WallStreet Journal
Pulling Rank Gets Harder At One Korean Company
Sunday August 19, 10:19 pm ET
By Evan Ramstad
As a daeri, the fourth in five staff ranks at South Korea's largest wireless company, he worked under a rigid top-down structure where people with a lower title weren't allowed to question his decisions in meetings. In turn, if anyone above Mr. Hur's rank asked him to do a job, or even just go out drinking after work, he couldn't say no.
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It's a major adjustment that highlights the tension between Asian business traditions, which emphasize order and formality, and those in Western countries, where the premium is on ideas and innovation.
Since the 1960s, South Korea has built itself into one of the world's leading economies by doing things its own way, raising trade barriers to protect its companies and concentrating decision-making with top executives to protect their power. The structure is connected to both the military experience that all Korean men get and to Confucian teachings about seniority. There's no formal punishment for violating ranks, but there's plenty of social pressure to observe the rules. Big companies like Samsung Electronics Co. and Hyundai Motor Co. often cite the system as the basis for their success, saying their leaders create change without debate.
The big drawback of the system is that it discourages creativity and the flow of ideas. As the country's growth naturally slows with size, many South Koreans now feel the need to adopt Western practices like decentralized authority to keep moving forward.
SK Telecom's culture shift came after growth leveled off in its main business as the country's leading cellphone-service provider, as the mobile-phone market reached saturation. The company, which had revenue last year of about $11 billion, added close to $1 billion a year in revenue from 1998 to 2002 as cellphones became ubiquitous in South Korea. But that pace has slowed to about $500 million a year. Two years ago, executives decided to push into new markets, including the U.S. and China, and seek more new ideas from employees.
"To let new ideas bubble up, we needed a new business culture," says , chief executive officer for SK Telecom. "It requires different incentive schemes, an organizational structure, a financial-resource-allocation process and a business-development process."
Most of corporate South Korea remains tied to old traditions. At Samsung, for instance, nonexecutive employees aren't allowed to directly communicate to anyone above their immediate boss. There are pleasantries and casual conversations that cross ranks, but even then it tends to be a senior person initiating the contact with a junior person and not the other way around. Smaller companies, particularly in high tech, long ago embraced flat hierarchies and openness.
"SK Telecom is more pioneering when it comes to dramatic change," says , a sociology professor and specialist in Korean culture at Yonsei University in Seoul. He expects that others will follow, though slowly.
Even at SK Telecom, top executives were initially divided over the pace and scope of the overhaul. But Mr. Kim wanted the company to avoid mistakes like when top executives seven years ago shot down a suggestion by younger employees to change the ringing sound that people hear when calling someone they know, so that the caller hears music chosen by the friend they've phoned.
It was only after the younger employees brought the idea up again months later, insisting it would bring in extra revenue through music licensing, that SK Telecom adopted it.
"There were ideas for gradual versus all-out reforms," Mr. Kim said. "But the word 'gradually' means 'not now' to some people. So we decided to go all-out."
He assigned a handful of departments to test two Korean titles and two in English, "professional" and "manager." The English words proved easier to sell to employees since the Korean titles, in some cases, represented downward shifts in stature.
From vice president to chairman, executive titles were unchanged. But managers who are put in charge of projects or people get the added moniker of "team leader." The company also started assigning jobs based on ability, rather than seniority. Some employees in their 20s began leading projects that, under the old system, they wouldn't have qualified for until they reached a higher rank, which would often be when they were in their 30s.
Mr. Hur, who works in SK Telecom's global business strategy office, says discussions have become free-wheeling and more productive. In one recent meeting, Mr. Hur got into a lively debate with a younger colleague who had a different idea than he did on how to finish a project. "For a moment, I wished it was back in the old days when I could have shut that guy down," he said. "But I had to admit his opinion was better than mine, and I adjusted. So the system worked."
In addition to the title change, the 600 of SK Telecom's 4,500 employees who moved into new business ventures saw their bonus scheme change. Previously, bonuses were based in part on the one-year performance of their business unit. For new ventures, that incentive stretched to three years, reflecting the longer time that new and risky businesses need to turn profitable. Base pay that was linked to rank in the past is gradually changing to other performance measurements.
The company made other changes to try to spur creativity, such as relaxing the dress code. Even security guards changed, working in more casual dress (short-sleeve white shirts and casual slacks instead of dark uniforms) and exchanging greetings and jokes with everyone who walks through the door.
Mr. Kim, the CEO, says he's encouraged by employee surveys that show nearly 80% prefer the new titles and flattened hierarchy to the old system. But he says it will take more time for the change to spur enough new ventures to make a financial impact.
Some Koreans doing business with SK Telecom say the new flattened hierarchy is an improvement.
, owner of a promotion-services company that SK Telecom regularly hires to help with marketing and internal events, says her company recently produced a musical skit for an employee event there. "We were able to contact the people who are actually in charge of the work," says Ms. Joo. "We didn't have to contact higher or senior people about the play. The younger guys set the direction. In the past, we had to wait for higher and senior people's decision-making. With the new system, we were able to save a lot of time."
But other outsiders who work with the company are finding it a challenge to adjust. , a gwajang (the middle of the five ranks) at LG Electronics Co. in the unit that supplies SK Telecom with mobile phones, says he thinks their new system is simpler. But he also finds it harder to figure out whether or not to pay deference to SK Telecom employees just by looking at their business cards.
"I know what the old titles were," Mr. Park says. "So unconsciously, I keep that in mind."
Friends of , a human-resources manager, pointed out another problem. Under the seniority system, a promotion came every few years and became a moment that was celebrated by taking friends out for drinks. With fewer title changes, SK Telecom employees have fewer opportunities to host a party. "My friends are really upset by that," Mr. Im says.
허재훈(33)씨는 SK텔레콤의 5개 직급중 4위에 해당하는 대리(Daeri)이다. 이같은 수직적인 체계에서는 회의때 그의 결정에 아래 직급이 의문을 표시하는 것은 허락되지 않았다. 반대로 그보다 높은 사람이 어떤 일을 시키거나 심지어 퇴근후 술마시러 가자고 할때로 거절할 수가 없었다.
그러나 지난해 10월이후 모든게 바뀌었다. 회사가 창의적인 조직을 위해 직급제를 재정비했기때문이다. 기존의 5개 직급은 ‘매니저’로 단일화 됐다. 그는 이제 ‘허 대리’에서 ‘허 매니저’로 호칭이 바뀌었다.물론 이제 막 입사한 25살의 사원도 매니저로 불리게 된다.
서구 기업이 아이디어와 혁신에 중점을 두는데 비해 아시아 기업은 전통적으로 서열과 형식을 강조해 왔다. 1960년대이후 한국은 군사적 경험과 윗사람의 말을 따르는 유교적 전통의 영향으로 최고경영자가 결정하면 일사불란하게 따라오는 고유의 방식으로 최고의 경제발전을 이끌었다.
이같은 서열을 따르지 않을 경우 공식적인 징벌은 없지만 그것을 따르도록 하는 사회적인 압력이 있었다. 그러나 그같은 시스템은 창의성과 아이디어의 흐름을 가로막는 약점이 된 것 또한 사실이다.
SK 텔레콤은 휴대폰이 일반화되기 시작한 98년부터 2002년까지 매년 거의 10억달러씩 매출이 증가됐고 지난해의 경우 110억달러에 이르렀다. 그러나 2003년이후 포화상태에 이르면서 연간매출이 5억달러 추가에 그치고 있다.
2년전 중역진은 미국과 중국을 포함, 새로운 시장 개발을 위해 직원들로부터 새로운 아이디어를 구하기 시작했고 직급제 단일화도 그러한 연장선에서 이뤄졌다.
김신배 SK텔레콤 사장은 “새로운 아이디어들을 끌어내기 위해선 새로운 비즈니스 문화가 필요하다”고 강조했다.
대부분의 한국 대기업들은 직원이 직속 상사를 넘어 그 윗사람한테 직접 대화하는 것이 허락되지 않는다. 농담이나 평이한 대화를 할 때도 윗사람이 주도하는 것이 일반적이다.
하이테크 업종의 소기업들은 그러나 오래전에 직급제를 수평화했고 개방성을 추구하고 있다. 연세대의 한준 사회학과 교수는 “SK텔레콤은 극적인 변화가 필요한 싯점에 선구자적인 선택을 했다”고 평가했다.
SK 텔레콤은 7년전 한 직원에 의해 전화건 사람이 벨소리를 미리 선택된 음악으로 듣도록 하자는 제안이 중역진에 의해 묵살된 적이 있었다. 몇달후 그 직원은 그것이 매출을 증가시킬 것이라는 제안서를 다시 올렸고 결국 채택됐다.
김신배 사장은 “개혁을 점진적으로 하느냐, 전면적으로 하느냐에 대한 생각들이 있었다. 하지만 점진적은 지금은 아니라는 의미로 비치기때문에 우리는 전면적인 개혁을 택했다”고 밝혔다.
당초 새로운 직급 이름을 놓고 한국어 두개와 영어 두개(Professional, Manager)의 후보가 있었지만 영어명이 낫다는 여론을 따랐다. 부사장과 사장 등 중역진의 타이틀은 유지되지만 ‘매니저들’은 권한을 갖고 프로젝트를 추진하며 ‘팀리더’라는 별명과 함께 조직원들을 이끌 수 있다.
아울러 SK텔레콤은 업무 또한 서열 순이 아니라 능력에 따라 부과했다. 어떤 직원들은 20대의 나이에 이같은 프로젝트를 맡게 됐다. 이전이라면 더 높은 직급이 되거나 적어도 30대에나 가능한 일이었다.
허재훈 매니저는 최근 프로젝트 완성에 대한 방법을 놓고 나이 어린 직원과 토론을 벌인 끝에 그의 제안을 수용했다. 그는 “옛날이라면 그 친구의 입을 다물게 할 수 있지만 그의 의견이 더 좋다고 인정했다. 방법이 조정됐고 시스템도 정상 가동됐다”고 말했다.
직급의 변화외에도 SK 텔레콤은 4500명 직원중 600명을 새로운 벤처 비즈니스에 투입했고 보너스 체계도 1년단위로 하던 것을 3년단위의 인센티브제로 변화시켰다.
또한 복장 규정도 완화했다. 심지어 안전요원도 캐주얼 복장으로 할 수 있게끔 했다. 복도를 지나는 모든 사람들이 인사를 주고받고 농담도 하는 분위기로 바꿔나갔다.
김신배 사장은 직원들에 대한 여론조사 결과 80%가 새로운 타이틀을 선호하는 것으로 나타났다고 밝혔다.
프로모션 회사의 대표인 주희정 사장은 “그전에는SK텔레콤이 의뢰한 행사를 진행할 때 윗사람의 결재가 이뤄지기까지는 시간이 걸렸지만 지금은 그럴 필요없이 바로 책임자를 통해 일이 집행된다”고 반겼다.
그러나 모두가 편하다고 생각하는 것은 아니다. LG전자의 박창훈 과장은 SK 텔레콤의 새로운 타이틀이 아주 단순화됐다고 생각하지만 그들의 명함을 받을 때 예의를 차려야 하는지, 아닌지 헷갈릴 때가 많다고 말한다.
인력개발부 매니저인 임규남씨의 친구들은 다른 문제를 지적한다. 과거에는 일정한 기간마다 승진하면 그 기념으로 친구들이 술을 얻어먹을 기회가 있었는데 지금은 그럴 일이 거의 없다는 것. “내 친구들은 그것을 제일 섭섭해 한다”고 임규남씨는 말했다.
