Streamline Training & Documentation: A New Style in Korea

Thursday, August 23, 2007

A New Style in Korea

Right on cue, the Wall Street Journal published an article this week describing how SK Telecom, South Korea's largest cellphone-service provider, has flattened its organization in an effort to stimulate the creativity and innovation the company needs for continued growth. This news fits well with the discussion in earlier posts of similarities and differences between Asian and non-Asian business practices — and of how the similarities seems to be increasing as globalization proceeds.

Reporter Evan Ramstad describes SK Telecom as a company where previously there were five staff ranks. It was

a rigid top-down structure where people with a lower title weren't allowed to question [a higher-ranked person's] decisions in meetings. In turn, if anyone above [a person in rank] asked him to do a job, or even just go out drinking after work, he couldn't say no.

As of this past October, the ranks are gone. Now everyone in those staff positions has a common title, the English "Manager" (see graphic below). Executive titles are unchanged, and managers in charge of projects or people are "Team Leaders" as well as Managers.

Source: Wall Street Journal 8/20/07
Kim Shin-bae, SK Telecom's CEO, explains that the company recognized a couple of years ago that they had to make changes:

To let new ideas bubble up, we needed a new business culture. It requires different incentive schemes, an organizational structure, a financial-resource-allocation process and a business-development process.

Ramstad makes clear that the change at SK Telecom is by no means a universal phenomenon in South Korea, though "Smaller companies, particularly in high tech, long ago embraced flat hierarchies and openness."

There have also been changes in compensation at SK Telecom. Base pay used to be based on rank, but now other performance measurements are taken into account. Bonuses for those working in new ventures are now calculated by looking at how the ventures fare over a three-year time frame, rather than a single year, which is generally too soon for a venture's potential to be realized.

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Labels: Organizational culture, Upward influence

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