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The Subtleties of Effective Leadership in South Korea

HCLI Research

Published 4 November 2015

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Heekyung (Jo) Min, Executive Vice President of Global CSV at CJ Corporation, a South Korean conglomerate, spoke to HQ Asia about what it takes to be successful in South Korea, the need for foreign managers to understand Korean culture, what Korean employees value and the Korean corporate DNA.

South Korea, which for the purpose of this article will be referred to as ‘Korea’, presents a number of unique scenarios to foreign managers operating in the country. Historically, its culture was heavily influenced by Chinese culture, and Confucian values remain deeply ingrained in the national culture. In particular, the emphasis on the Confucian concept of Five Principal Relationships that govern all aspects of society — between ruler and ruled, father and son, husband and wife, oldest and younger brother and between friends — has shaped Koreans to be very collectivistic and relationship-oriented.

These facets have influenced Korean society at every level and should be considered by any foreign manager who seeks to lead successfully there.

Lead From The Front…and the Top

Koreans believe that a business leader is like the head of the family or clan. Consequently, owner-managers of family-run businesses tend to enjoy distinct advantages over professional managers who do not have familial connections to the business. In Korea, employees look up to managers, and especially owner-managers, as paternal or maternal figures and defer to them for directions and leadership.

Whether you are an owner-manager or a professional manager, successfully leading in Korea depends on the strength of your leadership. In general, top-down leadership is more effective in Korea than a more consultative style of leadership. Korean employees expect a leader to lead from the front, have the tenacities to pursue business goals and the ability to set clear directions and strategies for the business.

Get Buy-In

Speaking from personal experience, of coaching foreign CEOs in Korea, the most common mistake they make is to assume that because the top-down leadership style is most effective, communication should also follow a top-down format. This assumption is wrong.

An effective manager in Korea is one that displays strong top-down leadership, but also effectively and clearly communicates their business decisions to every employee at every level of the organisation.

This may sound oxymoronic and highly counter-intuitive, as one would expect employees in a traditionally hierarchical society to unquestioningly execute decisions made by their managers. However, Korea is different. Employees need to first believe and buy into those top-down decisions, before they will effectively implement and execute them.

It is precisely because leadership is top-down that winning the hearts and minds of Korean employees becomes important. Mid-level Korean management will generally act on business strategies only when they are convinced in the cause and agenda of those strategies.

Plan Meticulously, Implement Flexibly

Another distinct aspect of Korean corporate culture that foreign managers need to understand is the balance between making very precise business plans and the flexibility of implementing those plans.

Compared to Western corporations, where management may sometimes make business decisions based on rough analysis or even intuition, Korean managers typically conduct detailed analyses and draft intricate business plans before making any business decisions. Yet, Korean managers seldom follow these scrupulously made plans when it comes time to execute.

Despite the commonly held perception that Korean organisations are inflexible and rigid, it is not uncommon for Korean managers to significantly change their business plans. In fact, there have been instances where Korean managers have ditched their painstakingly made and meticulously drafted plans altogether.

When I first returned to Korea after a long stint overseas, a main irritation was centred around this rubbishing of plans. Why did Korean managers spend so much time making plans and strategies today, when they did not follow or implement them tomorrow? I used to believe that making concrete and precise strategic plans gave Koreans the motivation to initiate an action, and once those plans were being implemented, Koreans were flexible enough to adjust them. However, I now interpret this phenomenon in a different fashion.

In my opinion, these meticulously drafted plans and strategies are tools for Korean leaders to build broad consensus within their organisation. Before a business leader in Korea can implement any decisions, it is important that the key stakeholders debate the pertinent issues and draft strategic plans that help put everyone on the same page. A precisely drafted business plan would be an effective communication platform for the management to articulate the organisation’s strategic directions and purposes. Once broad consensus has been built and the leader has obtained the mandate to implement a business decision, adjustments to the plans can then be made.

Foreign managers in Korea should be flexible and not feel guilty about changing business plans radically during implementation. Use business plans as mediums to build consensus and galvanise your team towards a goal, but be prepared to tweak the plan as you go along.

Loyalty is a Two-Way Street

An important feature of the Korean business landscape is the prevalence and importance of very large owner-controlled corporations called chaebols. A uniquely Korean institution, these massive export-orientated family-run conglomerates dominate the Korean economy. In 2011, the five largest chaebols, Samsung, Hyundai, SK, Hanwha and LG, accounted for over 55% of South Korea’s GDP. A defining feature of the chaebol is the notion of loyalty. Stemming from the Confucian ideology of society functioning on the Five Principal Relationships, one of the key tenets was that a person must be loyal to one’s superior, organisation and country.

From a Korean business leadership standpoint, loyalty is an important two-way concept. A business leader would expect his subordinates to be loyal to him, but at the same time he would be expected to treat his subordinates as family members and take a protective, paternalistic approach to them and their wellbeing.

Communicate Appropriately

Another important aspect of Korean business leadership is mastering the skill of communication. Compared to business leaders in the rest of Asia, leaders in Korea need to possess a multiplicity of communications skills. The business leader in Korea must be comfortable communicating to both group audiences and individual employees on a one-on-one basis. The leader must also be proficient at communication techniques that are both low-context, by being direct and verbal, and high-context, by using implicit messages and contextual cues. For example, business negotiations can be based on low-context communications, but relationship management requires high-context communication skills.

In addition to these communication skills, a business leader ought to have the ability to frame the same messages differently, depending on whether he is speaking to external or internal stakeholders. Communication is a complex issue in Korea and the ability to communicate effectively across diferent organisational contexts and hierarchical levels is probably one of the most important skills a leader in Korea can possess. Equally important, is being savvy enough to know what situations call for which communication techniques.

All the Pieces Matter

Heekyung (Jo) Min talks about the need for foreign managers and organisations to be cognizant of the high level of interconnectivity and dependency between businesses, society and government in Korea.

Running a business in Korea is not just about running a commercial entity. If an organisation thinks that it is solely their management’s prerogative to make business decisions and external stakeholders do not have a say in those decisions, they are setting themselves up for failure. This is a perilous pitfall that foreign businesses in Korea typically do not understand.

Business leaders in Korea must think about the impact of any business decisions on Korean society. Whereas in other countries, where business decisions can be more transactional in nature and are governed largely by financial interests, social sentiments surrounding business decisions are crucial in Korea. These sentiments can determine whether a business will succeed or fail in Korea.

It is vital to understand that both laws and social sentiments govern businesses in Korea. Prevailing social sentiments could sometimes even have greater impact on business than the law. A business decision may be legitimate and permissible under the legal framework, but if the prevailing social sentiment were against that particular decision, the business would fail even when the managers have not broken the law. it is in that context Korean companies are very active in its CSR and CSV activities. The shared growth index evaluations are indicators of the level of shared growth published by the Korea Commission for Corporate Partnership (KCCP) every year. By quantifying the levels of companies’ shared growth, the ratings are divided into four scales: top, excellent, good, and normal. The commission conducted evaluations of 112 large and mid-sized firms this year. Although there is no legal obligation to score well, Korean companies work hard to get a good score because a low score will lead to negative public sentiments and even government pressure.

In general, Korean society will retaliate against businesses that they deemed to have negatively impacted the society or not doing its responsibilities actively and the level of expectation is decided by public sentiment.

This article first appeared in HQ Asia, Issue 9 (2015).