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2017-10-18 17:44
By Lee Joong-hak and Kim Jong-nam

What is your company doing to prepare for the Fourth Industrial Revolution? What do you think will be needed to survive in the upcoming Fourth Industrial Revolution, which will bring both threats and opportunities to Korean corporations?

What is the current status quo of Korean companies in terms of diversity?

Klaus Schwab, the founder of the World Economic Forum, who brought the idea of the Fourth Industrial Revolution to international attention, stated in one of his lectures in 2016 that Korean corporations lack diversity and flexibility. Furthermore, according to Schwab, the only way to survive is to be innovative and creative. Thus, the direction our corporations are headed in is concerning: there is still a male-centered organizational culture, mass simultaneous hirings based on one-size-fits-all criteria, and a general homogeneity that favors similar educational backgrounds. Moreover, the ethnic and racial exclusiveness that stems from the traditional Korean idea that “we are a single race” decreases the diversity of Korean corporations. If we cannot break out of this blinding dogma, the creativity and innovation that might open new windows will shrink. Thus, we will become numb because we cannot move nimbly and responsively in a competitive market, which will restrict our ability to have multiple perspectives, to seize new opportunities, and to work collaboratively with a global workforce.

What kind of specific diversity issues and problems do Korean companies need to grapple with?

All of the above problems could be solved by increasing the diversity of our companies. However, worryingly, Korean companies are less interested in diversity than, for example, multinational companies are. For example, PepsiCo, which is regarded as the most advanced company in diversity, has a diversity council, which includes 12 executive-level members, one of whom is a board member. Furthermore, PepsiCo chose diversity and inclusion (D&I) as one of its core values, established it as an important behavioral norm for its employees, and continues to release its performance results for D&I to the general public.

It is true that some Korean companies have been making efforts to hire people of different nationalities and religions; however, Korean companies are not able to provide an environment in which all can work successfully. As a concrete example, Korean leaders have relatively less understanding, compared to global companies, about Muslim employees’ needs for prayer times and do not provide even a small prayer room.

What are the best practices for ameliorating the insufficient level of diversity in Korean companies?

Based on the research of two renowned scholars and professors at Harvard, Robin J. Ely and David A. Thomas, there are three common approaches to diversity management:

1. 1st perspective ― discrimination-and-fairness perspective: diversity is about ensuring that women and minorities make up an appropriate percentage of your staff. This began in the U.S. to prohibit discrimination against African Americans and women. According to this perspective, corporate diversity management must only consider whether they are treating all employees and executives in a fair manner in accordance with the law. However, this is not true diversity, as management expects women and minorities to all “blend in” with the norm, which ends up not encouraging innovation and different perspectives.

2. 2nd perspective ― access-and-legitimacy perspective: diversity helps legitimize the relationship between the organization and a specific community by hiring employees who share a background with members of that community. This perspective helps expand businesses because you can best understand your client base if you have employees who can relate to them. Korean corporations that have branches abroad would especially benefit from this perspective, which will help them become better-versed in selling to different kinds of customers. However, although this can be helpful, this is still not true diversity if people are pigeonholed in the kind of work they do in accordance with their backgrounds ― i.e., if they are expected to work only with clients who share that background.

3. 3rd perspective ― integration-and-learning perspective: diversity is crucial to helping organizations change, encouraging innovation, and creating organizational learning. According to the authors, this is true diversity: valuing different cultural identities and seeing them as useful sources of knowledge. Employees who come from a different background are valuable precisely because of this difference: it is this quality that will allow them to think outside of the box and offer new and interesting perspectives or ways of working. True diversity will result in employees’ challenging basic assumptions with new and radical ideas, which will allow for the flexibility and innovation previously discussed.

As seen above, successful diversity management allows for the resolution of compliance issues in corporations, the expansion of one’s customer base, and a powerful increase in innovation. Thus, since today’s business environment is so competitive, diversity management in corporations is not optional but a must. Given this, let’s keep in mind these three things:

1. Korean companies seem to think that since they can choose localization when making their way into a new market, they do not need diversity management. However, our level of diversity is not very high compared to that of other countries and globalization and localization should be pursued hand in hand. Regardless of the locations of workplaces, diversity should be executed as a universal strategy, not as an option.

2. Diversity should be a priority as a topic that employees and executives in Korean corporations should be more knowledgeable about, because awareness is strongly linked to corporate competitiveness.

3. Korean corporations should be wary of the dangers of being culturally monolithic, which can cause blind groupthink. This causes difficulty in dealing with non-ethnically-Korean customers, as well as a lack of fresh perspectives. Corporations will consequently struggle to find rapid solutions, and their competitiveness will unfortunately worsen.  

Many pundits say that the Fourth Industrial Revolution is just around the corner, making it tougher for corporations to do their business. Considering this, diversity is not an issue of the future, but a problem facing us right now.


Lee Joong-hak is a manager in the People Innovation Lab at Lotte Academy, where he is in charge of competency assessment. He is currently pursuing a Ph.D. in diversity management. He co-authored Manuals for Team Leaders, and co-translated Giving Voice to Values? His email is edujoonghak@lotte.net.


Kim Jong-nam is the founding CEO of META (www.imeta.co.kr) and the author of two books, Organizations without Meetings and Breaking the Silent Rules. 

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