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DAEHAN CORPORATION: OVERVIEW

DAEHAN CORPORATION: OVERVIEW. Daehan must layoff 20% of their workforce Same problem(?) in US & Korean employment systems - Downsizing during matured growth -Asian economic crisis Different employment systems require different approaches

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DAEHAN CORPORATION: OVERVIEW

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  1. DAEHAN CORPORATION:OVERVIEW • Daehan must layoff 20% of their workforce • Same problem(?) in US & Korean employment systems-Downsizing during matured growth-Asian economic crisis • Different employment systems require different approaches • Understanding the HRM strategies of Daehan:-past vs. present

  2. UNDERSTANDING DIFFERENT EMPLOYMENT SYSTEMS (1) • Traditional Korean HRM assumptions- Paternalistic approach - Lifelong employment - Seniority based systems • Korean Labor Relations- before 1987: almost no functioning union- 1987 ~1990: too many strikes after democratization- after 1990: stabilization • The role of chaebols in Korean economy

  3. UNDERSTANDING DIFFERENT EMPLOYMENT SYSTEMS (2) • Characteristics of the Korean labor market-Horizontal vs. vertical • Layoff policies-Legally possible under New Labor Laws-Rarely applied before economic crisis • Social welfare system for the unemployed-Insufficient unemployment benefits

  4. CHANGING CHARACTERISTICS OF KOREAN EMPLOYMENT SYSTEMS • Changes since the 1990s for global competitiveness • Strive for lean and flexible organization-Globalization & slow economic growth • Making balance between the seniority-based systems and the performance-based systems • Main triggers-Employee needs and values are changing-Employers need to develop different competencies-Economic crisis

  5. WHAT TO DOAT DAEHAN? • How to downsize while maintaining the morale and commitment • Layoff vs. voluntary early retirement plan-Never a layoff on this scale before-Limited options for those who have to leave-Message for those who remain? • Changes in HRM strategies:transition into a new HRM system-From the seniority based system to the performance based system

  6. ROLE PLAY:UNION • How to minimize the number of people to lay off? • How to maximize the severance pay? • Will Daehan allow voluntary early retirement for all laid off employees? • Can Daehan afford a voluntary early retirement planat this time? • How to deal with changes in HRM Policies?

  7. ROLE PLAY:MANAGEMENT • How to deal with the union’s demands including a possible strike? • Compare Savings in labor cost by reducing 20% of workforce vs.One time financial burden of paying any special incentive packages:-Short term implications-Long term implications • How to motivate those who remain?-Need for new HRM strategies- How to get concessions from the union?

  8. WHAT IS THE BEST FORBOTH UNION AND COMPANY? • The need to use different approaches under different employment systems • Minimize the negative consequences from the downsizing processes -Avoid unnecessary confrontation-Maintain morale and motivation • Howto successfully manage the changing HRM strategy-Short term action plans -Long term strategies

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