AM Lecture 5

Management > Asian Management > Chaebol > Lee's management challenges > Lee explained

Lee explained

Long Hours

Workers were made to work far too hard and too long, meaning that after a certain number of hours, productivity declined. The government recently considered making chaebols shorten hours. However, there has been resistance from chaebol leaders, as they feel this new law would reduce output.

Due to the long hours, workers pace themselves, so they do not work as hard per hour than many other countries, illustrating that longer hours does not mean greater productivity.

Sales Orientation

For 36 years, Korea's export growth has averaged 22.4% per annum. However, there is a constant pressure to increase sales, but as sales are driven by management policy, profitability is ignored and the firm becomes a financial viability.

Top Management

The owner/chairman has absolute power and decisions are made without consultation, which can have disastrous consequences. One example is Samsung and its failed attempt at entering the already over-crowded automobile market.

Limited rewards

Management promotion is based on seniority and performance. There is a lack of motivation to focus on performance and so the planning horizon remains short-term. One result of this is the manipulation of accounting information to meet short-term requirements.

Unethical executives

There is a lack of transparency at high levels and information is shared by a select few. Bribery is also the "lubricant" of business, integral as it is to the business environment.

Training and HRM

There is much formalised HRM training, but it often not sufficient, causing HRM mismanagement.

Decision Making

There is a complex and long decision-making structure, where decisions are made at the top. Although a "team" system was introduced in the 1990s, this change is superficial.

Lack of focus

Managers try to do too many things and do them all themselves, which makes for a competitively weak system.

Business Planning

Planning is done yearly, but the new plan is usually just a slightly modified version of the first one. Chaebols are not reactive the the external environment in terms of planning. Workers are accustomed to routine work only, claiming that they are specialists if they have worked there for a long time, rather than having learned any skills.

Corporate behaviour

Effects of law reforms