Reference no: EM13221961

Until recently, Hur Jae-hoon could end debate with junior staff members just by declaring that the discussion was over. Employed at the fourth tier in SK Telecom Co.'s five-tier management/professional hierarchy, the 33-year-old strategist held the corresponding title of "Hur Daeri" and received plenty of respect from people in lower positions. No one below Hur was allowed to question his decisions, and Hur was expected to silently comply with requests from above. South Korea's culture of deferring to people in higher positions was deeply ingrained in the telecommunications company. In some South Korean companies, such as Samsung, junior staff members aren't even allowed to initiate conversations with anyone above their boss.

Now, in spite of South Korea's strong hierarchical culture, SK Telecom wants to support more egalitarian values. It has already removed its five management ranks and their differentiated titles and status. The English word "Manager" is now used to address anyone employed throughout the five former ranks. (Hur Jae-hoon's title has changed from Hur Daeri to "Hur Manager"). Only vice-presidents and above retain their previous status titles. People in charge of projects or people are also called "Team Leader."

Furthermore, the company is assigning project leadership responsibilities to employees in their twenties, whereas these roles were previously held only by people with much more seniority. As an added change, the company is allowing a more casual dress code at work.

Through this dramatic shift in values and practices, SK Telecom's senior executives hope that junior staff will speak up more freely, thereby improving creativity and decision making. They particularly want to avoid incidents such as one that occurred several years ago in which an excellent idea from younger employees was initially shot down by their bosses. The junior staff suggested that allowing customers to change their cellphone ringtones to music chosen by the friend they've phoned would generate revenue through music licensing. Fortunately, the idea was introduced several months later, after a few persistent employees proposed the idea again.

SK Telecom's initiative is not completely new to South Korea. Small high-tech companies already embrace egalitarian values and flatter corporate structures. But SK Telecom is among the first large firms in the country to attempt this culture shift, and it has met with resistance along the way. SK Telecom executives were initially divided over how quickly and to what extent the company should distance itself from South Korea's traditional hierarchical culture. "There were ideas for gradual versus all-out reforms," recalls chief executive Kim Shin-bae. "But the word 'gradually' means 'not now' to some people. So we decided to go all-out."

According to a company survey, 80 percent of employees support the changes. However, even with the changes in titles, many still look for subtle evidence of who has higher status and, therefore, should receive more deference. Some also rely on what positions managers held under the old five-tier hierarchy. "I know what the old titles were," says an LG Electronics Co. manager who supplies cellphones to SK Telecom. "So unconsciously, I keep that in mind."

Hur Jae-hoon admits there are times when he prefers a more hierarchical culture, but he believes that SK Telecom's more egalitarian values and practices are already showing favourable results. In one recent meeting, a younger colleague sparred with Hur over the better way to complete a strategy project. "For a moment, I wished it was back in the old days when I could have shut that guy down," Hur recalls. "But I had to admit his opinion was better than mine, and I adjusted. So the system worked."

Discussion Questions

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