Laura Rodriguez (alias) has been working
for a year for one of the major Korean companies at its German office, after
her 25 year professional career in sales at the German headquarter of the
global number one company. As a Brazilian national, who both worked in and with
Korean and German companies, she offers a very objective and keen insight into
two distinct business cultures and structures.
All the names of the people and companies
concerned in this story are alias in order to prevent any release of
confidential information as well as to protect privacy. Facts given by the
interviewee are based on her personal experiences with a number of Korean
companies.
ME: Before
starting your job in this Korean company, have you ever worked with Korean
people or Korean companies?
Laura: Yes, of course. Even during my job
in my former German company, some of my colleagues were Korean and a number of
my main accounts were also Korean.
ME:
What was your impression about Korean companies and their working culture?
Laura: It left me a very strong impression
in a sense that they try all the measures they had or they could to make things
happen.
ME:
I also have worked in a Korean company, more precisely to say, at a foreign
branch of a Korean company for almost 2 years and I have heard or witnessed
some differences in business cultures between Korea and Germany, or Korea and
Europe. Some stand out more than others and may I focus on them first?
Laura: Of course.
ME: Korean
or Asian companies are very notorious for their extremely strict hierarchy
system. What is your opinion on this? Do you think this holds true?
Laura: Yes, this is absolutely true. However,
I believe that this hierarchical working culture is not always bad. I have seen
my Korean colleagues working very hard and highly motivated for promotion. I
guess this works very well as an effective motivation trigger. You will do your
best, as you have a higher position that you desire to move to.
ME:
How was it in your former German company?
Laura: The system was a bit hierarchical,
but compared to Korean business culture, it was nothing.
ME:
I cannot imagine a company without hierarchy. Some must be very new and others
experienced. Rookies must be trained and there must be also team leaders at a management
level.
Laura: First of all, European companies
have no such a vertical hierarchy with 10 different positions from bottom to
top like here in this Korean company. For example, in this company, you start
off as an assistant and then you will be promoted to assistant manager,
manager, senior manager, higher senior manager, team leader, division leader,
business leader, etc.(referring to 사원, 대리, 과장, 차장, 팀장, 부장, 수석부장, 디비젼
리더, 사업부장 in Korean) These English
titles directly translated from Korean sound very awkward. In my former German
company, although it was very big, we had only 5 levels from bottom to CEO
level; from normal employee, team leader, division leader, board member and finally
CEO.
In European companies, these titles are not
important at all, as they do not have such system. Each employee will be in
charge of some accounts, not many accounts (not as many as in Korea) at the
same time. Rookies will take smaller accounts and those with experiences more
important accounts. No one will be promoted, only because he/she has worked
longer than others. Instead of being promoted to the next level, you will get rewarded
by higher salary, for example, if you have well performed. Unless you are a
team or division leader, your roles will be basically the same as your
colleagues. What counts more is your expertise and performance. In fact, nobody
knows how much you earn.
In meetings, employees in European
companies feel free to raise questions and argue with their colleagues no
matter at which position they are, as most of them are very equal. After moving
to this company, I feel like I am always stirring up a bee’s nest by raising
unnecessary issues.
Korea
|
Germany (Europe)
|
|
Hierarchy
|
Top down vertical hierarchy with 10 different positions |
only 5 positions from employee to CEO
|
Work&Life
|
Too much stress due to extreme work load
|
extra hours of working only for projects
HR managing stress level of employees.
|
Performance evaluation
|
focused on the achievement of targeted sales volume
causing internal competition, by evaluating team performance
all employees under extreme stress due to hierarchy combined with board members on temporary contracts
volume driven strategy brings about financial loss or stirring market dynamics
Despite, a desirable strategy for late beginners
|
Margin driven strategy
All employees including board members on permanent contracts
|
Strategy and planning
|
10 hour plan
hasty and changing often
|
10 year plan
inflexible
|
Suggestions for Korean companies
|
Mature employees over 50 years to be nurtured
Employee stress management by HR
Long term planning
| |
ME:
What struck me while working for a Korean company is an extremely volume driven
business culture. I have heard that European companies evaluate performance of
the employees distinctively from Korean ones. What do you think about this?
Laura: This is a significant difference. Apparently,
Korean management in general finds internal competition very desirable and even
tries to motivate it by assessing performance of each department separately by
means of achieving volume. The bonus lies at the mercy of your team
performance. In Korean companies, you have fixed salary with a small bonus, mainly
subject to sales volume of your team. This combined with the vertical hierarchy
puts you under unbearable stress. Even if you are just a rookie, you will be as
stressed as your team leader, as his stress will be passed down to you. In
addition, a board member of a team is not on a permanent contract and so he can
be fired at any moment depending on (non) achievement of the sales volume.
In my previous German company, it is margin
driven and the bonus is determined not only by the sales volume of your team,
but also by overall performance of your entire company. For your information,
earnings in German companies are both equally bonus and fixed salary based. The
amount of your bonus is based on performance of your company (60%), your
team(30%), yourself(10%). Even though you or your division has shown a
relatively poor performance, this can be still fine, if other divisions have
performed well. In other words, you share all the pressure and stress with your
entire company, all of your colleagues even from different teams. Your bonus
goes from 70% minimum to 140% maximum and if you are getting 70 percent as
bonus, it means that you have underperformed and you should find another job.
Yet, however poor your performance is, you will be never fired. I don’t know
how things are in other small or medium sized companies here in Germany, but in
a major company, you have your job secured until your retirement.
Back to the question, I think this volume
driven strategy is obscure! I have seen so many Korean companies offering low
prices, obsessed with the sales volume plan, which ruins the market dynamics in
Europe and leads sometimes to huge financial loss for the company as well. In the
European market, the prices are relatively transparent. In addition, reliability
and trust are given much more weight than short term financial gain by means of
“cheap deal”. If your offer is way too cheap, then your product looks cheap and
you do not look reliable financially. Moreover, as said before, your cheap
offer can sometimes result in a bloody price cutting war, which does no good to
anybody.
I have heard that salespeople in Korean
companies are sometimes told to beg customers for more sales volume or they
choose to lose money to reach the sales targets. Some old sales guys often
boast of their success stories that they waited for their buyers every night in
front of their houses until they finally made a sales contract. Sometimes, they
force their entire team into this old school and reckless strategy. Maybe, this
could work in Korea, but if you do this in Europe, you might even go to jail,
reported as STALKER. Korean people should understand the culture and should know
what they can and cannot.
As a salesman, you have to know how to
negotiate better, you have to be smart and you should be sometimes cunning. But
I have seen once at a negotiation table that a Korean sales guy reduce the
price 5 times in a row in only 30 seconds, causing a huge financial loss to the
company. It left both me and another purchasing manager perplexed. In Korean companies,
managers do not rarely cheat by manipulating numbers or take illegitimate
measures only so as to achieve the sales volume. This is stupid.
ME:
what made Korean companies focus on volume instead of margin? Maybe they did
not have any other option. If a late beginner joins the market and tries to
steal market share from those with hegemony, it might have to focus on quantity
base sales strategy.
Laura: A good point, but…… (Laughter)
ME: What draws my attention concerning
Korean companies is considerably shortsighted business plans by the board of
members. As overall company plans or strategies are constantly changing or final
decisions are made only at the last minute, employees stay often until late
night doing extra hours. I find it very unfair that employees commit themselves
body and soul to follow decisions that they have not made.
Laura: I do not think it is unfair, as this
is what you are getting paid for! Nevertheless, decisions or plans from the
board of directors are sometimes very hasty, short sighted and volume driven. Let
us say that German companies have a 10 year long term scheme, then it feels
like Korean companies have only 10 hour plan. The weirdest phrase that I hear
very often working with Korean people is “there is no tomorrow.” How can people
work for a company without future? As said before, board members, afraid to
lose their job next year, focus only on short term gains and sales volume.
Although I have to admit that it is better
to be flexible and agile amid rapidly changing business environment. In this
regard, this fast decision making process is not always bad.
Additionally, I think employees at management
positions focus too much on details here. Distracted by each single tree, they miss
the picture of the whole forest.
ME: Do you see clear difference in stress level
at work between Korean and German companies?
Laura: Sure. Korean people in Korea (not overseas employees) are
under extreme stress from pressure, long working hours, forced socializing
events and etc. This is no fun at all. Many Germans place significant
importance on the balance between work and life and German companies also
enable or allow them to pursue this value. Germans also do a lot of extra hours
but only temporarily for special projects or when they are senior managers. One
of the most important jobs of HR department in German companies is to make sure
that one is not more stressed than others. Workers in German companies are
evenly stressed or under equal pressure. If one has too many tasks or suffers
from too much stress, then your job will be shared with your colleagues or a
new person will be hired.
Korean people identify themselves with
their company and they feel so proud of working for it. I believe this helps people
to endure that much stress and dedicate themselves.
ME: When Germans work only 8 hours a day
and Koreans 11 hours, then someday, I can imagine that we can overtake German
or other European companies, becoming global number one.
Laura: Probably. Korean companies or Korean
economy has grown big and successful at such a fast pace that no one could
believe and they will continue with their glorious successes. Even so, in my
opinion, you cannot make a good company with dead people. Excellent job comes
from only excellent people. Not the amount but the quality of employees and
their job counts. Financial profit per product should be prioritized and be the
ultimate goal.
ME: Do you think that the quality of Korean
product lags far behind that of German counterpart?
Laura: Nope, Korean product is almost as
good as German product, but for only a few items. Korean companies have much to
be done in diversification. I guess the number of product by my former German
company is at least 7 times bigger than that of my actual Korean company. Nonetheless,
it took only 50 years for Korea to achieve miraculous industrial advances that
other western countries needed more than two centuries to accomplish. Soon,
things will change.
ME: What should Korean companies do to be
more competitive?
Laura: They need to nurture their employees
better in a long term. In Korean companies, employees cannot develop or train themselves
as they cannot afford to do so due to so extreme stress and pressure. I was
shocked to see that there were almost no employees over 50 years old. The
overall work force was way too young. I asked my Korean friends where all the
old people are gone and I was told that they were fired and now, they are
running chicken restaurants. This way, no know-hows and experiences can be
shared with or passed down to younger people. There are only few people in
charge of overall management and no information is shared. I believe only rich
and diverse experiences will make one professional. Korean companies need to
keep more older people in job and make use of their abilities.
In Korean companies, pressure is considered
to be a good thing. From my point of view, this works only in a short term.
However, in a long term, this will rather drag their employees down and make
them focus only on short term goals. In German companies, as said before, your
job is secured no matter how well you perform or how old you are and this is
even true with directors or CEO. (Executives also have permanent jobs in many
German companies.) I have heard that in Korean companies, you do a yearly based
contract, once you become a board member and you will be fired when you have
not done well enough. But remember, some projects take years. Companies should
not only react dynamically to fast changes but also stick to their long term
schemes.
