Can the practices and philosophies of Korean and other Asian MNCs work in Western companies?

...the seniority wage system...

...enterprise unionism...

...constitute the "three sacred treasures" of Japanese management...

It is a grave mistake to assume that Japan or its management systems would also represent those of Korea.

With Korean firms rapidly globalizing, it becomes more and more important to discover whether the specificities of their managerial systems are systematically and coherently transferable into a different cultural setting.

In stark contrast, surprisingly little attention has been paid to characterizing Korean management style and its philosophy, in spite of the singular performances of Korean firms in the global market. Perhaps this is because Korea has often been considered the "Second .Japan," with similar cultural and social attributes. Both countries have been strongly influenced by Confucian and Buddhist traditions. As a result, they do demonstrate important similarities in social values and customs, However, they also exhibit and substantial numerous in cultural and behavioral characteristics, which have influenced the development of distinctive organizational cultures and management styles. It is a grave mistake to assume that Japan or its management systems would also represent those of Korea.

With Korean firms rapidly globalizing, it becomes more and more important to discover whether the specificities of their managerial systems are systematically and coherently transferable into a different cultural setting. Evaluating the generalizability of the Korean management approach may also help us understand its strengths and weaknesses in overcoming the current economic and financial crisis....

Our particular context of analysis is Korean operations in the maquiladora industry in Mexico. Based on interviews with Korean and Mexican managers and local laborers, we attempt to identify the major sources of cross- cultural conflicts associated with transplanting Korean management approaches overseas. And we offer suggestions for improving the current situation by accommodating home country organizational culture to the local environment.

Abundant, low-cost labor has made the country an extremely attractive site for any labor-intensive operation....

...maquiladora investments from Asian countries, such as Japan and Korea, have grown considerably...

...the area of human resource management is the most troublesome...

...cross-cultural difficulties are probably the single most important factor behind the HRM challenges...

Korean MNCs in Mexico use control and human relations approaches, whereas the human resource approach can be found in the United States and, to a lesser extent, Japanese firms...

Control is used... to achieve... efficiency and corporate goal-congruent behavior...

...authority is top-down and little attention is paid to motivating or developing the worker...

...it appears that Korean MNCs are reluctant to adapt or modify their home practices to accommodate the cultural specificities of their Mexican work force...

...prone to elicit resentment from Mexican employees...

...it is important to understand the potential sources of conflict between the two cultures...

Despite the substantial benefits, maquila operations are not without problems. Most notably, manufacturers repeatedly indicate that the area of human resource management is the most troublesome. And cross-cultural difficulties are probably the single most important factor behind the HRM challenges in Mexico. Most of the work force is young, often with little experience and inadequate education. For many, foreign maquila employers represent their first encounter with a culture different from their own. The success of a maquila operation depends at least partly on the effectiveness of the company's HRM system in overcoming --and, helping its employees overcome -- cross-cultural difficulties.

According to Butler and Teagarden (1993), HRM approaches can be divided broadly into three categories: (1) a mechanistic control approach, which is essentially a simple transplant of the home country HRM practices; (2) a paternalistic human relations approach, in which cultural problems are handled by forming extensive close personal relationships between expatriate management and the local labor force and transplanting the formal HRM systems from home, without substantial modifications; and (3), a developmental human resource approach, which integrates home country customs with culturally appropriate HRM systems. In practice, the control approach is characterized by its focus on the external means of control -- often punishment -- to stimulate desirable behavior from. the local workers. The human relations approach, in contrast, emphasizes positive rewards and promotion to those who carry favor with management. The HR approach typically includes a sophisticated reward system that provides an extensive array of culturally and contextually appropriate benefits, satisfying the developmental needs of local personnel.

Korean MNCs in Mexico use control and human relations approaches, whereas the human resource approach can be found in the United States and, to a lesser extent, Japanese firms. Control is used mainly to achieve a high level of efficiency and corporate goal-congruent behavior. Unlike the human resource approach, authority is top-down and little attention is paid to motivating or developing the worker. Thus, it appears that Korean MNCs are reluctant to adapt or modify their home practices to accommodate the cultural specificities of their Mexican work force. Although Korean employers often attempt to avoid potential problems with control by developing amicable human relationships with local personnel, their mechanistic and inflexible HRM systems are prone to elicit resentment from Mexican employees. A labor strike recently occurred in one of the Korean maquilas, illustrating the mounting dissatisfaction among Mexican workers with the authoritarian management style of their employers.

Korean firms have a relative lack of international experience compared to their American and Japanese counterparts. Attempting to transplant these practices directly to their overseas operations without regard for cultural differences obviously impedes their successful global operations. In devising appropriate adaptations in home country methods to manage people with different cultural backgrounds, it is important to understand the potential sources of conflict between the two cultures. It is in this context that we explore the principal idiosyncrasies of Korean management practices in relation to the cultural characteristics of Mexico.

...places great emphasis on such ethical values as...

...loyalty to the superior...

...filial piety to tradition...

...respect for authority...

...faithfulness to friends...

Korea represents one of the world's most homogeneous countries, both racially and culturally...

Now, as Korean firms continue to globalize, they face growing challenges in managing personnel with different cultural and behavioral backgrounds for whom their home country management practices may not be applicable. In deciding whether and how these practices should be transferred overseas, it is necessary to examine carefully the cultural similarities and differences between home and host countries.

Previous studies on cross-cultural work values suggest potential areas of cultural congruence and conflicts between Korea and Mexico. As shown in Figure 2, on the surface, the two countries seem to share more than differences. However, a valid conclusion can be drawn only after an in-depth analysis of the organizational cultures of both countries. Based on a series of in-depth interviews with Korean and Mexican managers and workers at ten different Korean maquila operations, we found that five factors are the most important: work ethics, group harmony, seniority-based management practices, top-down decision making, and paternalistic management.

...this tradition effectively influences the behavior and mentality of most Koreans...

...eui- yok...

...the lack of eui-yok is deemed to be an ultimate sin in the Korean workplace...

...those who fail to demonstrate a strong work ethic are swiftly discovered and disciplined...

...usually through very effective informal means...

...not many managers in Korea are experienced in dealing with personnel without eui- yok...

...Mexicans tend to view work not as a sacred duty but as a means to an end or a necessary evil...

Recently one of the Korean companies in the maquiladora industry stopped demanding overtime work on short notice, realizing that Mexican workers put their families above all else...

Korean managers...  have to accept that their home management practices cannot be implemented instantly and without cost in a foreign context...

Thus, Korean managers assigned to Mexico face a major challenge. Mexicans tend to view work not as a sacred duty but as a means to an end or a necessary evil. In certain cases, they behave as if they were nonchalantly committing themselves with little intention of later fulfillment. Moreover, they often fail to distinguish clearly between work and play. Such an attitude may be associated with their polychronic orientation of time.

Such little emphasis on discipline in the Latin workplace tends to confuse Korean managers. Their most common complaint about Mexican employees, as stated by one of those interviewed in our study, is that "[we] cannot be quite sure if they are really concentrating on their work or just playing around, wasting time. Mexican workers often either listen to loud radio or talk too much to each other while they are working." The Korean managers, many of whom have relatively little international experience, find it difficult to comprehend such "work to live" values of their Mexican workers. Some seem to take it personally even as a challenge to their authority. The result is sometimes culturally inappropriate reactions from the Korean managers, which in turn may deepen cross-cultural managerial problems. The following comments by a Mexican worker illustrate this point:

Mexican people have their own pride, but the Koreans look at everyone in the same way according to their philosophy and yardstick. You should not use your own cultural value as a criterion when you compare the work ethic between countries. More often than not, they set up an unrealistic goal to achieve. Then when we fail to reach that goal, they often blame us because we did not put in enough efforts to reach it. Korean workers may be willing to work more than 15 hours a day for a week. But this is Mexico, not Korea. No one here wants to work overtime two days in a row, even though that will bring more money to you and your family. As a result, Mexican managers feel very frustrated because such failure does not result from the laziness of Mexican workers, but from the Korean top management's denial of Mexican managers' participation in the production planning process. Recently one of the Korean companies in the maquiladora industry stopped demanding overtime work on short notice, realizing that Mexican workers put their families above all else.

These misunderstandings and problems may well decrease as the Mexicans become further exposed to other cultures and modern management practices. Nevertheless, it would be critical for the Korean managers to understand that they should not expect in Mexico what they are accustomed to in their home operations. They have to accept that their home management practices cannot be implemented instantly and without cost in a foreign context. Formal and informal training programs can help local Mexican workers understand goal-oriented work. Developing and announcing extended operation scheduling so that overtime requirements will not come as a surprise can also be helpful. Expatriate Korean managers should be further trained to accept behavioral differences and adjust their management styles to the local culture.

Social harmony is highly respected, and violating it brings shame and eventual exclusion...

Appearance is often considered more important than truth...

...public obligations, such work expectations, often take precedence over private, commitments, such as family considerations...

...the group is often an effective means of informally controlling the... behavior of its members...

Hofstede...revealed...< /small>

The national cultural study carried out by Hofstede (1984) revealed, Mexico as a collective society. Seeking harmony rather than conflict is important among the Mexicans, who often carefully observe face or honor as much as the Koreans. Putting on a good appearance is tremendously important at all levels of society. This need to save face makes it difficult for Mexicans to accept criticism, particularly in public.

Nevertheless, Hofstede's dimensions by themselves tend to be broad in nature and not sophisticated enough to predict cultural proximity at the organizational level. They are perhaps even less suited to identify similarity in management practices. As can be seen in the case of Mexico and Korea, despite their similarities in the broad collectivism scale, important differences exist, especially in their expectation of rewards and compensation. Koreans understand and expect that their compensation or rewards will be subject primarily to the overall performance of the group they belong to. In contrast, Mexicans seem much more individualistic. De Forest (1994) suggests that in essence, achievement is based on individual rather than group performance in Mexico. Consequently, so-called collectivism fails to be replicated at the organizational level, at least when it comes to HRM practices. The following worker complaint buttresses this argument:

We appreciate Korean management's effort to achieve group harmony. But there are some problems with Korean companies trying to create corporate culture characterized by group solidarity. For example, we cannot accept their insistence on showing up early for morning exercises or on wearing uniforms. These kinds of ritual ceremonies designed to foster group harmony are not really important to us. Our profession, trade union, or any other type of organization is only secondary to our family. We feel that those ritual ceremonies are intruding upon our "individuality," which emphasizes a person's inner qualities. Korean companies seem to require a lot of conformity to corporate routines and policies in order to create a corporate culture that values teamwork and group harmony. They need a clearer understanding that Mexican people want to preserve privacy before group solidarity.

Mexicans show a low tolerance for adversarial relationships or friction at work--probably even more than Koreans. Even the relationship between management and union is usually complementary rather than confrontational. It is not unusual for some Mexican employees to develop strong allegiances to a company, viewing it almost as family. The above worker's attitude for affiliation may enhance the effectiveness of the teamwork spirit in the workplace and, if managed properly, may benefit Korean employers. Yet Mexican teamwork or group harmony can be preserved only when it is carefully balanced with personal and individual interests. Korean managers must understand and accept that Mexican employees are not ready to be totally immersed into the group spirit like their Korean counterparts. The management system should properly accommodate the Mexican practice of balancing public and private lives.

Confucianism values tradition...

...age and experience are almost built-in virtues...

Seniority-based HRM... do[es] not follow the predefined properties of the job, but rather... [is] based on the personal profile of each individual...

...the career success and achievement base in Mexico is viewed mainly as self- oriented and thus related to individual ability rather than seniority...

The Korean practice of favoring seniority sometimes creates a problem for Mexican employees.

..in Mexico. Your individual performance and personal connection [confianza] are the two most important factors for your career success...

Korean employers will find it difficult to recruit and retain qualified and talented local personnel. Talented workers will not stay with a Korean firm whose compensation or promotion decisions are based mainly on seniority rather than individual performance...

...maintaining a minimum employee turnover rate is often a critical key to controlling costs...

Seniority-based HRM maintains that the standards for regulating status within the structure of a company do not follow the predefined properties of the job, but rather are based on the personal profile of each individual. Under this structure, the HRM system gives more weight to personal attributes, such as academic achievement, length of service, and gender, than to the content of a job or the degree of responsibility assumed by the individual employee. The culturally embedded seniority-based system has worked well for many Korean firms. It has been invaluable in creating and maintaining organizational stability and in facilitating organizational learning.

In contrast, the career success and achievement base in Mexico is viewed mainly as self-oriented and thus related to individual ability rather than seniority. Because individual capability is considered more important than seniority in Mexico, whoever demonstrates the best performance will advance to higher levels of the organizational hierarchy. The Korean practice of favoring seniority sometimes creates a problem for Mexican employees. The following comments by a Mexican manager reflect how seniority is seen in Mexican maquilas:

Seniority can earn respect to a certain extent. But what's more important is your ability to perform a job and how well you are connected to a person who has power. We generally do not want to reveal our age. It is almost like a taboo to ask someone's age in Mexico since people consider that private. I noticed that Koreans show great respect for the elderly, even though their status or title in the organization may not be high. Such is not the case in Mexico. Your individual performance and personal connection [confianza] are the two most important factors for your career success. If you lack one of these two ingredients, you won't be able move up the corporate ladder. In particular, personal connection becomes more critical as you approach top management positions. Top positions in Mexico are often filled through nepotism. Seniority certainly is not a critical factor in making decisions on promotion.

One of the adversarial results of implementing a seniority-based system in Mexico is that the Korean employers will find it difficult to recruit and retain qualified and talented local personnel. Talented workers will not stay with a Korean firm whose compensation or promotion decisions are based mainly on seniority rather than individual performance. In a country like Mexico, where talented and qualified personnel are already in short supply, this may pose a serious threat to building successful maquiladora operations.

In many labor-intensive manufacturing operations, including Korean companies in the Mexican maquila industry, maintaining a minimum employee turnover rate is often a critical key to controlling costs. High turnover means training costs will increase and experiences will not be accumulated. Indeed, many of the Korean employers we interviewed identified this as a major problem.

To recruit and retain qualified personnel, it is critical for the Korean employers to offer a compensation package that identifies and rewards individual performance. Seniority-based systems should be sustained to the extent that they contribute to organizational performance, but this should be clearly explained to the local Mexican personnel to win their understanding and acceptance.

...an attribute of the Confucian teaching of respect for authority...

...family members are taught to obey the wishes of the head of the family...

...replicated in various firms in the form of well-defined organizational hierarchies...

...Hofstede found Korea to be one of the countries with the largest power distance...

...superiors in Korea reciprocate respect from their subordinates by demonstrating substantial paternalism or empathy...

Mexico is also considered a large power distance country...

...decision-making authority tends to be centralized...

...However... the desire is that authority be wielded kindly and sensitively...

...the harsh authoritarian management style of some Korean companies may elicit resentment from Mexican employees...

However, superiors in Korea reciprocate respect from their subordinates by demonstrating substantial paternalism or empathy. Moreover, it is often considered an obligation for superiors to help subordinates, not only in their professional careers but also in their personal lives. Such relationships are rarely addressed or portrayed directly. The visible interactions between a superior and subordinate may appear harsh and acrimonious, often misleading observers who are lacking a deep cultural understanding.

Mexico is also considered a large power distance country, where unequal power is commonly accepted. As in Korea, decision-making authority tends to be centralized among a few top executives. Although Mexican subordinates tend to be generally submissive to their bosses, they typically prefer to have clear and specific directions from above, rather than work independently on their own initiatives. As a Korean manager puts it, a typical Mexican "does his best to complete a job, as long as he is told exactly what to do." However, because workers' lives often amount to being ordered about by people in authority, the desire is that authority be wielded kindly and sensitively. Mexicans value working conditions in which supervisors are understanding (comprensivo), keep their distance, and address workers formally. Consequently, the harsh authoritarian management style of some Korean companies may elicit resentment from Mexican employees, who believe that authority is being abused. In our interviews, Mexican workers reported that sometimes they are not really happy about Korean management's approach, which tends to overemphasize discipline in the workplace. The following account reflects the frustration of Mexican managers:

We have neither authority nor respect as managers. Decisions have already been made at the top management level. So Mexican managers are only implementing a designed plan. We only know what to do to meet the goal, but we do not know why we are doing it. For example, we do not understand how the decision was made to reach the targeted goal of production. Mexican managers know better how to control their own employees and how to communicate with them. Korean managers always watch our work time closely and treat us not as managers but as subordinates. We would like to increase our voice in the decision-making process, but they do not allow us to participate in making decisions. They only respect top management or the president of the corporation. The rest of the employees do not seem important to them.

Traditionally reflecting a large power distance society, Mexicans are willing to accept authority without questioning. But exclusive reliance on an autocratic style is not apt to lead to business success in Mexico. Authoritarian management style tends to have a dampening effect on the work force. Today's managers and professionals in particular do not respond well to directives and commands, although they may have done so in the past. Accordingly, it is important for Korean managers to respect each employee's role as a legitimate and honorable endeavor, even though the employee may be at the lower level. Workers expect respectful recognition of their roles within the hierarchy in Mexico.

Cheong... represents a mixed feeling that combines love, respect, affinity, and loyalty... feelings attached to people, objects, places...

...cheong is an emotional product that evolves gradually and historically from the daily life process...

The concept of cheong appears to parallel Mexican cultural values...

Maquiladora workers tend to regard their loyalty bonds... managers are supposed to take good care of their employees, based on personal relationships...

In Korean companies, employee loyalty is usually to the person for whom one works. Mexicans also follow the leaders, not the company... Workers are the manager's extended family and expect to be cared for by their bosses.

Expectation of a high work ethic... job-centered work cultures. Such firms often generate a very stressful work environment, which can result in a high turnover rate for Mexican workers...

...seniority-based career advancement also appears to be one of the main sources of problems in managing Mexican workers...

...fostering personal relationships based on strong paternalism... seems to compensate for some of the drawbacks of the work-centered organizational cultures of Korean companies...

...positive rewards need to be linked more directly to individual performance...

...taking advantage of the distinctiveness of a local culture is a much more effective HRM strategy than trying to change the local employees' behavior to fit a home country culture and the organizational characteristics of expatriate managers...

The concept of cheong appears to parallel Mexican cultural values closely. Mexicans appreciate one's emotional status over rational reasoning. A person with a congenial, likable nature is called simpatico. The perception among Mexican manager's is that a company needs a good general manager to direct each individual unit or department toward a common corporate goal. Maquiladora workers tend to regard their loyalty bonds with superiors, rather than any seniority system, as the key elements in job security: Manager is patron, or boss. Effective managers are supposed to take good care of their employees, based on personal relationships. In return, employees devote personal service to the person in authority.

The meaning of respect in Mexico arises from powerful human relationships, such as between father and son or patron and peon. Respect is likely to be more personal and more a matter of circumstances. The strength of a manager's ability to affect the life of an individual will also influence job performance at work. The following Mexican employee comments support this argument:

Even though the decision-making process is usually top-down, the Korean management style tends to emphasize personal relationships. In Korean companies, employee loyalty is usually to the person for whom one works. Mexicans also follow the leaders, not the company. We do not care much about the name of the company we work for, whether it is IBM, Sony, or Samsung. If you are a good supervisor or manager, Mexican people will follow you. So the manager has to be more of an instructor, teacher, or father than a boss. Mexicans are family-oriented people. Workers are the manager's extended family and expect to be cared for by their bosses. A manager is expected to take an active interest in his subordinates' personal and family life.

Learning the cultural savvy of the Mexican people, one Korean manager was able to control absenteeism by visiting employees' families and asking their help in encouraging the men to show up every day for work. The manager would emphasize the contribution family members were making in increasing productivity at the workplace. In another instance, when Mexican employees did not return to work after Christmas (many had gone to the interior of Mexico for the holidays and stayed to take care of family matters), the Korean maquila hired buses to bring them back. In other cases, to boost the morale of Mexican workers, Korean companies arranged birthday parties for each employee and provided them with a small birthday present.

These examples illustrate that developing a personalized relationship, which is an integral part of HRM practices in Korean companies, can be an effective means of control in disciplining Mexican workers' behaviors and attitudes, if it is carefully exercised. Korean management finally learned, that these personal bonds are what really determine whether or not employees come to work every clay, and how much effort they are willing to make.

Because companies can vary so greatly from one another, researchers must always be very careful in generalizing the organizational culture of a specific country. Nevertheless, the major organizational characteristics of Korean companies can be summed up fairly clearly in relation to Mexican workers. Expectation of a high work ethic and unrelenting dedication to work tend to breed results-oriented and job-centered work cultures. Such firms often generate a very stressful work environment, which can result in a high turnover rate for Mexican workers, who tend to mix their personal lives with their jobs. Moreover, a top-down approach to the decision process, excluding local managers' participation, tends to create tight and normative cultures in which major attention is given to rules and procedures. This requires the sacrifice of individualism and reinforces corporate goal-congruent behavior on the part of the Mexican work force. Finally, seniority-based career advancement also appears to be one of the main sources of problems in managing Mexican workers, who tend to place a higher value on individual performance and connection. However, fostering personal relationships based on strong paternalism, as reflected in the unique Korean cultural ethos of cheong, seems to compensate for some of the drawbacks of the work-centered organizational cultures of Korean companies. An atmosphere is created that facilitates a strong sense of solidarity and teamwork.

Despite some cultural similarities, the findings of this study highlight the large cultural distance between Korea and Mexico. To reduce tine potential areas of cultural clash and thereby enhance business performance, Korean companies need to create a positive work atmosphere. First, given the strong individual merit orientation of Mexican workers, positive rewards need to be linked more directly to individual performance, rather than group- or seniority-based performance. Second, local Mexican managers need to be encouraged to participate in the decision-making process and share the responsibility for their subordinates' performance. The role of Mexican managers as liaisons is critical in bridging the cross-cultural gap between Korean management and Mexican employees. These are the people who can exert great influence on Mexican workers' behavior through personally exercised authority. Therefore, Korean management should not alienate but rather embrace them as mentors who can teach them how to manage the local work force effectively. Finally, the social climate in the work environment needs to better fit the undefined melange of pleasure and work for young employees. This means Korean firms need to develop a management approach that fits the lifestyle and behavior of these young workers. The following story provides insights into creatively managing the "live to work" versus "work to live" value conflict in one Mexican operation.

This maquila had to deal with a wide variation in worker productivity: large fluctuations in individual output, high error rates, high absenteeism and turnover. In addition, management believed the workers socialized too much, especially talking to each other while working. An innovative solution to socializing was initiated. The company hired a disk jockey to play continuous music throughout the facility during working hours, loud enough so that talking was inhibited. Birthdays and other celebrations were recognized. Employee performances were updated and those who did especially well were publicly recognized. The music' is now selected by the employees, and some workers even bring in some of the latest hits or regional favorites to share with coworkers. Employees are comfortable in making suggestions about job improvements.

Music created a win/win solution to a major common challenge encountered by maquila managers. It is a culturally appropriate reward for these young, highly sociable workers. At the same time, talking has ceased and productivity has doubled in terms of output per employee. The error rate has fallen to less than one- tenth of one percent overall. The turnover rate dropped from 12 percent per month to less than 3 percent per month--well below maquila industry averages. And supervision has been reduced by 40 percent, with the employees responding to the combination of incentives and self-motivation.

Thus, taking advantage of the distinctiveness of a local culture is a much more effective HRM strategy than trying to change the local employees' behavior to fit a home country culture and the organizational characteristics of expatriate managers, such as Koreans. In developing specific policies, practices, and procedures for implementing strategy, Korean companies can learn an important management lesson on cultural familiarity from the adage, "You can catch more flies with honey than with vinegar."

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~~~~~~~~

By Yongsun Paik and J.H. Derick Sohn

Yongsun Paik is an associate professor of international management at Loyola Marymount University in Los Angeles, California. J.H. Derick Sohn is an assistant professor of management at the University of Seoul, Korea.

Source: Business Horizons, Nov/Dec98, Vol. 41 Issue 6, p25, 9p.
Item Number: 1383378