SCANDALS are plentiful in South Korea of late. Earlier in the year, it was Korean Airlines, Hyundai, and Samsung. Last month, Hanjin and Lotte. Now, President Park Geun-hye herself. For foreign observers, it can sometimes be hard to understand the underlying causes. Why so many? Why all of a sudden? As a Korean-American professor living in Busan, I am often asked if there is a unifying element to help explain them all. There is: the Korean preference for loyalty, something that undermines the very fabric of South Korean executive culture.
For most people in the West, there is an understood separation between family or friendship ties and business. Although Americans and most Europeans are no less likely to recommend a friend for a job, there are certain things they wouldn’t do. If elected mayor, for example, they wouldn’t suddenly replace all senior staff with friends and family. In South Korea, this is exactly what has happened for decades, if not centuries. Even UN Secretary-General Ban Ki-moon was roundly criticised at the start of his tenure for replacing an inordinate number of UN staffers with hand-picked Koreans. One of the new hires was his former boss.
The South Korean corporations recently suffering scandals — Hanjin, Lotte, Korean Airlines — are built as tight oligarchies, with virtually all key positions held by the friends, relatives or classmates of a single family. In South Korea, this is an “open secret,” something everyone knows but no one really talks about. American companies, of course, are not immune to such structures, but South Korean ones are unique for the frequency and depth of such connections.
Even today, a typical South Korean company has its top executive positions filled with friends and relatives. This is the rule, not the exception. These executives, in turn, hire friends, acquaintances and classmates to fill the managerial positions below them. These managers hire their own friends, acquaintances and alma mater alumni, creating a tight network of loyalties. And yes, this happens in government too, frequently. South Koreans call these relationships “ropes,” the equivalent of American coattails. Being the owner of a successful company therefore means you are expected to share your influence and power with friends and relatives, through gifts, benefits or a job. If you refuse or don’t try, you are placing these ties in jeopardy. For South Koreans, the management and protection of family/friend loyalties is a top cultural priority. It is amoral to do otherwise. The main problem with prioritising loyalties is they get in the way of competence, especially in areas requiring expertise. We now know a lot of the poor decisions made by Hanjin were prompted by ineptitude at various executive levels, including the very top. These people were placed there through loyalty, not merit, and really had no idea what they were doing.
Sadly, this plot line is not exclusive to Hanjin. Virtually every company in South Korea has stories of good ideas squashed or mistakes hidden because someone close to the top of the hierarchy felt their agenda was being threatened. If you believe anonymous whistleblowers, Samsung’s exploding battery may have been caused in this way too. Recent revelations about the South Korean president pin her as being guilty of this same kind of favouritism. At the request of her friend, Choi Soon-sil, Park appears to have removed a significant number of government employees, replacing them with loyalists. One of the new hires was a Choi in-law who was later caught smuggling surveillance devices into the Blue House. Park’s scandal illustrates just how common it is for a personal relationship to take priority over other, established protocols. In Park’s case, the example is extreme because her friend, an apparent cult leader, was allowed to influence virtually every aspect of the president’s work.
Many scandals involving bribery and favouritism have been dragged into the open, demanding public discourse. Young adults and the media have been especially engaged, voicing outrage and popularising stern implements like the Kim Young-ran Act. The road ahead will surely contain more headlines as other loyalty networks, corporate and otherwise, are exposed and uprooted. Only when South Korea’s executive culture relinquishes its reliance on loyalty and begins to embrace merit will the recovery finally begin. The writer is a professor at Dongseo University in South Korea.
— Courtesy: The Japan Times