Human Resource Management

Abstract

Korean firms have traditionally leaned toward HR decisions based on seniority and on policies of compensation and job assignment that emphasize the role of the person more than the job itself. This traditional model of HR management changed dramatically with the imposition of “global standards” in the form of western HR management practices on Korean society in the aftermath of the financial crisis that hit the country in 1998. This led to the introduction of profit-sharing plans, promotions, and evaluations that increased motivation by encouraging competition between individuals. This trend can be clearly seen in the example (see Figure 3.1) of an annual Ministry of Labor survey of workplaces with 100 or more employees that reveal a sharp increase in the proportion of workplaces that introduced a system of compensation based on an annual salary or a merit-based pay system after the 1998 financial crisis. Subsequent surveys do not tell us, however, whether this trend continued or whether there has been a fundamental paradigm change in HR management areas other than merit-based pay. As the figure shows, the increase in the number of workplaces adopting the annual salary system has slowed since 2005, and the proportion of workplaces adopting a profit-sharing plan has decreased after peaking in 2005.