Korea is regarded by some as “the country that achieved more economically in a shorter period of time than any other county in modern history” (Lee, 2000). Some explain this exponential growth as a result of the expansion of chaebols a Korean form of conglomerate which takes the structure of a central management console which is family owned and run. Chaebols in the early stages would diversify their business to many subsidiaries. In doing this, the chaebol obtained a competitive advantage from economies of scale and scope under the centralised control of their owners. Others however argue that chaebols are responsible for the recent economic crisis of 1997 which led to the International Monetary Fund (IMF) providing South Korea with a $60 billion aid package .
TRADITIONAL HRM IN SOUTH KOREA
Traditionally, chaebols had spent enormous amounts of resources promoting corporate values that were fixed on a paternalistic corporate culture. This paternalistic culture included seniority based remuneration, group training, company slogans and company songs all aimed at harmonising the workplace. The traditional focus for a Korean firm was that with standardised employment policies, with little differentiation and competition in the labour market. Remuneration was based on seniority rather than competence or performance, employee selection preference was given to graduates from prestigious universities and those with certain personal reference were selected to work at top performing chaebols. Promotion systems traditionally were based on a number of variables including personality, family background, educational credentials, performance, seniority and even regional ties(Pucik, et al., 2001). HRM in chaebols consisted of a centralised human resources department encompassing the strategies for all subsidiaries. It was only post the 1997 economic crisis when many chaebols decentralised these departments known as “Group Planning Offices”(Kwon, et al., 2001).