Businessweek looks at the tensions between Korean and American managers at Hyundai’s US operations (something we’ve looked at here). Stuff like this:
The problem is that the companies keep booting out American talent. And many of the American executives who do stay find parent Hyundai Motor’s corporate culture to be suffocating. According to several current and former managers, Hyundai Chairman Chung Mong Koo, Kia’s Ahn, and other top executives run the companies in a far more authoritarian style than do most American CEOs. The critics say his team micromanages details, rarely listens to advice from local managers, and displays little tolerance for disagreement. “It’s a very feudal approach to management,” says Bob Martin, a former sales executive who left Hyundai in 2005 to become a consultant at CarLab, a Santa Ana (Calif.) consulting firm. “There’s a king, he rules, and everyone curries his favor. It’s very militaristic.”
Not everyone thinks Hyundai modus operandi is so bad, though:
While Chung’s top-down management style might rub some Americans the wrong way, his long-term track record in the U.S. is impressive. Under his leadership, Hyundai has nearly doubled sales in the country since 2000, to 467,000 cars last year. Kia has posted almost identical growth.
Chung, who was convicted of embezzlement in Korea last year but had his prison sentence suspended, has won praise for creating a highly disciplined company. When quality complaints started to plague Hyundai during the 1990s, he ordered engineers to attack the problem. By 2004, Hyundai had soared up the rankings in quality surveys. Unlike Detroit’s Big Three, Hyundai and Kia have fewer management layers to hold up decisions. “I can see where Americans would feel uncomfortable,” says Alice Amsden, a professor of political economy at the Massachusetts Institute of Technology who has written books about Korea and other developing Asian economies. “American management is used to a different style. But Hyundai deserves a lot of credit.”
Both Hyundai and Kia, speaking through representatives at their American units, said that all of the American managers who have left the companies in recent years were treated fairly. Even some of the executives who have departed praise the companies’ management culture. “Being aggressive doesn’t make them bad,” says Robert Cosmai, who was CEO of Hyundai’s American unit for two years before getting fired in January, 2006.
Personally, if whatever Hyundai is doing works for them, fine with me. At the end of the day, it’s all about the bottom line. That being said, if the shoe were on the other foot and it was an American company sacking its Korean staff left and right, I’m pretty certain we’d be treated to unending lectures in the Korean press about how foreign companies need to respect Korean culture and adapt to the Korean business environment. Assuming said company wasn’t LoneStar-ed first…
(HT to reader)
60 Comments
Actually, turnover at American companies in Korea is relatively high.
the koreans can run their companies any way they please. if some american who works for them doesn’t like it. the door’s always open. of course, the door isn’t the answer. no, the real answer is, korea got to change it’s way to accomodate whiney western whiner always threatening korea with ‘the world’s gonna react!’ and ‘if you wanna compete in the big leagues!’ kind of shlamarky all the while korea competes in the big leagues.
the koreans can do what they want; it’s their company!
波衣古衣皆次
shlamarky?
’shlamarky?’
i’m a former rap artist.
巌今
pawi, have you been kicked out of a Korean company for turning 40 and not making it to a top management position yet? no? Methinks if the Korean corporate culture had sucked you dry and thrown you out you might be singing a different story now.
That being said, if the shoe were on the other foot and it was an American company sacking its Korean staff left and right….
Yeah, I was wondering: Where are all the hunger strikes and red headbands and inflammatory local newspaper reports carrying the version of only one side of the dispute?
Well you have the fortune of not working for a chaebol, and yeah it’s someone else’s problem.
But I was wondering if you would say the same things, if you did work for a chaebol, saw some of the weird chaebol antics, and got fired for doing your job.
Exactly, pawi, it’s about the hypocrisy.
Yeah, incompetence and embezzlement have some consequences, even if not official ones in the third-world Korean justice system.
Anybody remember that 80’s move Gung Ho with Micheal Keaton and that Japanese guy more famous for being Long Duk Dong in Sixteen Candles? Passing thought.
Some of the more animated barbs aside on this issue, the article hints at something that has been a thought of mine for some time now. What is Hyundai going to do when their US built cars are drastically cheaper than their Korean made counterparts? Would they import them to Korea, and if so would they get “preferential” customs and tax treatment?
What’s up with the fake Chinese in the signature, pow pow?
#11 In some cultures it’s called carrot waxing but in this case the jury is still out.
#10: [Needed your tie-breaking skills last Thursday.] I think this goes beyond “Gung Ho” territory, which was pretty good natured after all. Some of those comments on the BW site are pretty vitriolic.
Honda has been exporting U.S.-built cars to Japan for a while now, so it wouldn’t be unprecedented for Hyundai to do the same. Their labor cost is undoubtedly way cheaper in the U.S. (at least it is for a certain Korean auto parts manufacturer located nearby). Those years and years of strikes add up to real money after a while.
Actually, turnover at Korean companies in Korea is relatively high.
#14 I have a friend who has changed jobs at least once a year for the eight years that I have known him.
“it’s way to accomodate whiney western whiner”
Actually I’d have to say Koreans are the biggest whiners I’ve ever seen anywhere. A few disgruntled corporate executives complaining to Newsweek or some expats/teachers venting on a few foreign blogs from time to time doesn’t compare to the organized whining Koreans are so adept at. Even a perceived slight in a minor Olympic sport such as speed skating causes such a childish reaction in the Korean psyche that they must result to protests and even death threats against the other skater. A traffic accident resulted in nationwide candle vigils and a World Cup loss resulted in the FIFA web server being crashed by thousands of whiney netizens.
Even a Korean expat living in the US getting paid in dollars & enjoying the freedoms paid for by the sacrifice of others still finds a way to whine and attempt to incite animosity on a little known blog (apologies Robert) over trivial issues that most people couldn’t care less about. I could go on all day but I think I’ve made my point. It would appear that Koreans aren’t happy unless they are whining.
Is it the “Korean Victim Complex” that results in this behavior? Is it some genetic disorder where the slightest perceived disparagement can only result in a childish tantrum and the need to lash out? Is it a cultural thing combined with a herd mentality, xenophobia and excessive nationalism? I don’t know but some whiney bitter little Korean who never has anything productive or positive to contribute about anything stereotypically calling Westerners whiney is the ultimate in hypocrisy. That’s like Charles Manson calling Nelson Mandela a criminal for being wrongly imprisoned. I’d pity them for having to go through life with what’s almost a psychological disability if they weren’t so annoying.
The bottom line in all of this is that Hyundai and Kia still have a tough obstacle to overcome in enhancing their overall brand image in the united states and I don’t think dipping into the luxury market is going to give them that boost that they’re expecting.
In the USA, African Americans are the #1 purchaser of Kia automobiles and this is solely due to the fact that Kia cars is one of the cheapest brands around (I’m not attempting to generalize income levels of Afr. Americans, just stating whats factual). Also, whats very telling is that out of the dozens of korean americans that I know NONE of them own/drive korean cars. Out of the 30 or so that own cars, 50% of them own US brans (mostly SUV’s and some buick sedans), 35% own Japanese (honda accords and civics, toyota camrys, honda crv’s and some lexus mini suvs and toyota vans). The other 15% drive bmw 3 series and the ubiquitous benz. I think its quite telling that koreans in america stay away from their ‘home’ brand in droves. If hyundai can’t even tap into that million+ market what hope do they have of converting middle america or the jaded, hipper then thou West Coaster?
‘In the USA, African Americans are the #1 purchaser of Kia automobiles and this is solely due to the fact that Kia cars is one of the cheapest brands around (I’m not attempting to generalize income levels of Africans…’ mondoo
and who’s buying the hyundai label, mexicans? you’re not trying to disparage blacks? really? i think you are. your implication is only blacks buy korean cars because they is poooooooooooooooo! you got racist written all over you.
‘I think its quite telling that koreans in america stay away from their ‘home’ brand in droves. If hyundai can’t even tap into that million+ market what hope do they have of converting middle america or the jaded, hipper then thou West Coaster?’ mondoo
you must be missing all those reports of record sales for hyundai. you must be missing all those awards from folks like jd powers and consumer report. perhaps if you lift the hood, you will see more clearly.
巌 古 衣
American consumers seem to make a distinction between Hyundai and Kia. I see far more Sonatas, Elantras, and Excels on the road than whatever the heck Kia makes. I test drove a number of cheaper models from both manufacturers before settling on an Elantra, which hasn’t given me hint of trouble in the three years that I’ve owned it. I did not like the way any of the Kias drove, especially the acceleration, which huffed and puffed like the Little Engine That Could. The Elantra was the best car that I could buy for the cash I had saved, and if I had to do it again, I would make the same choice, and I’ve got plenty of company in the mostly white town where I live. Kia hasn’t made it into the middle class here, but Hyundai definitely has.
A colleague has a sporty American pickup that’s given her grief, and she’s ready to get rid of it. This morning she was asking me all about my cute little car, and I had nothing but praise for my trusty companion.
Actually…turnover in the American company I worked for in Seoul is reletively low and most staff leave when other Korean companies are in awe of their experience in a market leader and offer them more cash and a better position.
Also the industry my company is in growing and head hunting can fierce. Some companies like a healthy turnover. I’m not in HR..but perhaps 5-15% is as ok.
btw, you used the fact that blacks buy kia as a way to disparage the company. of course, you weren’t trying to disparage blacks, now were ya? think before you write.
峴 皆
I am sure Hyundai can carve out some kind of niche, the US auto market is a pretty big place. That includes any boost they can get out of the “luxury” market.
However I emphasize “niche” the hubris that they will unseat a Toyota/Lexus or a Honda/Acura is a bit far fetched given the problems the company has as outlined in the article and you allude to.
One thing not mentioned that bothers me about Hyundai/Kia’s future is how far behind the curve they are with the US market. The leading edge now is in Hybrids and more luxurious small and fuel-efficient models. Yet Hyundai/Kia seems stuck in about 1999 with its model line with its sedans and stream of crossover SUV’s, even the US advertising I have seen reflects this mindset. And this is endemic, can ANYONE remember when Hundai/Kia was ahead of the curve?
What may very well happen to the company it will get stuck in the middle and be a smaller operation. Unable or unwilling to compete for the compact market, not really accepted as an equal to BMW or Lexus, and not fuel-efficient/green enough to compete for the middle. As I said though I am sure they will find their niche, but unsure of the size of it (let alone the chances of that niche able to unseat a major player).
pawi, your reading of those comments is (thankfully) unique. And I can only hope you never get a Chinese-character tattoo based on your mostly random use of those.
‘your mostly random use of those.’
lol
巌
‘However I emphasize “niche” the hubris that they will unseat a Toyota/Lexus or a Honda/Acura is a bit far fetched given the problems the company has as outlined in the article and you allude to.’
a bit far fetched? i don’t think so. can i ask what you said when samsung said it wanted to catch up with sony? don’t bother. you’re predictable.
‘there probably won’t be a hyundai in ten years.’ german executive from mercedes in 1997
‘build ships? lol!’ ghost of dram man to koreans
‘a bit far fetched? i think not.’ pawikirogi
岑 皆 次
One thing I have picked up over this high turnover kerfuffle is that management wanted the Kia brand to be more respected (therefore, no silly commercials). Thus, it looks like they’re into muddling the distinction between Kia and Hyundai, which is a mistake GM made a while ago (as in “what’s the difference between a Buick and Oldsmobile?”). Here is how I’d position their brands to do well in the U.S.:
1. Kia–sporty, fun, inexpensive
2. Hyundai–reliable, sensible
3. Genesis–luxury
Note that Genesis has to be a different brand, not a Hyundai model, with different showrooms and service setup. No self-respecting country-club elite would be caught dead in a Hyundai showroom.
Really? I recommend he does get a tattoo, and that he then sends it to Hanzi Smatter, for our amusement.
Where are the beatings and the compulsory binge drinking-athons? The Americans are missing out on most of the fun.
#23: “pawi, your reading of those comments is (thankfully) unique.”
I got the same vibe as Pawi’s from Mondoo’s comments about most Kia owners being black, but Pawi beat me to it. Then I was too embarrassed to speak up.
#26: “Here is how I’d position their brands to do well in the U.S.:
1. Kia–sporty, fun, inexpensive
2. Hyundai–reliable, sensible
3. Genesis–luxury”
I think you’re absolutely right, especially that Genesis must be totally separate.
The luxury brand really needs to be separate as the above posters said.
You mix the brand image together and you can kiss the Genesis brand goodbye.
The auto industry is more about vertical differentiation and not horizontal.
I used to think Pawi was trying to communicate a message with his character signatures, so I posted a short, very simple comment to him in Chinese on a previous thread.
‘I can’t read Chinese, so use English’ Pawi
‘班门弄斧’ Sonagi
Mrs. Linkd learned this little bit of wisdom in one of her marketing classes (~ 20 years old now?):
Sony wanted its home electronics equipment to be a premium brand at premium prices. During economic downturns prices tend to drop. But premium customers actually like to pay more for their stuff, and avoid things with “Sale!” stickers on them.
So Sony (bought? created? can’t remember) AIWA, and sold it through department stores, never in a Sony store. During price wars, Sony could fight the price wars using AIWA, and preserve the brand integrity of Sony.
No need to belabor the parallels to the current discussion about cars, I assume.
I missed this before:
Pawi said:
The article is not saying that Korea has to change its way to accommodate whiney westerners, man, the article says that a Korean company has to change its ways to meet its own sales goals. There’s a problem, you see, and that problem, from the article, is this:
Its not about personal whines, its about not meeting sales goals.
So here, you have a business problem and a business solution. Hyundai isn’t selling enough cars to meet their own expectations, because they keep firing their American marketing teams. They should stop firing their American marketing teams.
That’s how normal people read articles. But you, you have to fixate on the nationality of everyone involved and completely miss the point of the entire article, by insulting everyone who’s not Korean and irrationally praising Koreans all over the place.
Sad thing is that you’re not alone, and this is why I have very few Korean friends. Too many Koreans do this in every single conversation about everything.
Good point mateomiguel.
It must be remembered that one of the authors of the article in question is a Korean named Moon Ihlwan.
With regards to differentiating the Genesis model from the Hyundai brand (image) in the US, what I find rather interesting is that Hyundai apparently is trying that more conspicuously here in Korea.
I can’t remember where I read it (Korea Herald perhaps; sorry but a quick search didn’t turn it up), but I was struck by the fact that Hyundai has chosen to leave off all “Hyundai” nameplates/insignia for its Genesis model sold here in Korea.
Yet, it is apparently putting these markings ON its Genesis model sold in the US. I found this to be vaguely counter-intuitive for some of the same reasons outlined above. Moreover, I kind of thought Hyundai might have gone the way of Japanese carmakers, who decided to market their luxury brands separately (e.g. Lexus, Infiniti).
Indeed, I walked by a new Genesis the other day and asked a friend what she about it. After looking it over, her reaction: “Nice car. Who makes it?”
For whatever it’s worth (nothing, actually), when I first saw the Genesis, which was from the front, I really liked it (reminded me of an Infiniti/Lexus), but I when I walked around to check out her ass, I thought “typical Hyundai.”
BTW, a related article (not the one I mentioned above).
“Hyundai Motor Advised to Build `Premium Image’”
http://koreatimes.co.kr/www/ne.....ryCode=123
Pffft, call me racist if it makes you happy. like i said above, just stating the fact that Afr. Americans are the primary purchasers of Kia.
and who cares what JD Power award hyundai recently won? The fact of the matter is that they’re still hampered by piss poor forecast planning (eg - sitting months on end of exceses inventory of TENS OF THOUSANDS of ready for delivery vehicles and a dealer chain ripe for revolt). Yeah, I’d say that the brand is ‘healthy’ in the USA. Answer me this - why are korean americans not buying korean cars in the US???
A typical day at the office…
Me: Hi Mr. Kim, your company needs to change X, Y and Z in order to succeed outside of Korea.
Mr. Kim: Um… [teeth suck] You want me to ask our CEO to change something?
Me: Well, you are paying us $50,000 a month for our advice on how to be a successful global company.
Mr. Kim: Oh geez. Wow. [more teeth sucking] Can you maybe just review our power point presentations instead and make sure the English is correct?
nothing random, and it ain’t chinese. chinese only ones who used chinese characters?
岑 皆 次
Brilliant, ecorn.
#49: Thanks for the chuckle.
You have to wonder why Genesis didn’t get done as a separate brand in the U.S.? I mean, after all, the easiest way to get an exec on your side here is to say the Japanese have done it and are successful.
Oops: #37: Thanks for the chuckle.
I’m an American working on a project for an American company that has hired a Korean company (one of the big chaebol) for a big construction project. I’ve been here almost 2 years in Seoul. Also, our company has done lots of business with other chaebol companies in the 5 years I’ve been with them.
Korean companies are all about a top-down management style. This clearly has worked for them on some levels, since they have become major players in several big industries-shipbuilding, auto manufacturing, etc. They set a clear goal and they got there by pursuing it singlemindedly.
But the difficulty comes when reality conflicts with the CEO’s (or for that matter, any supervisor’s) expectations. When I bring a problem to my counterpart engineer, the conversation always goes like this: “Mr. Park, the pump you have specified is too small. The system will not work.” (names have been changed to protect the innocent) “But I am out of man-hours on this job. I cannot redesign it because I cannot ask my boss for more hours. Besides, procurement has no budget for a larger pump and the procurement person is older than me.” Hmmm. “But Mr. Park, you need to solve this problem, otherwise the facility will not do what it’s supposed to and it will cost you millions.” [teeth sucking noise]. The engineer knows that if we don’t change the pump, the entire project will crater. But he can’t tell his boss. How can this be an effective management style?
Bottom line, if you want to succeed in the ‘big leagues’ you need to listen to your subordinates. If you don’t you’ll keep making the same mistakes again and again. I haven’t seen the Koreans ever do that in engineering or construction.
BTW ecorn, thank you for the ‘teeth sucking noise’ line, I fell off my chair laughing when I read that; it was dead on.
Pusan people have the worse teeth sucking noise. It petrified me when I use to be a photographer in college and I had a Korean boss… it meant that I had to do the shooting all freak’in over again.
‘if korea wants to be in the big leagues.’
now see, this is the kind of arrogant claptrap i can’t stand. if korea WANTS to be in the big leagues? got news for you, buddy; korea already in the big leagues. what you’re really trying to say is the very same thing you say about korea in general, korea got to change to accomodate your whiney western self. no, they don’t.
‘i was just pointing out blacks buy kia.’ mudoo
yes, you were, herr grossendragon, weren’t you?
峴 皆
so, how many of you have run around the net trying to figure out my sign offs? slim, for sure. lawyer too. why don’t you just ask dog? aks him if they’re random.
# 40,
Getting a separate brand isn’t a simple matter. It means setting up an entirely separate division with its own engineers, marketing people and operations people. It means setting up an entirely different supply chain. All that costs money and capital expenditures of that magnitude bleed cash flow, something that’s not too strong right now for Hyundai.
Also, what if they did set-up an entirely separate brand today? They have maybe two products to fill the pipeline, the Genesis sedan and the coupe? Hardly enough volume to pay for the upfront capital expenditure commitment.
Nissan had the successful Z, Maxima and the Pathfinder, which became the basis for the Infiniti G35, I30 and QX45. Toyota had the Avalon, Camry and Harrier, which of course became reglossed as the Lexus ES, LS and RX vehicles. Hyundai doesn’t have any of that yet. At this point, it’s just prudent business to develop the basic Hyundai product mix before making the whole new separate luxury brand plunge.
I’ve also been working in the Korean business world for about two years now, although not with as large companies as Steve up there. But I have been able to successfully argue with my bosses (two so far) and get things changed whenever they needed changing. The Koreans working with me noticed that and started telling me whenever ANYTHING was going wrong. Then I’d incorporate it into my next talk with the boss. They seemed to find this much more preferable to actually speaking themselves. And hey, as long as things get done right I’m happy.
pawikirogi,
Let’s be honest here. There are times to support things Korean and times not to. I think when it comes to international managerial style, many Korean companies still have some ways to go. I’d say that Samsung and LG have a better reputation in this regards. Hyundai automotive much less so.
Also, Korean car companies are not really “in the big leagues” yet. We are somewhere in between, something like above Ford (which I believe we’ve left in the dust, but hey, they are sucking wind anyways) but looking up on five or six other players. The bulk of Hyundai’s sales are in Korea, Latin America, India, Eastern Europe. The U.S. and Western Europe are important, but not very sizable markets for Hyundai yet. Given how much labor costs are rising and the rising threat of Chinese automakers, Hyundai has to figure out how to break more into markets in the developed world to make sure their avenues of growth are protected, otherwise, the Chinese will out Hyundai and out Kia them and Chery and Geely will out pace them.
To get to where Hyundai needs to be, they not only need world class automotive products (which they are getting) but they need world class management also. The angry, stuffy, flaky Korean ajushi with a emperor complex just isn’t gonna cut it. He’s not gonna be able to get along with the outside talent that has the MBA from Wharton and/or Sloan and will butt heads against him. However, in order for Hyundai to get to the next level and keep a comfortable distance from the Cherys, Geelys and BAW’s of the world, they need this kind of management talent.
and we need gyopos to buy Hyundais instead of bringing their Japanese car to church, and listening to words about how the Japanese persecuted Christianity during the occupation.
Hyundais aren’t bad as you claim. Still, gyopos imagine it turns into a ddong-cha after 1 year. The Japanese car is also a status symbol. You know, like a guy with a ego problem, going out and getting the biggest gun or car he can buy.
Hyundai Elantra is its own car,
like Nissan Sentra is its own car.
Pretty much the same car with some variations and face lifts every couple years.
Nissan Sentra is a worser car overall, though.
The gyopo will buy this Sentra, though.
Why? Because it’s a Japanese car. Made somewhere in North America for the North American market.
or they could just buy a samsung car which uses the nissan engine.
Samsung cars aren’t for sale in North America.
When I was in the Navy I learned it was called (at least in the Navy) the “Seven-Molar Suck”.
wjk, I think you accidentally tacked on the truth to the end of your racist diatribe! Wow!
Whereas Hyundais and Kias are currently made to appeal to the ego of one CEO, and not for the market.
racist? It’s on the same lines as
“Buy American”
you know, the crap Ford and GM dishes out at every auto show. Kind of like a dead dog’s plea.
UAWorkers is the problem. Not their cars.
SM5, I believe is the Nissan engined SamSung version of the Sentra.
This is actually an excellent example.
Here you have a great side by side comparison of technically a Japanese car driven around at domestic price in Seoul.
Versus the Hyundai Lantra, a Hyundai Korean engine in Seoul.
Honest to God, which car is better?
Of course it’s the Lantra.
Switch this around to North America.
The gyopo buys the Sentra over the Elantra.
Mind boggling.
Prior to the late 90’s, North American gyopos contributed to the South Korean economy mostly by MONEY LAUNDERING.
And, taking South Korean wives to be naturalized.
Early 90’s, late 80’s. I guarantee you the washer was a whirpool, not an LG. The car was a Japanese car, not a Hyundai. Actually, it’s still a Japanese car. The cell phone which didn’t exist was a Motorola pager or a Panasonic wireless telephone.
QED.
wjk,
Again, stop accusing us of laundering money for our relatives in Korea. That’s crazy talk… blantenly untrue…
#42
“Bottom line, if you want to succeed in the ‘big leagues’ you need to listen to your subordinates. If you don’t you’ll keep making the same mistakes again and again. I haven’t seen the Koreans ever do that in engineering or construction.”
There was an article published in Businessweek that described how Samsung did away with the Confucian order in its design center.
http://www.businessweek.com/ma.....910003.htm
“Samsung’s designers have broken through the barriers of Korea’s traditional Confucian hierarchies. Although Korea has loosened up as democracy has taken hold in the last 15 years, respect for elders and a reluctance to speak out of turn are still the norm. And Samsung as a whole still holds lots of meetings where Confucian order prevails. But the design center is different. Located several minutes’ walk from company headquarters, it’s a place with no dress code, where some younger staffers dye their hair green or pink, and where everyone is encouraged to speak up and challenge their superiors. Designers work in three- to five-person teams, with members from various specialty areas and levels of seniority — all working as equals.”
# 57,
That’s part of the reason why people in the states will seriously debate whether or not they will buy a Samsung over a Sony or Panasonic. Whereas in the states, compare a Hyundai, Toyota and/or a Nissan, that Japanese brand wins more often then not.
The company I work for has a fleet of Hyundais. We call them the disposable cars. They keep breaking down and are in the shop being worked on constantly. For what it’s worth…
I never buy anything Korean. LG, Samsung always breal down and have quality problems. Now I buy only Japanese stuff. It’s more expensive, but long-lasting and reliable. Also Koreans are horrible in their HRM which leads to culture clashes everywhere: in US, Germany, CIS and Russia. Their authoritarian style and demands to bow are awful.