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Behind the scenes: Samsung vs. Hyundai Motor (5)
Wiil fundamental change happen in imperial management?
Hyundai/Kia Motor Group Chairman Chung Mong-koo's peculiar style of human relations management has been referred to as "Elevator HR." One high ranking company official explained as follows: "An employee who happens to encounter Chairman Chung in front of the elevator and is asked something along the lines of, 'Hey, what are you doing still working here?' is likely to lose his job then and there. On the other hand, the formerly dead have come back to life though such questions as, 'Why haven't I seen so-and-so around lately?' " The official continued, "Employees refer to this process as 'the reigniting of extinguished flames."
It seems that Chairman Chung's mercurial method of choosing employees, or "Instant HR," is accepted as a legitimate managerial strategy. Chairman Chung was under heavy pressure from the start when he took "Mangement 101" under the guidance of his deceased father, Chairman Chung Chu-young. He engaged in fierce competition not only with his brothers, but also with the departed chairman, Chung Se-young, and the offspring of affiliate companies' chairmen. Hyundai Motor Corp. employees say that Chung Mong-koo's unique style is not unrelated to such experiences. "His method is one of trusting no one, having everyone watching everyone else, and inciting competition among employees to prove their loyalty to him," said one Hyundai company official.
Chairman Chung does not tolerate the existence of any clear heir to his throne. Strongly driven by his work, he is not satisfied until even the most trifling of matters have been attended to. He also guards against the attainment of power by his managers, growing angry if he hears of someone being referred to as his "right-hand man" or the true power holder in the company. One company officer explained, "Since learning management skills from his father, he has come to firmly believe that empowered managers will betray the executive without fail."
Monitoring in place at Hyundai Motor is also designed to function with Chairman Chung at the center. Within the walls of the control tower known as the General Planning Office, there is a jumble of teams difficult to distinguish because of their similar names, including the Policy Support Team, the Strategy Planning Team, the Operations Planning Team, the Planning Support Team, the Management Planning Team, the Investment Analysis Team, the Planning Management Team, and the Management Information Support Team. Rather than being rigidly organized by field, they are designed to overlap in responsibility in order to obfuscate their specific role. Company dynamics are best judged by observing who is most frequently knocking on the Chairman's door. This type of management style seems to result in favor being assigned to an arbitrary group of company officials. Indeed, Hyundai Motor Corp. is no exception. One Hyundai official explained, "We call those who are hardly of any help, yet exercise great influence from the vicinity of the Chairman, 'the eunuchs' [because they are subservient but powerful]." It is a well-known fact that Chairman Chung is clumsy with his words. At one meeting of company officials, Chairman Chung repeated several times the phrase "product-friendly development." Later, it was revealed that he had actually been tripping over the phrase, "environmentally-friendly product development." While he was making his blunder, gathered officials dutifully nodded their heads as they jotted down the phrase. This anecdote illustrates the company atmosphere, where success is attained by properly interpreting the Chairman's anomalous statements and then loyally abiding by them. Chairman Chung never reverses his words. Moreover, he is tenacious. "Fortunately, the majority of Chairman Chung's judgments were right on the mark," one high-ranking official said. "There is no one besides Chairman Chung who could successfully drive his own ideas without ever reversing himself." However, Chairman Chung's method of following his heart also carries risks. Internal discontent surrounding Chairman Chung's method of command has now resulted in a police investigation, exposing the dangers of "imperial" management. At Samsung, the top-down managerial structure is no different, though slightly more nuanced. One official likened Samsung's ruling structure to the emperors of ancient Japan, who had their decrees enforced by shogun administrators: "The word of the emperor is supreme," he said, "second only to God. Similarly, the power of Chairman Lee Kun-hee has been deified. However, he does not rule directly. It is the Structural Regulation Office [currently the Strategy Planning Room] which holds the reigns." Another Samsung employee said, "My first week on the job, I was constantly told to watch a videotape of 'The Analects of Lee Kun-hee.' After watching it, I almost felt as if Chairman Lee were the founder of some kind of religious sect." Though Chung Mong-ku inspires fear among his officers and employees, he is often described as being informal and down-to-earth. An officer of an affiliate company said, "Chairman Chung mingles with his officials and employees every so often, on which occasion he sticks mostly to Soju or wine aged no more than twelve years." On the other hand, Chairman Lee Kun-hee is a figure of absolute, distanced authority. So extreme is this division between himself and his workers that, rather than being referred to by their names, Chairman Lee and his wife are called "A" and "A-prime." Another official, from the Structural Regulation Office, said, "At meetings, rather than commenting on the issue at hand, Chairman Lee throws around lofty phrases such as 'the era of the 20,000-dollar income citizen,' and 'the hub of East Asia,' to the extent that one gets confused as to whether we're in a business meeting or a gathering of the government’s Cabinet Council presided by President ." That Chairman Lee rarely makes a public appearance further fosters the aura of mystery surrounding him. There are even instances where facts themselves are distorted so as not to undermine the authority of Chairman Lee. One such instance was the pinning of the blame for the failure of Samsung Motors on company managers rather than on himself, and his self-attribution of credit for the success of Samsung's semi-conductor industry. Yet one Samsung employee said, "Regardless of what others say, the automobile enterprise was done by Chairman Lee, and the semi-conductor enterprise was the work of former chairman Lee Byung-ch'ul." A Samsung spokesman rejected this assertion, stating, "Chairman Lee opposed the automobile project." This spokesman also said that "Chairman Lee took the semi-conductor industry that his deceased father began and lead it to the very top." Samsung-related organizations go into a 24-hour state of emergency if the Lee household makes a single move. If the chairman travels abroad, it is understood that the preparations and local support to be afforded to him should exceed those for a presidential visit. One Samsung official stated, "At the hotel room where Chairman Lee stays, all electronics are switched beforehand to the Samsung brand and the interior is rearranged to fit Korean sensibilities." It is said that Chairman Lee occasionally holds parties at his house in Hannam Dong that exceed imagination. "Guests could not but feel awe at the spectacle of hundreds of lids being simultaneously lifted by butlers to reveal platters of food, and at watching a world class singer and conductor perform during the meal," one attendee said. "The sight of the entire Lee family, down to his grandson, occupying the head table, while the executives and officials in attendance were pushed off to inferior seats, was reminiscent of an emperor sitting before his subjects." Chairman Lee Kun-hee's imperial management is made possible because of the Structural Regulation Office. In the financial world, the Structural Regulation Office is referred to as the "Blue House of the Samsung Republic." Samsung announced that the office was being renamed as the Strategy Planning Room and that part of its function would be trimmed in the wake of the Everland investigation regarding the issuance of discounted convertible bonds. Nonetheless, one Samsung official said, "Fundamentally, nothing has changed. Even within the group, most people continue to call the organization by its old name." "A fundamental change in the imperial style of management, or the Structural Regulation Office, seems unlikely," one Samsung official stated. At Hyundai, a highly ranked official warned, "If the imperial management and 'eunuch-style' subservience continues, the company could truly collapse." Samsung and Hyundai, the top two companies in Korea, are at the point where they need fundamental change. A spokesman from Hyundai, responding to calls for revision, said that it "is up to the will of Chairman Chung Mong-koo." A Samsung spokesman offered, "The things that Samsung is being criticized for now are part of the past. Things will be different from now on."
