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[VIEWPOINT]Korean Management From the Outside

Published: 05 Jan. 2003, 16:47

Koreans and Japanese sometimes refer to the relationship between their nations as "close but distant" or "similar but different." As a Japanese who has worked in Korea the past three years, I think I may be able to highlight some of the differences between the two countries' cultures, customs and ways of thinking. Both countries are influenced by Confucianism, but it seems that Koreans tend to stress filial piety (hyo) while the Japanese accentuate loyalty toward the group (chung). How do these different emphases affect management?

A Korean business leader once dubbed the Korean corporate management style as "OK management" and the Japanese style as "yes management." In "OK management," the boss makes clear-cut decisions swiftly, but there is also something personal, like consideration for and reliance on employees, in the concept. From a positive angle, this style reflects the flexible thinking of a continental people. From a negative angle, "OK management" is an inconsistent system in which personal capability and the interests of the top management are mixed with business.

Korean businessman say Japan's "yes management" is more like an island people's, and is characterized by subtlety and indecisiveness. The Japanese commonly share the concept that when a group acts in unity, there is nothing to fear. It was three years ago that I got my first culture shock at the difference in Korean and Japanese values. I had been transferred to Korea, which was in the midst of the financial crisis. At that time, bonuses were a major issue in labor-management negotiations. The labor union contended that companies were obliged to pay bonuses to workers because bonuses were protected by law. In the long term, if the company had consequently gone bankrupt, the workers would have lost not only their bonuses but their jobs, but these workers were focused only on their short-term gain.

"OK management" has its positive sides: It encourages quick decision-making and flexibility. On the other hand, this management system relies on the flair of individual leaders, and prioritizes short-term interests. This can be seen when we look into the research and development investment of Korean companies. According to the Korea Industrial Technology Association, total investment in R&D by Korean companies last year was just over $10 billion. This accounts for only 6 percent of the investment of Japanese companies. R&D investment by Korea's top 15 firms came to 5.6 trillion won ($4.3 billion) － less than that invested by Japan's National/ Panasonic alone.

This simple comparison of statistics is not an entirely fair one － there are differences in the countries' histories and economies. But the figure draws attention to the authoritarian structure of the Korean management system, whereby orders from above are valued over data analysis or "process management," whereby power and responsibility is diffused throughout the company.

On the other hand, though it may seem shallow-minded and indecisive to Koreans, "yes management" is a form of process management guided by quality control and data analysis. "Yes management" pursues middle- to long-term benefits and emphasizes customer satisfaction. Workers have a self-sacrificing attitude and always root for their company.

According to an April 23 newspaper article that carried the 2001 world competitiveness almanac by the International Institute for Management Development in Switzerland, Korea's national competitiveness ranked 28th out of 40 countries, the same as last year. Korea ranked 31st in corporate efficiency, 4 places down from last year's 27th ranking, and was placed 44th out of 49 countries in business environment. This indicates that many companies find it difficult to operate in Korea. I would like to see Korea's "OK management" adapt to the trends of globalization and informatization.

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The writer is chairman and CEO of Fuji Xerox Korea Co.

by Takasugi Nobuya