In few areas of business is globalization more noticeable than in the area of corporate titles. Offices and cubicles throughout the world proliferate with managing directors, directors, and vice presidents.
Much of this has to do with the multinational companies’ drive to facilitate true cross border teams. The emphasis is on flat management structures, open communications between all levels and western style egalitarianism. Yet in some countries such titling protocols are but a gloss over older, and more deeply ingrained, titling systems. Nowhere is this more true than in Korea – and MNCs ignore this fact at their peril.
A Confucian society since antiquity, Korea has traditionally placed an intense emphasis on seniority under its “HoBong System” of seniority-based promotions and pay.
When one joins a company out of school, his title is “SaWon”, which means “employee”. After three to five years, a promotion to assistant manager is expected – followed by a raucous party with friends to celebrate the occasion.
After another four years there is a move to manager and another party follows. Within these ranks there are subtle differences in pay and prestige also based on seniority.
For decades this system served Korea well. But the 1990s Asian Financial Crisis signaled the system’s (apparent) death knell. The crisis led to soul searching in corporate Korea and while the culture didn’t change overnight, Korean companies decided to adopt the western “salary system” in which remuneration and title is based not on seniority but on job description, competence and, most importantly, performance.
The old ways linger
But strong traces of the old ways linger on at both local and multinational companies. For non-executive positions, many companies still have around four titles while some financial and other industries have three titles. Executives are called “Imwon” and there are usually two to five different level of executives below the President/Country Manager.
Many large companies have abolished the “Isa” (Director) title and replaced it with two or three different titles, such as “SangMu” (Vice President), “JeonMu” (Managing Director) and “BuSaJang” (Senior Executive VP). However “Isa” is still found in many multinational companies but only at senior levels as a reward for long service. Korean colleagues still address each other using titles and unless you know someone’s title you cannot call them.
“Our company abolished Korean titles about five years ago,” says the Korean human resources director of a leading multinational pharma company. “The company has no internal/external titles except for its senior executives. Most companies still use local titles externally, especially for sales people. That said, some people still call each other by the old titles – old habits die hard.”
Many find this obsession with titles stifles communication. While junior colleagues can speak to senior colleagues, often the senior colleague has to be the one to initiate the contact. In some organizations it is taboo to speak with anybody senior to your boss. Much depends on the size and culture of the organization, but often senior managers – particularly those from the west – find the situation highly frustrating.
Attempts to resolve title psychology have been mixed.
Some companies have abolished titles outright, committing themselves to the sole use of English titles and also to not address people by title internally. There is the well known case of SK Telecom which adopted the “manager” system in 2007. Under this system, everyone had “manager” in their title - even though many are not “managing” other people, they are “managing” their work. New entrants to the company are happy with this, however some veterans were not.
Julie Jang, the Korean human resources head of medical devices firm Medtronic, says the company abolished the internal title system in January 2008. “We did it because it helps Medtronic Korea fit better with the global organization. What’s more, we have a flat corporate structure and abolishing titles helps to improve communication.”
But even some firms who have retained Korean titles are phasing them out. “Our company used to have about 10 different local titles, but these have been cut to seven,” says Peter Kim, HR Director at Bausch & Lomb Korea. “These will be further reduced. Korean firms need to align titles more with regional and global titles.”
To successfully hire in Korea, companies need to accept the importance of titles. While many companies have struggled to put the title issue to bed, it is still ingrained in the country’s corporate culture.
Human resources departments need to develop a clear policy that delineates what local titles can be provided for a given position. The layers of titling should be as simple as possible and perhaps abolished altogether internally. Irrespective of this, the tyranny of titles is likely to remain for years to come.