Chaebol culture

A Korean company killed off its rigid bureaucracy—but its employees want it back

June 24, 2014
June 24, 2014

Traditional management culture in Korea is rigid and hierarchical. Many companies maintain a structure of five or more distinct ranks of employees, each of which comes with a prescribed title. A few years ago, firms like SK Telecom (paywall) began doing away with this traditional structure in favor of a much flatter hierarchy, where people referred to colleagues simply as “manager”. Others followed suit by degrees, if not in so extreme a fashion.

But employees, it turns out, don’t necessarily exult in their new freedom. KT Corp. (a competitor of SK) is now reverting to the way things were, reports The Wall Street Journal, after abolishing its five-tier system in 2009. When it surveyed employees “an overwhelming majority” said they preferred the old system. One complaint was that the flat hierarchy made executives feel inferior and underpaid compared to counterparts their age at other companies.

The rigid corporate hierarchies were informed by Korean culture, which remains strongly influenced by Confucianism (pdf) in its respect for patriarchy, seniority, and hierarchy. People got raises and promotions on essentially the same schedule, and younger employees rarely spoke up in meetings. Part of its persistence was due to the fact that the rigidity fits well with a country where military service is mandatory.

The Asian financial crisis of the late 1990s shook things up (paywall) as layoffs changed the relationship between company and employee. So did increasing competition from younger, more casual startups, prompting more traditionally managed companies to evolve.

But even though the hierarchical structure has been blamed for a number of ills, like killing creativity and disempowering people, leading companies like Samsung and Hyundai cite it as a reason they can move quickly and succeed. The executive spearheading KT’s return to the past is a Samsung alumnus.

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