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Gen Z's Workplace Demands Force Corporate Korea to Loosen Up

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(Bloomberg) -- When Jeong Da-eun started looking for work ahead of graduation, she had little interest in Samsung or Hyundai, traditionally the most popular employers in South Korea, put off by stories about their regimented work culture and emphasis on family connections.

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“I’d much prefer working for an internet company like Kakao,” said the 25 year old.

She’s not alone. Messaging app Kakao has been the top pick of university students for two years in a row in a “dream employer” survey by career portal Job Korea, unseating Samsung and other family-run business empires that dominated such rankings for years.

Executives of those companies have taken notice, making changes in the past year aimed at dismantling their top-down, hierarchical corporate culture. At Samsung Electronics Co., leading smartphone maker and the chaebol’s flagship business, employees are being encouraged to address each other by name rather than job titles. Hyundai and Lotte Group, both major conglomerates with interests ranging from department stores to food, recently stopped asking job applicants details about their family background.

“The young leaders at these family-controlled conglomerates are facing trends that require them to be more flexible and open-minded,” said Park Ju-gun, head of corporate research at Leaders Index, a chaebol-focused research firm.

While many students are still attracted to the status and stability promised by a major chaebol, more young professionals are now turned off by their culture, including centralized decision-making processes and traditional offices, with rows of desks arranged by order of seniority and new hires positioned near the hallway.

“Just call me JH”

Samsung Electronics’ Han Jong-hee, promoted to co-CEO in December, held his first town hall meeting in April in which he asked that employees call each other by their names rather than titles such as “director.”

“Just call me JH,” the 60-year-old executive said to a crowd of employees attending the meet-and-greet.

One employee, feeling emboldened by Han’s call to abandon traditional notions of authority, asked whether he was aware that “for us 2030s, Samsung is no longer the top choice,” referring to a Korean term for people in their 20s and 30s. Han said he “100%” recognized this as a problem.

Samsung is expected to announce more changes in the coming year as its 53-year-old leader Jay Y. Lee -- released last year after serving time in jail for bribery and corruption -- returns to a more public role, directing the conglomerate's strategy and reforming its corporate culture, chaebol watchers say. Samsung declined to comment.

The companies’ emphasis on loyalty and order is believed to have helped drive growth of these businesses as the country recovered from the Korean War. The conglomerates’ expansion in turn played a key role in turning a poor, agrarian country in the 1950s into the world’s 10th largest economy.

The chaebol’s culture of absolute deference toward seniors, particularly those related to the founders, is now seen as problematic, hindering innovation and good decision-making. Senior executives and scions of founding families are now eager to present themselves as friendly and accessible rather than remote or, worse, prone to abuse of privilege. Many still remember the public backlash following the 2014 “nut rage” incident, an in-flight tantrum by a Korean Air executive and heiress of the airline’s parent Hanjin Group.

At Hyundai Motor Group, Executive Chairman Euisun Chung, who is also the grandson of the founder, now regularly meets low-level employees, which Leaders Index’s Park says “would have been unimaginable in Hyundai’s previously extreme, conservative culture.”

Bonuses and promotions

As elsewhere, a prolonged pandemic has prompted South Korea’s young professionals to reassess their career choices. A Job Korea survey of office workers at major companies in April found that 90% were interested in changing jobs, up from 69% a year earlier. Among the top reasons was dissatisfaction with the corporate culture.

In order to retain talent, companies including Samsung and SK Hynix recently paid record annual bonuses, with some employees receiving 100% of their annual salary. Companies, however, are aware that such one-off incentives aren’t enough.

Samsung late last year promoted a record number of executives in their 30s and 40s to senior positions, in response to what it described as a “rapidly changing, competitive landscape.”

At Hyundai and Lotte, executives are reconsider their focus on family background. The practice of employing and placing people based on family connections was originally aimed at nurturing loyalty and cohesion, but chaebol critics have said it often led to competent workers being overlooked.

Lotte is also starting to promote more women and recruiting more senior officials from outside the company, according to Lee Kang Hun, vice president of Lotte Corp, the holding company for the group. Like many Korean companies, Lotte had previously adhered to what is called a “pure blood culture,” promoting employees based on their perceived loyalty, with mid-career hires rarely rising to top positions.

“We want to recruit talented people, no matter where they were born or which university they attended,” Lee said.

But Jeong, who did not apply to any of the conglomerates and ended up working in government, is not convinced. Most chaebol have implemented changes over the years, such as hiring an increasing number of executives and board members from outside, but family members are known to operate from backstage. Some companies are also still known for favoring recruits from certain regions or universities tied to their leaders.

“The work culture might be improving, but they still prioritize school and family backgrounds,” Jeong said.

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