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Feb 2, 2014

Korea, the Land of Perpetual Crisis, is facing yet another crossroads

Korea, the Land of Perpetual Crisis, is facing yet another crossroads -- this time Korean the focus is on renewed challenges facing manufacturing. The weakening Japanese yen together with the growing strength of Chinese manufacturing, not to mention rising costs of local labor, is placing Korea once again as the proverbial shrimp positioned between the two whales.

In fact, to a large degree, the real growth of Korean manufacturing is taking place in Korean-owned facilities outside of Korea. While this trend is real, it does not satisfactorily address what needs to be done overall. There are simply not enough domestic jobs in design, marketing and administration. A core of Korea's economy must continue to be in-country manufacturing as a central economic pillar.

Since this is an English newspaper, I'm writing with the assumption that a disproportionate percentage of readers are expatriate. Consequently, I am specifically writing to this audience, but what I have to say may also apply to Korean managers.

Though only 11 percent of the Korean workforce is unionized, that small percentage has a disproportionate influence on the overall workforce. Furthermore, I suspect when it comes to foreign-owned factories in Korea, the percentage is considerably higher. While some unions have been discredited in the public eye for all ready being well paid and perhaps spoiled, many media-grabbing labor actions highlight a real or imagined "struggle" between management and other employees in many non-unionized employee's minds.

As the old saying goes, "what we have here is a failure to communicate.'' This is the perennial challenge of any organization, but in Korea with cultural, language and sometimes political divides to cross, this issue has the potential to drive even Job up the wall.

The biggest failure for communication is a breakdown in trust between management and employees -- organized or not. And as much as it is easy to blame radical unions, most of the time the fault must be laid at the feet of management for not putting in adequate time and effort back when problems were minor and relatively easily manageable.

Last year, when I was researching our book on doing business in Korea, I had the privilege to interview some of Korea's leading executives and attorneys. Their comments reminded me of my first professional decade as a human resources manager, first working with a bank union in Seoul and later keeping a union out of a Japanese factory in California. What struck me was even after the decades working in sales & marketing, the principles of good labor relations have not really changed -- no matter where one works.

Given the limited space on this page, I will bullet point some of the most important points that can foster management-employee trust, which in turn may get everyone reading off the same page to reduce waste, improve productivity and increase overall competitiveness. Though much of the following may seem aimed at unionized shops, most if not all applies to good employee relations, regardless if there is a union.

  1. Establish and hold regular rap sessions between employees/employee representatives and the management team; summarizing the discussion in all-employee memoranda or in company newsletters.
  2. Use company training to concretely demonstrate management's commitment to your employees and the Korea operations _ as well as upgrade professional skills and teamwork.
  3. Disentangle management's compensation schemes from the union's pay increases. For example, consider keeping management's salary increases on a different cycle from the union's -- and not tied to the same economic benchmarks, such as cost of living, used to rationalize the union's pay increases. Otherwise, you may find collusion between your managers and employees.
  4. Hire a new or replace your human resources manager with someone who is not only experienced but also trained. Frankly, from over a decade in international HR, I can tell you there are competent HR professionals but they are in a small minority. Too often general management does not adequately respect the HR function and too often low company expectations allow incompetency to dominate that function.
  5. Treat all employees equally at all times, regardless of the manager's natural preferences. This should be a no-brainer, but it's one of those easier-said-than-done issues.
  6. Communicate frequently and openly about the real situation of the company to both union leadership and employees so informed employees can in time differentiate between company business concerns and union political concerns.
  7. Use athletic and social events as opportunities to signal to the rest of the employees that the union and management are getting along with mutual respect.
  8. Put in all the time that is necessary with the union or your employees' concerns -- even if it may seem excessive compared to one's past assignments.
  9. Spend at least three times as much time communicating with your management team about dealing with the union as directly communicating with the union. One bad manager can destroy a great deal of union bridge building. This also applies to non-union shops when it comes to good management-employee relations.
  10. Be aware that often senior local managers harbor grudges and prejudices against the union or groups of employees. One may find that 90 percent of your management's thinking needs to change. It is equally important to work for change with your managers as with one's union or one's other employees.
  11.  Recognize in most instances that management has much more power and resources than the union. If you are a certain distance apart between labor and management, management should travel 90 percent and labor 10 percent -- and then, together, the two can move on and steer back to the center.
  12. Don't restrict negotiating to the time of CBA re-negotiations. A skillful general manager is always negotiating. Sometimes he or she will try for a major union concession shortly after a CBA has been signed when the union leadership may be emotionally worn out.
  13. Consider unions are often like adolescents in that they are constantly probing to see what their limits may be. It is important to clearly and concretely communicate one's limits and governing principles.
  14. Do not allow unions to have a voice in promotions. Promotion is a key management control vehicle. Koreans highly value promotions for social as well as economic reasons. Management should have full control in this area as a way to keep employees in line.
Regardless of how many of the above points may apply to your company, the truly effective manager is the one who personally takes the initiative to learn about his or her employees by walking about and asking questions about them both on a personal level and professional level. Korean employees sincerely appreciate senior managers taking sincere interest in them as human beings and they are often proud to demonstrate their expertise in their given company roles. Often the difference between a successful manager who instills strong employee loyalty versus the remote manager who is often at odds with the employees is whether that executive takes a regular initiative to spend time really trying to get to know the employees and to learn from them how they are making company contributions.

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Tom Coyner is President of Soft Landing Consulting(www.softlandingkorea.com), a sales and business development consultancy, and serves as senior commercial advisor to IPG Legal. His professional involvement with Korea began in 1975.