Case Study Sample: Corporate Culture of SK Telecom

Case Study Sample: Corporate Culture of SK Telecom

The Change of Corporate Culture of SK Telecom

1. SK Telecom is attempting to distance itself from which South Korean cultural value? What indicators of this value are identified in this case study? What other artifacts of this cultural value would you notice while visiting a South Korean company that upheld this national culture?

The changes introduced in SK Telecom are aimed at distancing the company and its’ employees away from one of the basic South Korean values – hierarchy. In both society and business in this country hierarchy plays an extremely significant role. Age and social position define the ways, in which people communicate, how to behave, and even which words use to address each other. All communication between two people, in both personal and professional setting, is based on their places within the hierarchy.

In the SK Telecom case factors that point at hierarchical structure within the company are: the position of Daeri, that is more significant and respected than the one of “manager”; no argument and criticism of superiors; clear differentiation between managerial ranks; age as one of the defining qualities for an individual’s promotion. Moreover, the case study notes the respect with which people at a higher position are treated by their inferiors. While visiting a Korean company one can notice a number of other signs of hierarchical structure. For example, communication between people of different ranks varies, as there are even levels of politeness, which a person should use for people at various steps of the hierarchy (Bammel, 2008). Moreover, the ways in which people behave and present themselves according to their status are so distinct that a person familiar with the South Korean hierarchical structure is able to define their place without asking. Moreover, as the relationships in a hierarchical structure are paternalistic, one can see that superiors pay more attention to their inferior employees than it would be happening in an authoritarian company.

2. In your opinion, why is this hierarchical value so strong in South Korea? What are the advantages and disadvantages of this value in societies?

As it was already stated, one of the main features of Korean society, same as its’ business system, is the hierarchy. It is so strong in the society, as it has deep roots in the country’s religion and beliefs. Korean hierarchical structure is based on the traditional Confucian system of interpersonal relations. To get the understanding of this cultural value one should have a deeper understanding of the teaching of Confucius. Korean hierarchical relationships are built on the principle of a vertical and are divided into five types: Sire – subject (superior – subordinate), father – son, husband – wife, older brother – younger brother, friends (Soo Kee, 2008). According to one of the leading authorities in matters of national character, hierarchy – the Korean way of existence, and leaving the hierarchical structure is equal to leaving Korean society (Lee, 2004). Absolutely equal status of the two people involved in a communication process is an exception rather than the rule. It happens only among the members of the last of the described pairs.

Unlike purely authoritarian structure and its top-down pressure system, hierarchical relationship imposes obligations on both sides. The junior person is obliged to obey the older one because it is necessary; and a senior, therefore, a (theoretically) higher moral character, must take care of the younger ones for concerns that involve the feeling of duty (Lee, 2004). Thus, Korean company culture should not be perceived as authoritarian, as people at lower levels are not purely elements in a large mechanism, which have to work smoothly for the common good. This responsibility that an older person in a hierarchy takes for the younger one ensures that people at lower hierarchical levels have mentors and advisers, not only bosses.

A consequence of the hierarchy is the maintenance of clear distance between the older and younger members of society (as well as the company) (Choi, 2004). Attempts to people who do not know the system to put everyone on the same level is perceived as blatant insubordination. The extent, to which this subordination is a mean of coercion depends on the relationship of the hierarchy with other components of the Korean administrative culture. If authoritarianism generates a view at younger company/society members as the subject of power, who responsibilities but no rights, personalism, on the contrary, adds to the relationship of senior and junior employees certain warmth, which brings the system closer to a family model (Park, Rehg, and Lee, 2005).

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The manifestation of hierarchy in the bureaucratic behavior can be seen primarily through the predominance of vertical links over the horizontal, as well and modeling relationships of the patron – client type (Soo Kee, 2008). The organization of horizontal communication among representatives of different branches of power or departments in a company, who while doing approximately same tasks may perceive each other as competitors are much more difficult (Rowley and Bae, 2014). Most clearly this problem is visible in the process of interaction of the power structures or complex coordination when the problem lies at the confluence of interests of different departments.

The hierarchical structure of society in conjunction with the authoritarian method of decision-making not only binds the initiative of lower management levels but virtually eliminates the possibility of constructive criticism (Choi, 2004). This is a great problem of the system, as people at lower managerial levels are not able to make a p[ositive contribution in the company development even if they are willing to. At the same time, company top management may lose the contact with the reality, which will bring only the negative consequences of company development. Without adequate criticism from people who possess knowledge and understanding of the issue top-management can make wrong decisions.

One of the examples of the complexity of criticism and communication between different levels in the Korean system is the difficulty of organizing an academic discussion, in which open criticism of the teachers or senior colleagues would be possible (Park, Rehg, and Lee, 2005). To oppose senior positions is considered to be a blatant insubordination, as it is similar to criticizing own father. Therefore, many of the largest Korean scientists and artists prefer to work abroad, thus having a possibility for open discussion and communication with people on different levels of power and knowledge.

Another negative consequence is a hierarchy is the respect for rank, when a man is respected not for one’s personal qualities, but because s/he occupies a particular position. Therefore, formal leadership is the only form of leadership recognized in the company (Naranjo-Valencia, Jiménez-Jiménez, and Sanz-Valle, 2011). Informal leaders, no matter how strong, are still accountable to the formal leader and cannot present a position that is in opposition to the formal leader’s one. Taking into consideration the fact that formal leaders do not always have true support nad respect of employees, this type of leadership can have a negative impact on the efficiency of company employees and their desire to execute all tasks with proper quality and speed. This lack of desire to complete assigned tasks would be especially visible in cases when the tasks do not correspond with the employee’s understanding of the problem.

One more significant disadvantage of hierarchy in business is that it hinders career development (Choi, 2004). If in Western society a smart and capable manager can make a career fast enough and go ahead of less competent and capable elderly, it is impossible in Korean society. Young specialists who are very talented and willing to work still have to reach a certain age in order to get a promotion. This quality of hierarchy is very disadvantageous for the development of Korean companies, as without support and encouragement in form of promotion promoting young specialists loose the desire to achieve more and provide better results.

On the positive side of the hierarchy are the orderliness of the system and administrative mechanism that is clearly working, as a hierarchy implies a clear delineation of responsibilities (Bammel, 2008). Therefore, in a Korean company it is very easy to understand who is responsible for which task, thus time is saved on allocating assignments and finding people in charge. This quality of Korean company culture is very clear in cases of crisis, when decisions that are made fast have to be executed even faster and without any questions (Rowley and Bae, 2014) 

In a developing country, hierarchy can become a basis for the nation’s stability, as it has happened in Korea. The rapid economic development of the state was too much extended a result of its’ reliance on a hierarchical system, in which people quickly complete their tasks without questioning the authority and correctness of decisions. Stability and discipline, which go hand in hand with hierarchy, lead to the most efficient work and fastest results (Sang-Hun, 2008). Therefore, Korean companies have in fact presented the advances of a hierarchical system when they’ve made a technological leap in order to achieve the level of development of other technological states. Therefore, when a company has to follow a definite route without any changes in company’s politics, Korean hierarchical system is the best way to achieve highest results at the shortest time possible (Sinha, 2005).

3. Do you think that SK Telecom will be successful in integrating a more egalitarian culture, even though it contrasts with South Korea’s culture? What are some of the issues that may complicate or support this transition?

Of course, the easiest way would be to create a corporate culture from scratch. But this is possible only in the formation of new organizations. Therefore, SK Telecom would face a number of significant complications while adjusting to a more egalitarian corporate culture. While forming the new corporate culture the top management should take care of adjusting the key elements of corporate culture, such as replacement of unwanted and outdated values, norms, and rules for those meeting new realities. This should be done gradually and tactfully in order to avoid sharp resistance and rejection of innovations from employees, especially those with long experience in the organization (Naranjo-Valencia, Jiménez-Jiménez, and Sanz-Valle, 2011). The process of adjustment would be very complicated particularly for a company with a hierarchical structure.

The major problem faced by SK Telecom management is that company’s values and culture contradicts with those national ones. One should remember that in Korea hierarchy is not only the main structure of businesses but is, in fact, in the basis of the whole society. Therefore, while refusing to adhere to hierarchical structure SK Telecom goes again the cultural values of its’ country of origin. Except the misunderstanding that this change can cause in the society and the change of perception of SK Telecom there are also problems that will arise within the company due to the new untraditional way of management.

People, who have lived according to the set of beliefs and values will be forced to re-adjust to new rules at a workplace. Therefore, those SK Telecom employees who have always lived in accordance with Korean tradition will need time and effort to adjust to the new values and methods of the company’s culture. Moreover, people will have to live through the contrast between values at a workplace and those in personal life. Here one can argue that the majority of people gave the task of adjusting to values at a workplace, which is different from those in everyday life, therefore SK Telecom employees will not have a unique experience.

As it was already noted, the older generation, which spent more time with the company, will have more trouble adjusting to new rules. This is especially true for a company and society, in which the authority of older generation has always been ultimate (Bammel, 2008). While Korean adults know that they are respected and listened to no matter what younger generation thinks of their thoughts and decisions, the older employees of SK Telecom are faced with a dramatic change, which ruins their perception of work and own place at a workplace. Therefore, the older generation within SK Telecom can feel that the change in the company deprives them of all the privileges they have had while working there.

At the same time, while part of company employees will feel uncomfortable while adjusting to the change, one can say for sure that younger generation would be willing to adhere to new rules and regulations. Korean youth, which is less supportive of country’s hierarchical tradition (here one can blame the influence of globalization and Americanization of societies as one of its’ results), will willingly accept new corporate culture. Their work efficiency will increase, as the freedom provided by more egalitarian company structure will allow younger inspired employees to have more influence on the company and its’ decision-making process.

It is true that the process of adjusting to egalitarian corporate culture will be a complex and complicated one. Firstly, employees will have to adjust to the new rules and regulations within the entity; secondly, these new rules contradict the major set of beliefs and values of the society. Therefore, SK Telecom will have to make a number of important steps in order to ensure a smooth transition from hierarchical to egalitarian culture. Firstly, it would be essential to explain the problems the company is facing with the current organization of working process. It would provide logical background to the change. Taking into consideration the fact that Korean employees are willing to support authority, the change would be accepted. The second step would be the process of adjustment of employees to the new methods and values within the company. This step would require training, discussions, and additional coaching, which would help SK Telecom employees adjust to the new corporate culture and perceive it as their own.

4. You have just been employed at SK Telecom as a graduate. Discuss perceptual process and problems that you may experience as a new employee.

The problems I might experience as an SK Telecom newbie depend on a number of factors, but the major one is if I was raised in the Korean culture or not. If I’m not Korean, it will be still complicated to adjust to the company structure, even if it has already shifted to the egalitarian one. Even if the rules and regulations have changed, it still does not mean that on a subconsious level all employees have already accepted the new corporate culture. Therefore, while behaving according to the Western tradition of communication and business relationships I can still be perceived negatively due to inability to relate to other employees on the sub-conscious or tacit levels. For a Korean graduate, it would be easier to adjust to the new SK Telecom structure. On one hand, I will be an individual raised in Korean tradition, thus familiar with the tacit norms existing within the company; on the other, I am a young person who lived in a globalized society, thus along with the norms and traditions of my culture I’m familiar with those of the Western civilization. Therefore, I’m more interested in working in a community that supports my personal development and initiative. It might take some time to adjust to the company’s egalitarian structure, as before my employment in SK Telecom I’ve most probably lived and studied in a hierarchical community. But, after the adjustment process, I will be interested in working in the company that supports my personal and professional growth.  Of course, there is a possibility to meet some negative attitude of people who have been with the company longer than me, especially when I’m be showing initiative and desire to take part in the decision-making process. This attitudes will remain in the company for a while until everyone familiarizes him or herself with the new values of  SK Telecom.

Reference List

  • Choi, J.T., 2004. Transformation of Korean HRM based on Confucian Values. Seoul Journal of Business, 10 (1).
  • Bammel, S.S., 2008. Succeed In Korean Business by Understanding Korean Company Hierarchy. [pdf] Korean Consulting and Translation service, Inc.
  • Lee, J.K., 2004., Confucian Thought Affecting Leadership and Organizational Culture of Korean Higher Education. Radical Pedagogy, 3 (3).
  • Naranjo-Valencia, J. C., Jiménez-Jiménez, D., and Sanz-Valle, R., 2011. Innovation or Imitation? The role of organizational culture. Management Decision, 49(1), pp. 55-72.
  • Park, H., Rehg, M. T., and Lee, D., 2005. The influence of Confucian ethics and collectivism on whistleblowing intentions: A study of South Korean public employees. Journal of Business Ethics, 58(4), pp. 387-403.
  • Rowley, C., and Bae, J., 2014. 11 Culture and management in South Korea. Culture and Management in Asia, 187.
  • Sang-Hun, C., 2008. South Korea pushes to dissolve ‘the old way’ of business culture. The New York Times, [online] 
  • Sinha, J., 2005. Global champions from emerging markets. McKinsey Quarterly, 2, pp. 26-36.
  • Soo Kee, T., 2008. Influences of Confucianism on Korean Corporate Culture. 

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