[Management in Korea] Reversing culture of scarcity

Management in Korea is a regular column written by the members of Egon Zehnder Seoul touching on various aspects of Korean enterprises and business leaders and offering management tips. -- Ed.



Korean companies historically have been reluctant to recruit from the outside. Increasingly, however, they are hiring external talent, particularly when they need to quickly expand in a critical area. 

Unfortunately, our observation in working with many of Korea’s leading corporations is that external hires rarely get the chance to succeed. They are seldom given the support and guidance necessary to successfully transition to the new company. 

They receive significantly lower first-year performance evaluations than their internal counterparts. And not surprisingly, the majority leave before their contract comes up for renewal. 

The ability to mix internal and external hiring is an essential part of having an optimal talent management strategy; a company that is unable to look beyond its walls when it needs to will be at a significant disadvantage over those that can search more broadly for the best possible talent. 

An enterprise that wants to make itself more hospitable to external hires, however, will have to confront a pervasive problem among Korean businesses: a culture of scarcity.

In a culture of scarcity, there is never enough credit, reward or profit to go around; more for you means less for me. In this zero-sum environment, people respond by banding together in cliques and power circles to protect what is theirs.
 
Loyalty and trustworthiness thus are valued above ability and potential. Any executive honest with himself or herself will have to acknowledge that this describes the typical Korean business. Us-vs-them infighting and internal politics are everywhere; the young professional finds that getting hired is just the first hurdle in an endless battle for acceptance by one group or another.

Cultures of scarcity are very good at perpetuating themselves. Unless they have worked extensively abroad, most Koreans lack any meaningful firsthand experience with an alternative. 

Many come to believe that the current arrangement is “just how things are,” and treat those coming up behind them the same way that they were treated. So the cycle continues, with executives often subjecting those starting their career to a prolonged hazing period to test their loyalty—and being even tougher on outside hires, who, with different ways of doing things and unknown relationships, are infinitely more “dangerous.” Under these conditions, it is no wonder that so many outside hires fail. 

The problem of successfully integrating executives brought in from elsewhere thus is much more than a talent management issue. The entire business culture needs to be reworked for everyone. This is clearly a complex task, but one can begin by doing three things:

1. Celebrate wins as company-wide victories. Emphasize that anytime the company prospers, opportunity for everyone increases.

2. As much as possible, make promotion and compensation based on clear and objective benchmarks for performance rather than subjective evaluation, which invites favoritism and rewards relationships over ability.

3. Actively invest in employee success through mentorship and training and development. Employees need to have reason to believe that their success and advancement does not depend on others’ being held back.

It is ironic that cultures of scarcity place so much emphasis on loyalty and trustworthiness. The fact is that zero-sum environments breed exactly the opposite: self-centeredness and suspicion. 

Replacing scarcity with opportunity requires leaders to break a vicious cycle—an act of considerable emotional generosity and strength. 

But in the end, those who do so will find that it is not only good for business, but that it is the surest way to build genuine loyalty and trust throughout the organization.

By Eugene Kim and Kim Ah-jeong


Eugene Kim is the managing partner of advisory firm Egon Zehnder Seoul. He works with public and private corporations, family-owned enterprises, nonprofit and government agencies to provide board advisory services, CEO and leadership succession planning and development. He can be reached at Eugene.Kim@egonzehnder.com



Kim Ah-jeong is the head of research at Egon Zehnder Seoul. She leads the Seoul research team, covering more than 200 projects from various industries. She can be reached at AJ.Kim@egonzehnder.com