Case Study: SK Telecom Goes Egalitarian in a Hierarchical

Society

Introduction:
This case is a convergence of several Human
behavioral aspects like power distance and effect of values on professional
society as an example organizational hierarchy.
SK telecom South
Korean company has organizational hierarchy culture that reflects in South
Koreas cultural value to major extent as well. Power distance has several
characteristics. People accepting the unequal distribution of the power,
employees value obedience to the authority and are comfortable receiving
commands from their superiors without consultation or debate, they give
preference to resolve differences indirectly through formal procedures rather
than face to face or direct communication. On contrary, in egalitarianism,
maintaining equity in all entities is a basic doctrine. People expect relatively
equal power sharing and interdependent relationship with their bosses rather
than mono dependence. In egalitarian culture, employee may approach boss
in condition like decision dilemma. Lower positioned employees may suggest
their opinions without hesitancy in abovementioned structure.
1) SK Telecom is attempting to distance itself from which South Korean
cultural value? What indicators of this value are identified in this case
study? What other artifacts of this cultural value would you notice
while visiting a South Korean company that upheld this national
culture?

SK Telecom is attempting to distance itself from traditional strong hierarchical

system which is adopted by South Koreans few decades ago. Under this
hierarchical system people authority positions are not to be questioned for
their decision by any of their subordinates, the subordinates are expected to
silently comply with all the order of their superiors.
This case study identifies various indicators of this hierarchical system in SK
Telecom Company. It is stated in the case that an Employee at the fourth tier
in SK Telecom Co.'s five-tier management /professional hierarchy; the 33-yearold strategist held the title of "Hur Daeri" received plenty of respect from
subordinates. None of the subordinates were allowed to question Hurs
decisions, and similarly Hur was expected to wordlessly obey with requests
from his superiors. From the above we can state that power is concentrated in
SK Company among few people in higher positions like vice president and
managers. Involvement of the subordinates in decision making is far away.

Even excellent ideas from the subordinates were shot down by their bosses,
just because bosses in position have the power to do so. Subordinates are just
made to do the work dispensed by the higher officials. Team leadership
positions were given to only those with high seniority. South Korea's culture of
deferring to people in higher positions was deeply ingrained in the
telecommunications company.
Artifacts like lack of confidence, capacity to sustain peer pressure, locus of
control, self efficacy and situation also indirectly becomes reason for positive
or negative approach of employee towards organizational hierarchy. In
majority of the Korean companies still the older people with experience are
given new projects while younger generation who has enough talent are not
encouraged or allowed to undertake a challenging task. Not particularly in
South Korea but in any professional organization the above mentioned factors
should be balanced along with egalitarianism, which is not visible in South
Korea so far, but SK telecom is trying to become iconoclastic company in
this example.

2) In your opinion, why is this hierarchical value so strong in South

Korea? What are the advantages and disadvantages of this value in
societies?

The reason for the hierarchical value being so strong in South Korea is
because of their cultural traditions and customs. We learnt from history of
Korea that before the division of North and South Korea, it was once a united
country where there was monarchial governance. Monarchy government, ruled
by a king or a queen who inherits their position from their family, which is
often called the "royal family." With an Emperor ruling the country, he is
regarded as the most powerful person in the country. His words and orders
should be followed without any questions or dispute. No one can question the
Emperor and his orders. The artifacts of this monarchy still exist in South
Korean culture and tradition. People in South Korea have adopted unequal
distribution of the power and they consider it as part of the system and
culture. The same situation we see in many companies like SK Company or
Samsung which were followers of hierarchy structure.
In traditional hierarchy, senior managers make up the board of directors and
are responsible for establishing strategy, decision making and overall business
direction, while middle managers obey the order and imply them. This kind of
hierarchical structure clearly defines each employees role within the

organisation and also defines the nature of their relationship with other
employees. Hierarchical organizations are often more vertical with narrow
spans of control, which gets wider as we move down the structure like
pyramid. Decision making is centralized and flow of information or processing
of the information is minimal. In the twentieth century as organisations grow
bigger, hierarchical organisations were popular because they could ensure
command and control of the organisation. However with the advent of
globalisation and widespread use of technology, in the 1990s tall hierarchical
organisations began to downsize and reduce their workforce. Technology was
able to carry out many of the functions previously carried out by humans.

Advantages of Hierarchical Organizations

Authority and responsibility are clearly defined.

Clearly defined promotion path.
There are specialists managers and the hierarchical environment
encourages the effective use of specialist managers.
Subordinates respect higher officials. Discipline can be maintained in an
organization.
Employees very loyal to their department within the organization.

Disadvantages of Hierarchical Organisations

The organization can be bureaucratic and respond slowly to the

changing customer needs and the market within which the organization
operates. As decision making is centralized, the person who takes
decision might not be totally aware of situation or issue.
Communication across various units can be poor especially horizontal
communication as there is low process of information across the
traditional hierarchy organizational structure.
Creativity, efficiency lacks as employee involvement in decision making
is minimal/low.
There is limitation to development of knowledge and skills of employee
as they are not given stimulating tasks.
Job positions are not allotted based on talent, skill or intellect but on
seniority, which is not optimal or even detrimental to the survival or
growth of the company.
There is more chance of fraudulence at higher level of hierarchy as
there is low information processing and centralized decision making.

We perceive dishonor and hindrance to employee /sub ordinates selfrespect.

3) Do you think SK Telecom will be successful in integrating a more

egalitarian culture, even though it contrasts with South Korea's
culture? What are some of the issues that may complicate or support
this transition?

We think SK Telecom will be successful in integrating more egalitarian culture,

even though it contrasts with South Korean culture. Even though, people in
authority position would like the old hierarchical culture as there is no
resistance to decision making, but they have realized that by promoting more
egalitarian culture , subordinates who deal with root level issues can come up
with good ideas which if implemented ultimately benefits the whole
organization. In this modern era of globalization where other companies
worldwide are offering cut throat competition, constant innovation and
evolution can ensure survival and growth of the company for that to happen
encouraging subordinates for their ideas and selecting agile, focused,
passionate people for the positions irrespective if they are young and may not
have enough seniority is very important.
The issues that support this transition:
SK Telecom is among the first large firms in the country to attempt this culture
shift, and it has met with resistance along the way. SK Telecom introduced
various approaches and plans that support egalitarian values. The company
removed its five management ranks and their differentiated titles and status.
The English word Manager is now used to address anyone employed
throughout the five former ranks. (Hur Jae-hoon's title has changed from Hur
Daeri to Hur Manager). Only vice presidents and above retain their previous
status titles. People in charge of projects or people are also called "Team
Leader." These reduce power distance and also inculcate interaction of
employee with the superiors. This reduces power distance and also inculcates
interaction of employee with the superiors.

Furthermore, the company handover project leadership responsibilities

to employees in their twenties, whereas these roles were previously held
only by older staff with much more seniority. This way trying to
encourage capable people and enhance their knowledge and skills. This
is an initiative to eliminate power distance owing seniority.

As an added change, the company is allowing a more casual dress code

at work.
This also increases interaction among employees.
Executive and managers are ready to accept and consider the opinion of
staff/employee if they find it better than their opinion.

Through this dramatic shift in values and practices, SK Telecom's senior

executives believe that junior staff will speak up more freely, thereby
improving employee involvement, creativity and decision making. Majority of
the employees support the egalitarian values. SK Telecom executives wants to
quickly and completely remove these traditional hierarchal values and adapt
new egalitarian values. This is reflected as companys executive chose to all
out reform rather than gradually.
The issues that complicate /serve as barrier to transition:
As traditional hierarchy is extremely embedded in system and people, it will
be hard to exculpate absolutely. It needs time to achieve more egalitarian
culture. Appropriate rules need to be enforced and implemented at various
levels of hierarchy. Superiors and subordinates have to work together and
remove unequal distribution of power. People, who have been in authority
position, will have resistance to promote egalitarian values and will have to be
incentivized.