Sunday, December 11, 2005

Benefits of Being a Korean Executive

I'm often quizzed on the differences in Korean and American management. Here's a great article from Dong-A Ilbo ( plus some of my insights and edits) on the compensation, benefits, and downside of the promotion. In some ways, it's a "careful for what you wish for" situation--lots of status, but lots of stress.

By definition, an executive is upper level management above the position of General Manager. The first executive position is Director (e-sa), then Managing Director (sang-moo), Senior Managing Director (cheon moo), and then VP and President.

The article notes:

It is difficult to become an executive, but the position offers benefits.>>I've read where less that 5% of all General Managers are promoted to Director.<<< A Samsung executive said, that after I became an executive, there have been about 10 things that changed, from salary to office environment. For sure, the amount of responsibility also grows.

Doubling Salary-
There is a slight difference depending on corporations, but salary rockets 1.5 times to twice that of general manager(bujang) if one is promoted to an executive-level director's position.

>>>In the case of large conglomerates, including Samsung, LG, SK and Hyundai-Kia Motors, if the annual salary of general managers stands at $70-80k, the initial annual salary of newly appointed executive reaches $120-140k. <<<
>>I'm also told that Korean executives get about 1.5 times their Korean salary when they are assigned to the U.S.<<

The also receive benefits such as various incentives and stock options. >>This is a huge perk with the record high for Korean stock, especailly at Hyundai, Kia and Mobis.<<<

Most companies give the right to receive stock options to their executives. However, that is confined to those with good performance. Samsung, which offered a large amount of stock options, changed the benefit to the mid- to long-term incentives paid every three years from this January. Executives of large, major companies say, at least we are not bound by money.

Benefits are Great-
Benefits as well as salary are incomparable to those of general managers
Once becoming an executive, one receives an independent work space, such as a separate office. LG Electronics offers a private office, while Samsung secures an independent space by placing partitions.

In a large, major corporation, executives have a female secretary who manages schedules and answers phone calls and a mid-level car. Managing directors and directors receive management costs for their cars, if not their own drivers, and therefore, they do not pay for gasoline.

Companies also pay congratulatory or condolence money for executives. Immediately after becoming an executive, one receives membership to a golf course. They can also fly business class and stay in top-class hotels while taking an overseas business trip. Companies also pay for credit card expenses by executives.

Samsung executives are given thousands a month in social expenses and expenses for their wives physical checkups once a year. By installing a computer for work in their homes, they can work at home during holidays.

Enormous Stress
As executives have a possibility to be selected as a CEO, they are engaged in constant competition among their colleages. That generates great stress for executives.

>>>Unlike general managers or employees of lower ranks, they could be fired anytime if they post low performance. Indeed, some people are let go only a year after having the pleasure of being promoted to an executive. <<<

Lee Man-woo, managing director of SK Corp., said, executives must do everything under his or her own responsibility, they suffer work-related pressure incomparable to what they experienced as general managers.

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