UNIVERSITY OF ABERTAY DUNDEE BREAKING BARRIERS Lecture 5
UNIVERSITY OF ABERTAY DUNDEE : BREAKING BARRIERS Lecture 5 – Managing in Asian Countries Japan and South Korea 9/4/2021 1
PART 3 B 3. 2. The Japanese Approach (Japan & South Korea) 3. 2. 1. Introduction 3. 2. 2. The Socio-Economic Context 3. 2. 3. Labour Market Trends 3. 2. 4. Management and Organization 3. 2. 5. Recruitment and Selection 3. 2. 6. Training and Development 3. 2. 7. Rewards and Remuneration 3. 2. 8. Employee Relations 3. 2. 9. Conclusion 2
PART 3 B 3. 2. The Japanese Approach (Japan and South Korea) 3. 2. 1. Introduction u The practice of management in South Korea was developed in line with the Japanese model not just because of their close geographical location and cultural heritage but also because of the direct control of Korea by Japan from 1910 until the end of the Second World War and then, from about 1948, both countries embarked upon similar construction developments and economic reforms and challenges. u Despite being different in their political institutions and their economic infrastructure, they share a management model that is based on similar work ethics, employee attitudes, economic challenges and organizational 3
3. 2. 1. Introduction (cont. ) u u NB. Often argued that their success has resulted from the quality of their human resources and the credibility of their management systems Both countries – reputation for manufacturing excellence and efficiency due to distinctive production practices and employment policies National businesses are protected by the State from external competition Highly regulated labour markets 4
3. 2. 2. The Socio-Economic and Political Context u u u Economically, both countries have virtually no mineral resources and very limited natural resources and their economies are very reliant on the import of raw materials and hydrocarbons from other countries but they have been exemplary in their incredible economic success. Both countries are members of the WTO and OECD countries. They were affected by the 1997 Financial crisis but recovered very fast. Both countries are among the world’s largest and most technologically advanced producers and exporters of automobiles, electronic goods, semiconductors, wireless telecommunications equipment, computers, chemicals and processed foods. They have a small agricultural activity but have large fishing fleets to supply them with a variety of seafood for which their cuisine is known. The Japanese economy has been enduring short-term pain for long-term gain, as it has been changing from manufacturing to service industry, and has become 5
3. 2. 2. The Socio-Economic and Political Context (cont. ) u u US – major investors in South Korea – 50% of all foreign investments, Japan 20% American investors focus on services sector Japan – focus on manufacturing sector Asian financial crisis 1997 – Govt intervention to bring about economic recovery: - control of interest rates - deregulation of financial sector leading to greater transparency - reduction of restrictions on foreign direct investment - encouragement to restructure and downsize 6
3. 3. 2. The Socio-Economic and Political Context u u u Politically, Japan is a constitutional monarchy with a parliamentary government. The head of the state is the Emperor who has symbolic roles. The leader of the majority party or of the majority coalition is normally elected by the Diet (parliament) as the Prime Minister who is the head of government. South Korea is a democratic republic state where the head of state and commander in chief of the armed forces is an elected president. As in Japan, the head of government is the prime minister. The legal system of both Japan and South Korea is modelled after the European civil law system with much influence from the US law. Culturally, as explained in the introduction to Part 3, both countries are influenced by Confucianism, which stresses the value of harmony, conformity, avoiding conflict and maintaining long term relationships. The Japanese and the Koreans pay particular attention to class, status, education level, age and seniority because these factors determine the level of respect an individual should get. 7
3. 3. 2. The Socio-Economic and Political Context (cont. ) u u Stronger emphasis on the role of the group rather than the individual Collectivist behaviour Link to Total Quality Management principles and practice Group orientation impacts employee relations, business operations and management practices 8
3. 2. 3. Labour Market Trends u In overall the labour markets of both countries are characterized by: l l l A low level of unemployment; Declining employment in agriculture and industrial sector but rising employment in the services sector (>67% in both countries) The domination of conglomerates (Chaebol and Zaibatsu) employment practices; Employment created by the spread of foreign direct investments (this is more for South Korea than Japan); Hard-working, multi-skilled, committed and loyal workforce; Limited opportunities for women in employment; women seen as home and family caretakers linked to two tier employment status (regular v peripheral workers) 9
3. 2. 3. Labour Market Trends (cont. ) Increasing numbers of part time employees u Practice of lifetime employment has practically prevented the rise of unemployment u Japanese economy – increasing job insecurity among the middle aged population Hiugh unemployment men aged 45 - 54 u South Korea – rate of unemployment is low but has especially affected people in their twenties and graduates u Japan – unemployment August 2015 – 3. 4% u South Korea – unemployment August 2015 – 3. 6% (Source: www. tradingeconomics. com) u 10
3. 2. 4. Management and Organization u Although many factors have contributed to the success of Japanese and Korean economies, it has been argued that their management has been a significant success factor. The Japanese model of management, which incorporates aspects of HRM in South Korea, is characterized by: l A high emphasis on quality improvement (QC, TQM, JIT, etc. ); - competitiveness due to continuous minor improvements, new ideas and improvements motivate employees to work harder and increase organisational commitment - group working seen as essential element of success - main strength = development of new products l Having clear mechanisms for consultation, communication and decision- making (The Ringi System); 11
3. 2. 4. Management and Organization (cont. ) l Exercising a kind of paternalistic leadership style, emphasizing single status between the leaders and the subordinates; - Unitarist approach – employees seen as having shared organisational objectives - Most employees feel sense of belonging and responsibility for goal achievement - Line managers take care of employees welfare l A relative provision of job security (from lifetime employment to employment adjustment); - continuous implementation of training, education and job rotation programmes l l Moving from full-time to flexible employment practices; and Separating between management at home and management abroad in the case of their MNCs. 12
3. 2. 5. Recruitment and Selection u u Most of the methods of recruitment and selection that are known in Western countries are used in Japan and South Korea but with different levels of emphasis. For example, it is reported that their companies put the same effort into recruiting blue-collar workers as the US and European companies put into the recruitment of managers from top universities. In overall, the process of recruitment and selection in Japan and South Korean is characterized by: l The recruitment of generalists than specialists; l Giving high importance in graduate recruitment to the reputation of the college or university; l Giving more importance in selection to personality and character than skill and qualification; l Hiring friends and relatives through the word of mouth (more common in South Korea than Japan); and l The use of headhunting (the American way) to help combat a lack of professional and skilled employees 13
3. 2. 5. Recruitment and Selection (cont. ) u u Tendency to employ young and adaptable employees with little experience – ‘blank canvases’ Common induction programme South Korea – new recruits spend three to six months on collective induction training Selection process – includes written exams and interviews – emphasis on attitude and personality 14
3. 2. 6. Training and Development u u u Both Japanese and South Koreans value education highly and see it as an important aspect of citizenship. They also value life long learning & continuous training. Confucius culture emphasizes on the respect of the teacher and the educated in society but learning is still by rote and memorizing. In overall, training and development in the Japanese model, including South Korea, is characterized by: l l l The use of induction training – seen as the most important step in integrating the employee into the organisation On the job training and job rotation – seen as best way to gain new skills and important for all employees Company specific training rather than focus on 15
3. 2. 6. Training and Development (cont. ) l l Self-development through formal education and training. Enhanced learning through evening courses and distance learning – positive attitude towards improving work performance – self responsibility Management training and development - Japan – development of own style of holistic managers through on job training and job rotation. Development of own management policies. Linked to preference for young people who can be trained in the company way – moulding managers - South Korea – US type MBAs and US type business schools Both are now running their own MBA programmes in order to bring Western management to the East 16
3. 2. 7. Rewards and remuneration u In Japan all wages are determined at the organizational level as agreed between the management and the company union whereas in South Korea rewards are determined annually by the Ministry of Labour in consultation with the Federation of Korean Trade Unions (FKTU) and the employers’ associations. However, in both countries l there has been a move from seniority based to performance-related pay, l there is a statutory minimum wage but wages are higher in Japan than in South Korea and in many of the industrialized nations because the cost of living in Japan is one of the highest in the world, l the level of pay is very much dependent on organizational size and sector, l most employers offer generous bonuses and favour internal promotion as a means to reward hard working employees. 17
3. 2. 8. Employee Relations u u Japanese employees have a constitutional right to organize trade unions, to bargain with management for better pay and working conditions, and to go on strike when necessary. Traditionally and especially over the last three decades the Japanese employee relations system has been exemplary in promoting industrial peace and employeeemployer cooperation. One of the main characteristics of this non-adversary and cooperative employee relations is the institution of the enterprise union. Unlike the Japanese system, employee relations in South Korea have been characterized by state-control and violent industrial actions. It was not until recently that trade unions were allowed to be set up, to bargain and to organize strikes. The Korean system is highly regulated as almost all aspects of employee relations are stated in codes of practice and statutes. The Korean government uses such 18 laws and regulations in order to control labour
3. 2. 8. Employee Relations (cont. ) u Collective bargaining - Japan – conducted at local and plant levels between the company union and management - Collective agreements – legally binding for a maximum period of three years - South Korea – collective bargaining widely practised particularly in the chaebol which are normally unionised. Any deal contravening state imposed laws is void. 19
Key Concepts Kaizen – continuous improvement u Chaebol (South Korea) and Zaibatsu (Japan) – conglomerates u Ringi System (Japan) – clear mechanisms for consultation, communication and decision making u 20
3. 2. 9. Conclusion • • • Although both Japan and South Korea have virtually no mineral resources and very limited natural resources and their economies are very reliant on the import of raw materials and hydrocarbons from other countries they have been exemplary in their incredible economic success. It is very often argued that their success lies with the quality of their human resources and the credibility of their management system. The Japanese and the South Koreans pay particular attention to class, status, education level, age and seniority. Not responding in the right way to the right people and not being sensitive to such cultural values may damage personal relationships and destroy opportunities for business deals. Therefore the practice of management is determined by national cultural norms and values, Confucianism in particular, which has a powerful impact on employee relations, work ethics, and business operations. 21
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