The Ten Commandments of Labor Relations in South Korea: Korean Human Resources Basics

Korea has one of the most capricious and least efficient labor forces in the world (which the exception of a few industries) and China is catching up with Korea very fast. Vietnam, Cambodia, Laos, Malaysia, Indonesia and the Philippines will soon follow. The fault is not only on the employees, but on the employers.

Korean companies have departed for greener fields in China to discover that the fields are not as green as originally imagined. Many of these same companies, as we all know, have packed their bags and moved to developed Vietnam, Cambodia, Indonesia, Malaysia, Laos and the Philippines.

In all of these nations, one thing holds true, lawyers and other professionals are needed, not only to mitigate the ubiquitous legal risks, but to structure labor relations systems that mitigates labor relation risks. Because of the lack of this advice or more likely the lack of company management willing to hear this advice, Korean businesses have become some of the least favored companies to work for, for the more skilled employees in Asia. Even in Korea, foreign companies are increasingly becoming the favored choice of many of the most skilled and educated employees.

The situation can change with the active involvement of professionals with the knowledge, experience and proactivity to build systems that meet local needs. All of my clients doing business in Korea and abroad are, always, strongly advised to follow these Ten Labor Law Commandments. These Ten Labor Law Commandments are the entry point to a successful relationship with labor in most countries.

Ten Commandments of Good Employee Relations

Carefully Draft Employment Rules and Employee Handbooks. The form rules and handbooks being utilized by the majority of law firms, in Korea, are not adequate. These employment rules and the employee handbook should be drafted with the advice of a knowledgeable, experienced and proactive attorney and a local Human Resources professional. The employment rules should be strictly followed and enforced. Always apply rules equally to all employees;
Hold Monthly Meetings between Management and Employee Representatives. Be honest about issues in the company, the future vision for the Company’s Management and the hopes and wishes for the employees. Transparency goes along way in building trust and a positive and long-lasting relationship;
Publish a Quarterly Newsletter. In the newsletter summarize the Management –Employee Representative Meetings, Job Training Programs, Available Positions, Promotions, Welfare Benefits, Requests to Employees, Personal Stories (Births and Marriages), Charitable Endeavors etc.. If possible, have a monthly newsletter;
Separate Management Compensation from Union/Employee Collective Pay Increases. This helps to alleviate collusion between employees and management. Union/Employee pay increases should primarily be tied to inflation (with promotions and steps), while management should, primarily, be tied to job and company performance;
Hire a Professional HR Manager. The HR manager should have a position equal to the Finance Manager. In addition, the HR Manager should be trained in HR and not merely moved from a different department of a company. The HR Manager is an essential role in the company and as such should receive the same pay, support and education as the Finance Manager. While, this may seem absurd, in the West, the reality is your major risk shall, likely, be issues with employees;
Build Good Relations with Labor Boards/Labor Relations Organizations. These organizations are a useful source of information, can assist with hiring and also assist with terminating an employee. A good olive branch is to allow these organizations to proud training to management and employees. Many programs exist with the Ministry of Employment & Labor;
Reward Workers with Token Gestures of Appreciation. A reward for Best Worker of the Month, Least Absence Days, Most Improved etc. goes a long way in building loyalty to the company. We advise posting this information and other key information in a prominent place in your company. Korean’s love trophies, plaques and good meals;
Make Concessions. Some of the concessions made can be utilized to show that the management respects the employees. Most strikes and labor disputes occur because of a breakdown in trust, not the simple lack of enough compensation. The breakdown in trust, usually, occurs because of the perceived lack of respect the employer has for the employee. The breakdown in trust leads to a breakdown in communication, which ultimately leads to labor disputes;
Embrace Good Ethical Management. Differentiate your workplace from other workplaces by leading the company with a respect for the law, best business practices and strong business ethics. The companies that embrace ethical managements, overwhelming, attract better talent and achieve far better results; and
Educate Employees to know how their Specific Task/Job Leads to success for the Company as a Whole. This is especially important in manufacturing companies. Often the employees’ role is so mundane that they lose focus on the essential nature of their function. An employee that understands the importance of his or her role is an employee that will be more productive, understanding and cooperative.