebody’s laundry, taking their shoes to be shined, running to the bank for them—but not bringing in anything for the company or justifying their employment. Of course if you have to work on Saturdays, you have to run errands on your work time.

Some of the guys are young and went to graduate school in the States. They know what life is like in other places. They love spending time with their families. But most of the older ones, the last thing they want is to go home. I mean, what would they tell their wives? And the whole “house” is the size of an American living room. It’s all in one room or two very small rooms. The kids sleep there, the wife cooks there, and the neighbor ladies visit and make kimchi there, the kids’ friends come over and play there. It’s a very small, densely-populated, loud, crazy place. It’s much more comfortable for a man to spend twelve or fourteen hours at work and then four or five hours drinking with his colleagues, which is considered part of his job. Then he goes home half in the bag and doesn’t really care who’s sleeping on top of him or who’s running around with the television turned up loud.

So we had a kind of clash between the new generation and the old generation. And the older people will always win. So I didn’t reward people by giving them Saturdays off. Eventually what’s going to happen, probably this year, is that they’ll compromise and come up with a plan. For instance, “We think we would have had a twenty percent compensation increase this year, but we’ll take a fifteen percent increase and every other Saturday off. We’ll save the company money.” Maybe they would have only gotten twelve percent, anyway.

In my office, people arrive around eight o’clock in the morning after traveling between an hour and two hours to get to work. The very senior people leave maybe by six or six-fifteen, most of the upper and middle-level people leave around seven or seven-thirty and then go to some night spot to socialize, then have a long commute home. I can honestly say that a group of about ten average people working sixty or seventy hours a week only accomplishes a third—maybe half—of  what ten average employees in America do in forty hours a week.

The low productivity is built into the system. For instance, in Korea they have computerized, but they continue to keep the old written logs. Of those ten people, a certain number are assigned very specific duties, although this is all non-union. Maybe all one guy does is work with outside suppliers—that’s it. Another person works for him. When he’s been there a certain amount of time, he has to be promoted, and two more people have to be put under him because of his status.

The fact that you can’t recognize individual performance means somebody who’s working extra-extra hard is kept out of the mainstream and looked down on. God forbid that someone chooses not to drink. We have a guy in the office who’s just fantastic. Give him any project, it’ll be

done quickly and professionally. His work is usually excellent. However, he doesn’t drink with the crowd. He stays to himself and doesn’t get involved in office politics. So he’s become a social outcast who will not be promoted—unless big changes are made before he reaches a certain age. He’ll probably leave the company.

In the West, we like to keep account of what we’re spending on a daily or weekly or monthly basis, and financial decisions are based on these accounts—whether to spend more money on one thing and cut back on another. Regardless of what it is, there’s some data behind the decision. In our company and in a lot of other companies in Korea, decisions are made by someone who has a big title and a big office but very little responsibility and doesn’t want to know what’s going on in the day-to-day operations. He has been hired on the basis of where he went to school and who he knows. This is called “the corner office syndrome.” It exists in Japan too.

On the basis of a whim, this person may just send down the order not to buy paper this month. So you run out of copy paper, and you’re forced to go through the files and pull out something that doesn’t look too important, make copies on the back, and refile it. Later, when find something in a file, you don’t know if you’re looking at the front side or the back side of something. The reports get all mixed up. I thought that was just our office, but I’ve found that it’s many, many offices and almost everywhere. In the States I’ve watched people who lived through the Great Depression make decisions based on fear of not having any money, and I think older people here also make decisions which reflect the hardships they have been through. But after causing all this confusion the same person will decide that someone high in the hierarchy needs a new Hyundai Grandeur just because he’s reached a certain age. It’s just amazing.

Getting back to my own story, I learned that I had to be very careful about choosing someone to give an assignment to. It can’t always be the best person for the job. For instance, on one occasion, rather than give a project to a department head, who then would probably have just passed it on to somebody in his department and not had anything to further to do with it, I skipped a level. I went to one of the people who worked for him because it required a very detailed explanation I thought would be better done directly. We’d had a number of meetings about this, and everybody knew about it, so I didn’t think it would be a problem. It ruffled some feathers. The person I went to was very uncomfortable because he thought his boss was going to see him as undercutting his position or causing him to lose face.

I should add that things can also be said for Korean practices. The seniority system eliminates some of the dog-eat-dog atmosphere we have to deal with in the States, where people step all over each other to get ahead without any regard for the other person. But Koreans don’t adhere to the rules as strictly as the Japanese. They’re more aggressive and do sometimes step over each other. They’re tough. I think Koreans will adapt to the new domestic economy and the new world economy better than the Japanese. They’re survivors. They’ve survived great hardships by being able to adapt to the situation. The beliefs and cultural rules are important, but people step over the lines when it benefits them.

One of the other things that I’ve learned is that the Korean economy is growing rapidly right now, and growth solves a lot of problems. So there is time to compromise, to do things in a somewhat traditional way and implement change in small steps. If you get some consensus first, the changes will go much better.

People here recognize successful changes and will usually go forward with them. They want more. Just look at the way they educate themselves and the number of hours they’re willing to work and what they’re willing to sacrifice. Look at what people do for the common good.

The new generation, the more I talk to them, the more I realize they’re torn. The kids don’t want to trade the problems that confront them here for the problems of the West. They don’t want to give up a relatively low crime rate and a safe society in order to improve their standard of living. They are also much more aware of the effects of past economic development on the environment. and they’re upset about it. They are less and less able to swallow some of the old Confucian ideas about love, marriage, relationships, the status of women and the strict relationships between old and young. They are much more creative, much more willing to speak out for change and much more idealistic.

Postscript:

After reading this post, Scott added, “Looking back, the experience I had in Korea provided a great learning platform for my future assignments in China and later in India.  I would say that today I know that learning how to ‘understand’ things is more important than learning how to ‘do’
things when dealing with different cultures.”

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