South Korea’s Corporate Hierarchies Are Breaking Down
A new generation of familial leadership is relaxing business culture.
There’s a change underway in South Korean corporate culture. It’s subtler than the country’s massive cultural hits like BTS, Blackpink, K-dramas, and the Oscar-winning Parasite—but in the long run it may be more important.
Young professionals are rattling the rigid, hierarchy-bound corporate systems that have become a core part of Korean working life. Unlike in the past, they are finding a sympathetic ear in C-suites across South Korea, which are increasingly filled with Generation X and even millennial executives. This confluence is already causing a massive shift in the way the country does business.
South Korea’s economic rise was built by the chaebols, or family-owned conglomerates, that were selected as national champions by the government and that received preferential treatment. Today, many are international household names—Samsung, Hyundai, Kia, LG, Lotte, and others.
Working at one of the top chaebols meant a prestigious job for life, a prized possession in a country that experienced bitter privation in the wake of the Korean War. Competition to get hired young was tough, but there was a path to success for those who could afford it: Years of study at private after-school academies in hopes of scoring highly enough on the national college entrance exam to gain admission to one of the country’s top three universities. A degree from any of the three was usually a ticket to employment at one of the top chaebols.
But South Korea was too successful at prioritizing education—it created too many four-year college graduates for the number of available jobs at the top chaebols. Youth unemployment rose along with dissatisfaction. We followed the formula, young people griped, and now you say there are no jobs? They gathered online in the 2010s and coined the term “Hell Chosun,” or “Hell Korea,” to describe their woes. Privately, middle-aged professional South Koreans groused about “gentlemen scholar” college graduates who felt they were above taking jobs at middle-tier chaebols, which were less prestigious but also reasonably secure work.
There was another factor on the side of the young Korean professionals, and they knew it: Despite being among the global leaders in hours worked per week, South Korea’s productivity is inversely proportional to its effort. Millions of hours were wasted as junior employees sat at their desks, doing nothing, waiting for their bosses to leave work—because you didn’t leave before them. Koreans have long theorized how much could be unleashed if all this culturally enforced wasted time and effort could be eliminated.
A new generation of corporate leaders began rising to power and reading the weather. Today, there are an estimated 130 adult children of chaebol families 50 years old or younger in leadership positions in the country’s largest companies, including three at the chairman level.
This doesn’t mean, however, that chaebols have overnight become squishy collectives. Family owners have not instantly diluted their power by breaking up the interconnectedness of the individual chaebol business units. The conglomerates are not suddenly less opaque to foreign investors. Chaebol bosses still wield a level of influence over Koreans’ daily lives on a scale comparable to America’s Gilded Age grandees.
Still, the beginning of change is visible. When I walked out of the lobby of Hyundai Motor’s headquarters in Seoul in December 2013, leaving my job as the automaker’s vice president of global corporate communications, every man in the lobby was wearing a dark suit, a white or light blue shirt, and a tie.
Five years later, I walked back into the same lobby. My first question to my Hyundai friends: “Where are all the ties?” Almost every man was dressed in business-casual attire, most without jackets. I was told the answer was twofold: the changing attitudes of young Korean professionals and the leadership of then-Vice Chairman Chung Eui-sun.
Chung, 50, is the grandson of Hyundai founder Chung Ju-yung and the son of the second company chairman, Chung Mong-koo. The younger Chung is the exemplar of change underway in corporate South Korea.
Chung Eui-sun was educated and worked in the United States, unlike his father and grandfather. Also unlike them, he speaks fluent English. As Chung Mong-koo’s only son, Chung Eui-sun had his fate sealed from birth: hereditary succession. He took management jobs at Hyundai and its affiliate Kia, staying in the shadow of his father the chairman, but making noteworthy changes along the way as he rose through the ranks. He hired a legendary German designer to revitalize the Kia look. He launched Hyundai’s premium Genesis brand. He tweaked the dominant company culture in small but telling acts of rebellion: Instead of picking standard-issue black for his company luxury car, he chose dark blue.
For all practical purposes, Chung has been running the company for the past few years as his elderly father receded from view. In October, he was appointed as Hyundai Motor Group’s third chairman, the head of South Korea’s second-largest chaebol and the world’s fourth-largest automaker.
When I left Hyundai in 2013, teams were arranged in rows of cubicles with the most junior employee sitting farthest from the team leader. When promoted, an employee literally moved one cubicle closer to the team leader. One of the most promising young members of my team at Hyundai—top-three South Korean university graduate, trilingual—checked out of chaebol life because, he said, “I know what my salary is going to be in 20 years.” For a previous generation, that was immeasurable security. For his, it meant suffocation.
Today, the once-dour Hyundai cubicle farm has been renovated to include rest spots and desks of different sizes and shapes; employees can work wherever they like. There are flexible working hours; employees no longer have to arrive by 8 a.m. (or risk being shamed if they are late). Instead of staff members dutifully walking a paper document to a superior to receive their signature, wasting time while waiting until they are free, team leaders and executives are encouraged to sign online.
When I was unlucky enough to be in the lobby whenever Chairman Chung Mong-koo decided to enter or leave the building, security guards ushered us mere mortals out of the lobby until he passed, such was the deference for his station.
Now, young Hyundai employees crowd around Chairman Chung Eui-sun and take selfies with him. This is nothing short of a remarkable revolution, especially at what has been known as the most conservative of chaebols. Chung’s trusted top executives come largely from the company’s global operations—Koreans who have lived and worked in the United States, the United Kingdom, Brazil, Russia, Europe, and everywhere the company operates, unlike previous generations of South Korea-bound leaders. Chung has hired more non-Korean executives to work at the headquarters in Seoul.
Corporate South Korea has tried to Westernize in fits and starts before. In the late 2000s, LG headquarters hired a raft of Western C-suite executives to internationalize the company, which made fine fodder for glowing business magazine coverage. Soon enough—but less discussed in the media—they were gone, because, my Korean Hyundai colleagues told (warned?) me, they were “poor communicators.”
The key is not for Korean companies to become more Western. The key is for them to become more global while embracing their unique Koreanness as a brand attribute. Chung Eui-sun grew up during the time when Hyundai and South Korea as a whole were fast followers: those that could mimic what the innovators did, and usually cheaper.
Now, that’s all changed. Chung is taking over Hyundai at a time when South Korea is the innovator. It was the first country to roll out commercial 5G service. Bloomberg named it the world’s most innovative country five years running. And the world has watched South Korean innovations—drive-through testing, mobile apps, choreographed drone shows—bend the COVID-19 curve twice this year.
Recent years have seen periodic media coverage of an alleged loosening of Korean work culture, but this was usually little more than policy PR that rarely filtered down to the beleaguered employees.
This moment feels different—a confluence of young professionals and youthful leadership, both of whom have global perspectives and can choose from the world’s best business ideas while keeping the best of the Korean ways and discarding the worst. The new Chairman Chung said he wants to change Hyundai culture to be “more open” to good ideas. If this is true, and if other Korean chaebols follow suit, this moment could herald a combination of South Korea’s already demonstrated creativity and innovation with a corporate culture that finally matches it.