Presentation on theme: "Employment Flexibility in Korea Challenges in Transition Sam Butler DBM Korea Larry Cambron President, DBM Asia Pacific."— Presentation transcript:
Employment Flexibility in Korea Challenges in Transition Sam Butler DBM Korea Larry Cambron President, DBM Asia Pacific
Meet DBM Strategic HR solutions to help organizations align their workforces to meet changing business needs Worldwide leader for over 35 years Services in transition, retention, development, and selection More than 225 offices in 47 countries Owned by Thomson, $7.2 billion information solutions provider Serving 330,000 individuals in transition and 7,200 organizations annually
Agenda Snapshot of Current Challenges Creating Employment Flexibility Impact on Your Business: OPC & CTS Case Study Q&A
Business Environment What is happening in the Korean labour market?
Business Environment Background Korea’s business history is grounded in the chaebol structure Businesses mired in bureaucracy due to organisational size, centralised control and broad scope of competencies Managed as family concerns with family values Enterprise agreement with employees is based on loyalty for job security Guaranteed lifetime employment concept, investing heavily in employee welfare Retrenchment was seen as a performance issue
Market Drivers What is driving change in the Korean labour market?
Market Drivers for Change Ballooning operational expenditure on headcount and currency devaluation is eroding profits and price competitiveness Globalisation is creating new, more organisationally efficient competitors Static corporate structures reliant on family power bases and employee inertia accepting organisational restructuring is hindering growth Corporate management and financial reporting irregularities is diminishing foreign investment
Current Challenges Understanding the employee perspective
DBM Korea Employability Project 2002 Employee’s Perspective: Challenges when facing job loss
Employee’s Perspective: What retrenchment means Retrenched employees receive big severance packages but minimal outplacement support Retrenched Koreans are more likely to Be unemployed for a longer period than might be necessary Be without appropriate levels of support in a stressful career transition Feel abandoned by their organisation and harbour resentment toward it due to lack of transitional support Misguidedly start a new business due to poor knowledge of career options and a large lump sum payment Be pressured to accept any job in order to achieve re-employment Miss opportunities to gain personalised, insightful lifetime career management skills due to corporate preference for group programs
Current Challenges If employees don’t want labour flexibility, why does Korean business want it?
Employer’s Perspective Labour flexibility is critical to establish Korea as regional hub should not be reliant on a crisis or immediately prior to bankruptcy enables much-needed competitiveness in capitalist economies Removes threat of foreign investment funds being diverted to China enables corporations to successfully adjust workforce sizes based on business cycles Opens up the recruitment market by removing the fear and restriction of not being able to downsize in fluctuating markets Is symptomatic of a growing economy, something Korea is presently experiencing post 1997 reform Should be approached with a progressive stance with Government providing the environment for corporations to successfully downsize Source: AMCHAM Korea, Washington Doorknock 2003 Source: EUCCK Human Resources Committee
DBM Korea Employability Project 2002 Employer’s Perspective: Challenges in planning a restructure
Employer’s Perspective: What flexibility means Employment flexibility can be a positive for all concerned Flexibility requires sensitive handling at all stages of a change process. Professional organisations, like DBM, exist to assist employers and employees with transition It’s not only employees who need support in a downsizing but also employers (managers and survivors) Government must take a more open and active position in enabling organisations to restructure The business impact is too great to remain inflexible
Employment Flexibility Impact How will employment flexibility impact Korean businesses?
What if … You return to your office today and: 1.Find an from your CEO advising a 3 rd consecutive quarter of poor business results? 2.A message from your secretary that you’re due in a senior management team meeting in 30 minutes to discuss a workforce reduction? 3.You answer a phone call from a journalist / union delegate wanting to know your company’s position on rumoured layoffs?
ROI when using Outplacement Consulting Taken from a survey of over 1,200 HR Professionals in North America SVP/VP 25%, Director 38%, Manager 30%, other 7% Frequency 88% of survey respondents had experienced a downsizing 38% had experienced four or more downsizings in the last 5 years
Utilisation of Services Elements of Outplacemnent Consulting Services Used in Last Downsizing
Career Transition Services A service that helps an organisation’s management team to plan and implement the critical initiatives of a workforce change leading to employee change or separation Outplacement One-on-one or group coaching, skill development, and assessment services to facilitate former employees finding their next best employment opportunity, in the shortest period of time, with the least amount of disruption
For a copy of this report, please contact Eun Ju Kim at Don’t Know 0.2% Compatibility with Organizational Culture 0.9% Individual Performance 2.2% Plant Closing 5.0% Other 5.9% Merger/Acquisition 8.6% Reorganization 22.8% Reduction in Workforce/Downsizing 54.3% Reasons for retrenchment
Magnitude 46% of respondents said that 1~5% of organization was affected 25% of respondents said that 6~10% of organization was affected 14% of respondents said that 11~20% of organization was affected 7% of respondents said that 21~40% of organization was affected 4% of respondents said that 41% or more of organization was affected 4% of respondents did not know For a copy of this report, please contact Eun Ju Kim at
Benefits and ROI of Outplacement Consulting & Career Transition Services Insert Table 1, page 5 Improves Internal and External Image Reduces Managers’ Stress Reduces Litigation Provides a Good Return on Investment 78% 64% 68% 72% Improves Morale of Retained Employees 59%
Implications Research proves that investments in these services positively affect businesses undergoing downsizing The return on these investments can be demonstrated to senior management By making the commitment to invest in Outplacement Consulting and Career Transition Services you can expect to: Maintain confidence and morale of employees Minimize negative effects of downsizings Effectively realise new business objectives
Creating Employment Flexibility Preparing to Take the Next Step
Strategy / Value Concept Invest in People Invest in Business Lifetime Employability Lifetime Employment COMPANY STRATEGY COMPANY/ EMPLOYEE VALUE Current Experience Future Experience
Enterprise Agreement: A New Deal between employer and employee Conceptual shift from Life-time employment to life-time employability Commitment to company to commitment to performance Company-reliance to self-reliance Corporately-bound to corporately- caring Rigid employment to flexible employment Embrace the full employment life-cycle rather than parts of it
New Deal requires mutual responsibility Employee Expect change Job opportunities in new areas Job flexibility & adaptability Full time, part time, contractor, casual Growth in entrepreneurial opportunities Responsible for career development Lured by opportunities for learning and growth Employer Rapid change: mergers, restructures Expansion Values initiative and willingness to learn Work performed anywhere, anyhow Global competition No job security Must attract talent/poach talent Cross company exchange
Employee’s Specific Needs Retained employees: To feel competent To be connected To be included in a community Re-deployed employees: To feel valued while on “hold-talent bank” Career/change strategies while waiting Clear expectations of job responsibilities and timelines Downsized employees: To be treated with dignity and respect To have support on day of notification To understand benefits, severance, financial planning, and Outplacement
Your employees will need to Continually learn and self-manage their career Network and self-market Endure change, uncertainty and periods of no formal employment Seek to create and find own career development opportunities Focus on balancing work, family and leisure Understand needs of employers
Your future organisation will have Ability to responsibly manage profit, revenue and costs in changing business environments Flatter organisational structures Rigid management systems replaced by networks of workers who team up for projects Traditionally defined jobs become continuously evolving sets of competencies Inertia replaced by agility (Turtle to Tiger)
Organisational and cultural transformation initiatives Employees prepared for change Career Transition Success Employees encouraged to self-manage careers Creating the environment for labour flexibility
Employment Flexibility in Korea Challenges in Transition Questions & Answers