Business Culture: Five Questions Addressed
1. What defines leadership in the foreign country?
2. What cultural issues might come into play when formulating an appraisal and compensation system?
3. What motivates employees in this culture?
4. How does one negotiate in the new country?
5. What would cause conflict for South Korea work teams? Does it differ from other types of teams?
1. What defines leadership in the foreign country?
Leadership will prepare to assess individual differences and perform to follow the foreign policies in a different environment. Leadership in each country has its own style: the US prefer individual leadership style rather than collective leadership style. In contrary, some Asian countries, such as China and Korea prefer collective leadership style by a party rather than individuals. Therefore, understanding modality can help deal with people in given situation. We may feel pressure in the way they lead or what they tell us what to do, so we need to change. Ayman states that "there is also evidence that attitues about what makes for effective leadership have been changing". (Ayman,2006). We Americans may think that leadership is to depend on personal traits. This is not true as Ayman has experiences of being a successful leader. We learned that we will be able to know how to deal our coworkers and our boss with modality by looking at their eyes, listening to what they say carefully and knowing how they feel about us. Then, we are able to make a good judgment of our behavior and others’. When participating with followers, we as leaders should see the clear quality of life what is essential for local people, customers and employees and then make a judgment of relationship and decision. McFarlin also said , “Approach other cultures with the idea of testing your sophisticated stereotypes.” We need to change our “individual” style and adapt their culture so that we can be “the most effective international managers”. (McFarlin, 2006) Leadership is about to have concern in recognition of one’s service and objectives. We first have to think about how we can work well with others and ensure our followers have the same goal and achieve objectives together. The more we understand the needs of staff, the more respect we get. Always, leadership in all over the world is to help people achieve the goal when they perform their task in identifying the organization’s resources and capabilities of strength and weakness.
By: Ha U Lei
Fall 2008
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2. What cultural issues might come into play when formulating an appraisal and compensation system?
When formulating an appraisal or compensation, culture of South Korea might come into play. Host-country evaluation is the performance appraisals provided by managers from the country where the multinational has located a facility. (McFarlin, 2006) There are always language problems between the expatriate and the host-country’s manager, since managers might not be able to communicate or tell the expatriates the feedbacks. Oddou stated that about 67 percent of upper managers in U.S. corporations have no international experience whatsoever, let alone experience in the country in question. (Oddou, 1991) Therefore, there will be a lot problems came up when an expatriate started to work in the host-country.
First of all, South Korea is general emphasis on coaching, and the amount of feedback is low; moreover, the criticism is done very indirectly. Since the emphasis on face saving is very high, the delivery method is done individually. Besides, the level of formality is informal and not written, and the determinant of positive appraisal is seniority. (Harris, P.R., 1991) As a result, appraisal and compensation are necessary. In order to give appraisal to the expatriate, there will have performance evaluation toward the expatriates. Cascio stated that many times, these sponsors will conduct performance evaluations using the cultural perspective of the home office, and assessments of such programs show them to be successful. (Cascio, 1995) However, it is very common that many multinational companies just export their appraisal forms to their host-country companies. (Arvey, 1991) Therefore, there are quite a few cultural problems with their appraisal systems in the host-country. South Korea is a high power distance cultural country that it is easier for them to accept commands from higher authority. Employees usually feel uncomfortable to work without instructions from supervisors or managers; they rather work under control and instruction from the upper levels. There is a tendency for employees in South Korea to say “yes” to questions that they might not really know, or they don’t want you to lose face. Therefore, when formulating an appraisal or compensation, it is better to emphasize on the questions or regulations that are crucial.
From what Gomez-Mejia stated, Compensation strategies in a global context, it shows that the characteristics of compensation system in South Korea need extra performance variables, group compensation scheme likely to be successful, and equality/need rule is important. The trend of formulating an appraisal or compensation system is getting more and more popular in South Korea, as well as the whole world. It is because it motivates employees to work harder. Townsend stated that one study analyzed the effect of both country and cultural categorization on compensation practices. (Townsend, 1990) Since they are from a high power distance, they usually obey and do what they are told to do, which might also means that they do not need to put extra effort into it. Therefore, when formulating an appraisal, employers need to pay more attention to this culture. Besides, employees in South Korea are loyal to their company that they might work for just one single company for their whole life. In this case, the compensation might be higher than other countries, since their employees work longer time in the company. However, sometimes there might still be some misunderstandings or terms that need to negotiate and in this case, one main method is the ad hoc approach, in which individual employees negotiate with their firm for covering the costs inherent in a foreign assignment. Expatriates can try this method to negotiate with their employers. Company needs to pay more attention to these cultural differences from other countries.
By Queenie Suen
Fall 2008
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3. What motivates employees in this culture?
Communal stated that what motivates employees and how they respond to feedback may vary dramatically depending on cultural factors, all the talk about “globalization” and “value convergence” notwithstanding. (1999) In fact, cultural values (such as the value placed on hard work and thrift) may affect employee motivation in ways that can help explain different economic growth rates across nations. (Granato, 1996) Overall, universally applicable approaches to motivation are rare because there are relatively few shared values across all cultures. (Hofstede, 1993) Therefore, when we talk about motivation, we should be specific.
Herzberg stated that there should be motivators such as challenge, responsibility, autonomy, and accomplishment are necessary, and job enrichment is referred to providing motivators as injecting motivators such as autonomy and challenge into the job setting. Also, how employees view their relationship with employers may have important implications for motivation. (Thomas, 2003)When the comparison of outcomes to inputs is in balance, employees should feel satisfied. If it isn’t, employees often try to restore the balance somehow. (McFarlin, 1990)
Bond claimed that employees in collectivistic cultures are less likely to apply equity concepts when distributing rewards than employees in individualistic cultures. Since South Korea is a country with collectivism culture, which is opposite to United States’. Employees in South Korea feel more comfortable to work in groups. In order to work in this collectivism culture, it is better for the expatriate to know ahead of time; otherwise, it will only cause frustrations to the expatriate. Employees work in the group who has established respect and trust from team members will intend to work hard in order to make each other successful, which also motivates other team members to work harder. Besides, in South Korea culture, managers want to see actual performance or achievement from employees’ assignments. Therefore, it is a task-oriented behavior building that requires employees to show their abilities and performance. This kind of South Korea culture also motivate employees to work harder or pay more attention, since their managers want to see the result of their work and their abilities.
There is a reinforcement approach, which is an approach that gives rewards and punishments in order to motivate employees to work better. Skinner stated that it is very effective that if we link consequences to desired behaviors in terms of motivating employees. (Skinner, 1969) For example, managers can improve employee performance by applying positive reinforcers (e.g., big bonuses). Conversely, poor performance can be eliminated by carefully applying punishment (e.g., a pay cut). (Sweeney & McFarlin)
Path-goal leadership approach is a model that predicts that a leader’s effectiveness is contingent on how well leadership style aligns with various aspects of the situation. In this approach, there are four basic leadership styles:
Directive: The leader provides clear procedures, guidelines, and rules for subordinates to follow when doing their jobs.
Supportive: The leader focuses on subordinates’ needs and overall well-being to maintain positive relationships.
Participative: The leader consults with subordinates, solicits their opinions, and otherwise involves them in decision making.
Achievement-oriented: The leader focuses on maximizing subordinate performance by setting lofty goals, providing challenges, and emphasizing excellence.
(House, R.J. 1971)
Here is a South Korea term “Inhwa” also related to motivation in workplace. “Inhwa” is a term that extracted from Confucian beliefs that describe harmony. Since South Korea has “Inhwa” culture, people in South Korea will show respect, formality, and loyalty to others; and because of this, Korean usually response in a positive way. With this “Inhwa” culture, it creates a mellow atmosphere in the working place, which can motivate employees to work more as a group and have good relationship with each other.
By Queenie Suen
Fall 2008
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4. How does one negotiate in the new country?
Negotiation
One approach to negotiating internationally is called the macrostrategic approach. This approach “focuses on how negotiation outcomes are affected by the relative bargaining power of the parties.” (Stoever, W. A., 1981) An example of this would be if we were negotiating with a company in South Korea, at first we may be in control of the negotiations and terms, however as the negotiations approach the end, the host country will usually be given the final say if the deal will go through or not. This shift of power is classified as macrostrategic negotiation. Another approach used when conducting negotiations across seas is called comparative negotiation. This approach deals with “what happens between negotiators during face-to-face interactions and how those interactions shape the outcomes that result.” (Graham, J. L., 1983) It is so vital when negotiating between cultures to understand each other’s customs and manner of doing business. “A multicultural team could make bargaining perspectives, traditions, and tactics clearer for all sides and help resolve any culturally driven impasses.” (Gulbro & Herbig, 1984) In order for a US firm to have success while conducting negotiations in Asia, “Americans need to devote time, effort, and patience to building relationships.” (Tung, R. L., 1984) This is due to the fact that business in Korea is secondary to personal relationships. Below are some things to do and not do when conducting negotiations in South Korea. It is organized into the categories: Before Negotiation, and Negotiation.
Before Negotiation
When doing negotiations in South Korea, or doing any sort of business in South Korea, it is important to carry with you many copies of your business card. Make sure to have the reverse side of your business card translated into Korean, and to include your title on the card. Koreans will understand what kind of power you hold and responsibilities you have by the title on the business card. When exchanging a business card, be sure to do it with both hands. Usually the exchange is followed by a bowed head, and usually a handshake if they incline. Always read the received business cards for a moment or two so you do not offend them by just putting it away in your pocket really fast. Koreans tend to be hesitant with working with someone they are not acquainted with very well, try to meet them through a third party beforehand. Since status is much respected in South Korea, it is a good idea to research who it is that you will be negotiating with so that you can match their negotiators with negotiators of equal rank and authority.
The negotiations will often begin with the host country offering coffee or another drink to establish rapport. Be sure to accept their hospitality even though you may not be thirsty, or even drink it. Small talk or conversation may follow to break the ice due to the fact that personal relationships generally take superiority over business practices. “A respectful rapport is the basis for a successful business relationship in South Korea. To solidify this rapport, it's important that you remain sincere and honest in your business dealings.” (Kim, 1997) Allow the person with whom you are negotiating with to begin the business negotiations.
Business Negotiations
Generally most Koreans are hospitable and friendly. If it appears as though the negotiations drastically turn more emotional, it is important to maintain your composure and to keep cool. Both parties will most likely be offering a price far too low or far too high, and after negotiations both parties should feel like they settled fairly. “Making sure the other party feels it also got a good deal, therefore pays off in the long run.” (Adler, N. J., Graham, J. L., & Gehrke, T. S., 1987) Do not go into negotiations fixed on getting your offered price, insisting on having your way will be looked down upon by your Korean business associates. Don’t be afraid of getting the silence treatment, at times this can be used to wear down the other party. All though in Korea the eldest person usually is given the most respect, decisions are made collectively, whereas most business decisions in the US are made by a single person or manager. “Confucianism is deeply rooted in Korean society. South Korea is a collectivist culture, so the group, rather than the individual, prevails.” (Kim, 1997) Always give respect to the eldest in the room by opening the door for him or following his movements. Do not wear sunglasses or smoke in their presence.
If you are negotiating with a younger Korean, it is more than likely that westernized ways of negotiating are more prevalent. There may also be older customs and cultures which may be very prevalent. “Saving Face” is the manner by which you react. You may hear certain things that could be upsetting to you simply to see your reaction. Maintaining face is one way to show that you control your emotions and not your emotions controlling you. If you lose face or over react, you run the potential to ruining the deal for both parties.
To all American companies, contracts are an important aspect of a negotiation. Terms are agreed upon and the fixed into a legally binding document to ensure that the terms and conditions are kept. “To some Koreans, a contract is only a general guide for conducting business; a change of conditions will result in changes in the details of a particular contract. Other South Korean business people may still have the perception that a contract is not as important as the interpersonal relationship between the two parties.”(Kim, 1997) It is very important to keep your word in Korean culture and to develop personal business relationships founded on trust and loyalty. “Building personal relationships are essential for successful negotiations in high context cultures.” (Graham, J.L., & Mintu Wimsat, A., 1997)It is necessary to understand how your business partner views these documents so that proper negotiations and terms can be established.
The use of nonverbal communication and other subtle ways of communicating are very widespread in conversing with those from South Korea. For example, saying “no” may be too harsh at that moment in negotiations. One way to imply a “no” would be to suck air through your teeth. This will imply that you don’t agree with a term or condition, but will not comment anything at that moment; another subtle way to do this is to squint your eyes or tilt your head back and answer with a “maybe.” This may be a better and more polite way than to flat out say “no.” Another important tip when negotiating is to always acknowledge the presence of the one with the authority, subtle eye contact through ought the presentation will reemphasize the importance of your deal to them personally, it is important not trusting that aspect of communication with the translators. Good luck with your negotiations.
By: Ryan Stoker
Fall 2008
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5. What would cause conflict for South Korea work teams? Does it differ from other types of teams?
What is conflict?
As a potential expatriate, it is of the utmost importance to note that verbal and non-verbal communication alike can be “distorted, confused, or missed altogether” when those from different cultures met and work together (McFarlin, 2006). When people met from different culture backgrounds and have opposite views and interest, conflict can quickly intensive. This intensity will come unless one can address the issue in a manner that shows an understanding and use of the various methods that the host country uses to solve conflict. We are not describing how to accommodate an opposing side but rather give useful insight on how to collaborate with others to in order to decrease the possibility of further exculpations towards resolving confrontational issues. Conflict is potential in Korea. When one goes outside using the Korean norm to communicate their views, which in turn shows a lack of respect from the perspective of those they met with. We will show the common cultural occurrences within South Korea as to give a person tools that they can use to prevent or resolve conflict in a quick and meaningful way.
Yes, one method is to understand the language that each party is speaking; not merely a rough understanding of what language is spoken. If language is a key barrier in the business career one undertakes it could lead to miscommunication that could even lead the loss of many lives, which Korean Asianan Airline came very close to facing. 157 people were miraculously saved from a terrible airplane crash during a storm in Cheju, South Korea. The leading problem during the emergency landing was that of the American pilot not being able to understand the language of his Korean co-pilot nor the Korean air traffic control personal. “Wore yet, communication may be further hindered by the [high power distance] Korean culture that discourages copilots from asking questions or volunteering information” (Glain, 1994). We will take a look at other culture norms as well do shed more insight on reasons for conflict in South Korea with expatriates.
Culture norms
Conflict is potential in Korea when one goes outside the Korean norm to communicate their views, which in turn shows a lack of respect from the perspective of those they met with. We will show the common cultural occurrences within South Korea
Koreans cultural dimensions according to Gerrt Hofstede scale index, the number possible out of 100, are long-term orientated 72, collectivist 72, feminism with leadership 61, large power distance with a 60, and strong uncertainty avoidance of 85 (Hofstede). This information interprets to the understanding that when working on a team project at work one would do best to avoid conflict by knowing how to communicate their ideas and thoughts in a parallel way. Being able to know that South Korean’s tend to make decisions on a groups feelings of a particular situation helps an expatriate know to share their thoughts on a issue with regards to how a solution would leave an expression of helping or hurting their team workers.
Decision making
As mentioned in the motivation section of the Business Culture, parallel writings are found that American expats would choose to have an equity norm to be rewarded for the individual effort put into a team project (Leung, 1988). Korean co-workers however would desire to have a equality norm. Thus, being able to receive a equality type of norm gives reason to why Korean co-works would make their work decisions in relation to how the overall effectiveness of a team would be from their choices rather than the individual decision making.
Propensity
Within the Korean culture a mistake is seen as a problem that needs to be recognized and evaluated as to prevent the mistake from occurring again and again. On the contrast is the aggravating account that denies the problem and desires not to address the issue. “As you might suspect, this type of account may aggravate rather than reduce tensions” (Tata, 2000). The importance on how one explains negative actions plays a big role on how one is really understood in Korea. When a person has the capability to control, within their realm of influence, whether an action will turn out to be positive or negative, in either outcome they are to own up to their group members for that action. “Cultures that are more collectivist tend to use mitigating accounts (concessions) while more [Western expatriate] individualistic cultures often use aggravating accounts [that] are likely to be viewed negatively in [the South Korea] collective cultures” (McFarlin, 2006).
Conflict style
Americans like arguments. Americans take pleasure in the intellectual challenge arguments provide. Some experts have gone so far as to say that Americans get a stimulated feeling by having an argument (Klopf, 1991).
Stella Ting-Toomey with fellow co-authors’ studies have shown that the Korean collectivist culture have an avoidance style trend when conflict arises, which is in contrast to those from the Western American individualist background who favor a direct, competitive style of conflict (Ting-Toomey, 1991). Studies done by Hofstede help support this data when confirming the understanding of the Koreans’ high uncertainty avoidance index listed earlier.
Conflict in groups other than work teams
Ethical values of what is seen as right from wrong in culture background does have potential for miscommunication. For example, be aware that actions do not portray the tone of bribery or corruption. Either the USA or South is hardly perfect in values of ethics as pointed out in case of the former South Korean president’s son-in-law, Chairman of the third largest conglomerate Mr. Chey Tae-won, was released from prison for a multibillion–dollar tax fraud (Ward, 2003). Gender conflict does occur in homes and social organizations as Korea is a more patriarchal society than compared to USA or Finland where women are seen as equals in each aspect of work or assignment. Most of the business finalizing is done by men that have seniority in rank. There does not seem to be a generational conflict between age groups as Koreans are taught more traditional values, which is to respect the elderly as they are the ones that pioneered the path for future generations out from communism after the Korean war in the 1950’s. The fact that all young men are required by law to serve in the military for 2 years helps reinforce the ideology of traditional patriarchal society. However, with a younger expat having a higher job position than a subordinate worker this could bring conflict.
By: M. Adam Molling
Fall 2008
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