Issues in Organizational Culture and Countermeasures in Response to Changes in the Work Environment

[HR Insight February 2018 Issue]

CEO Jeon Myung-hwan

Recent Changes in Labor Law and Labor Policy and the Situation of Conflicts Between Labor Groups

 Since the beginning of the new year, many changes are expected in labor law and labor policy. Starting January 1 of this year, the minimum wage will be set at 7,350 won per hour, and although it has not yet been resolved legislatively, reduced working hours also appear likely to become a reality soon. Furthermore, the abolition of the lump-sum wage system is being discussed, and it is believed that the trend of converting non-regular workers to regular positions will spread beyond the public sector into the private sector as well. It is reasonable to expect that these various changes in the labor environment will inevitably have an important impact on corporate operations. This paper aims to examine how changes in the labor environment, especially the issue of converting non-regular workers into regular employees, affect organizational culture, and to explore possible ways to overcome this. 

 At the end of last year, Incheon International Airport Corporation announced an agreement to directly employ about 3,000 of the 10,000 non-regular workers who work in firefighting and security screening, while converting the remaining approximately 7,000 into regular employees through two subsidiaries. Looking at the main points of the agreement, among the workers subject to direct employment, those below managerial level will be hired after interviews and eligibility screening, while those at managerial level or above will be hired on a competitive basis as a principle. However, workers who are subject to separate company employment will be hired through conversion without any special recruitment procedures. However, workers directly employed by the corporation will be classified under a separate occupational category distinct from general employment, and even for workers hired by a separate company, their wages and working conditions will not be lower than those of workers directly employed by the corporation. Finally, to ensure the full implementation of the conversion to regular employment, it was decided to establish a provisional “Incheon International Airport Joint Labor-Management Operation Council,” including labor and management from the corporation and the separate company. 

  Judging by the results alone, it may seem as though the conversion to regular employment was carried out successfully. However, the process leading up to such an agreement was by no means smooth. At the public hearing on November 23 last year titled “Measures for the Conversion of Non-Regular Workers at Incheon Airport to Regular Employees,” there was a clash involving shouting among members of the regular workers’ union (Korean Federation of Trade Unions’ National Federation of Public Service Industry Labor Unions, Incheon International Airport Corporation Labor Union) and the non-regular workers’ union (Korean Confederation of Trade Unions’ Public Transport Workers’ Union, Incheon Airport Regional Branch). Regular union members argued that “equality of opportunity, not equality of outcome,” must be achieved, and raised the “free-rider theory” regarding the conversion of non-regular workers, arguing that it should occur without any competition or testing. In response, the non-regular union members argued for the legitimacy of direct employment, saying that having performed the same tasks in the same space without any problems for seven years was itself proof of “eligibility,” and that no further qualifications were needed, thereby showing a sharp confrontation between labor and management. Moreover, the regular workers’ union insists that the executive must take responsibility for reaching such an agreement, and by attaching a vote of no confidence in the union executive at the time, about 55% supported it, resulting in strong opposition from regular union members to the extent that the union is now being operated under an emergency committee system without an executive. More conflicts are expected in the process of determining in detail the treatment and working conditions of regular workers who will be directly employed in the future or of those converted to separate companies. 

 Meanwhile, Seoul Metro announced that after three days of negotiations starting December 28 last year, it had reached an agreement to convert 1,288 existing indefinite-term contract workers, who are responsible for platform safety, train inspections, and subway security, into regular employees (general staff). The labor unions participating in this negotiation are the regular workers’ unions: the Seoul Subway Union (Lines 1–4), the Seoul Metropolitan Rapid Transit Union (Lines 5–8), and the Seoul Metro Union. The difference from Incheon International Airport Corporation is that, unlike the regularization of non-regular workers, the regular labor unions and management have agreed on a fully integrated form of regularization that absorbs indefinite-term contract workers—who were already directly employed within Seoul Metro and were guaranteed employment until retirement—into the personnel management system of regular employees. 

 However, even during this process, about 30% of the regular union members opposed the integration of indefinite-term contract workers into regular employment, and groups composed of regular employees, such as the “Seoul Metro Youth Group for a Fair Society,” criticized the process at a press conference, saying, “Stop the ‘goal-oriented’ regularization that is being pushed forward with a fixed deadline.” Even on the corporation’s internal bulletin board, all kinds of abusive and derogatory remarks from regular employees toward indefinite-term contract workers appeared, and eventually, on the 7th, the Seoul Metro Working Committee filed a petition with the National Human Rights Commission, asking them to stop the blatant verbal abuse and personal attacks by regular employees toward indefinite-term contract workers about to be converted to regular positions.

 Even in the private sector, cases where such conflicts between labor groups have emerged are not easy to find. In April of last year, the Kia Motors union held a vote among its members on the 27th and 28th on a proposal to amend the union bylaws to separate the non-regular workers’ union, and it was approved with 71.1% in favor. Out of a total of about 31,000 union members, including approximately 29,000 regular employees and about 2,800 non-regular workers, around 26,000 participated in the vote, changing the eligibility criteria for joining the Kia Motors union from “workers employed within Kia Motors” to “workers employed at Kia Motors Co., Ltd.” As a result, so-called non-regular workers—such as in-house subcontracted workers, cafeteria staff, logistics workers, dispatched workers at partner companies, and sales agency employees—were excluded from the scope of membership in the Kia Motors union. The background to these results also lay in the process of discussing the conversion of non-regular workers into regular workers. In November last year, Kia’s labor union reached an agreement with management to first conduct a special hiring of 1,049 out of about 4,000 non-regular workers, but the non-regular workers’ union went on multiple independent strikes demanding conversion of all workers to regular status. In response, the Kia Motors union explained, "We made every effort to resolve the issue of irregular workers, but the conflict on the ground instead spread, so we decided to revise the regulations." 

 As seen in the cases above, the serious conflicts between labor groups that arise during the conversion of non-regular workers into regular workers will cause damage to organizational culture not only in the short term but also in the medium and long term, and it can inevitably have a negative impact on corporate operations; this is entirely foreseeable.

[HR Insight February 2018 Issue]

CEO Jeon Myung-hwan

Recent Changes in Labor Law and Labor Policy and the Situation of Conflicts Between Labor Groups

 Since the beginning of the new year, many changes are expected in labor law and labor policy. Starting January 1 of this year, the minimum wage will be set at 7,350 won per hour, and although it has not yet been resolved legislatively, reduced working hours also appear likely to become a reality soon. Furthermore, the abolition of the lump-sum wage system is being discussed, and it is believed that the trend of converting non-regular workers to regular positions will spread beyond the public sector into the private sector as well. It is reasonable to expect that these various changes in the labor environment will inevitably have an important impact on corporate operations. This paper aims to examine how changes in the labor environment, especially the issue of converting non-regular workers into regular employees, affect organizational culture, and to explore possible ways to overcome this. 

 At the end of last year, Incheon International Airport Corporation announced an agreement to directly employ about 3,000 of the 10,000 non-regular workers who work in firefighting and security screening, while converting the remaining approximately 7,000 into regular employees through two subsidiaries. Looking at the main points of the agreement, among the workers subject to direct employment, those below managerial level will be hired after interviews and eligibility screening, while those at managerial level or above will be hired on a competitive basis as a principle. However, workers who are subject to separate company employment will be hired through conversion without any special recruitment procedures. However, workers directly employed by the corporation will be classified under a separate occupational category distinct from general employment, and even for workers hired by a separate company, their wages and working conditions will not be lower than those of workers directly employed by the corporation. Finally, to ensure the full implementation of the conversion to regular employment, it was decided to establish a provisional “Incheon International Airport Joint Labor-Management Operation Council,” including labor and management from the corporation and the separate company. 

  Judging by the results alone, it may seem as though the conversion to regular employment was carried out successfully. However, the process leading up to such an agreement was by no means smooth. At the public hearing on November 23 last year titled “Measures for the Conversion of Non-Regular Workers at Incheon Airport to Regular Employees,” there was a clash involving shouting among members of the regular workers’ union (Korean Federation of Trade Unions’ National Federation of Public Service Industry Labor Unions, Incheon International Airport Corporation Labor Union) and the non-regular workers’ union (Korean Confederation of Trade Unions’ Public Transport Workers’ Union, Incheon Airport Regional Branch). Regular union members argued that “equality of opportunity, not equality of outcome,” must be achieved, and raised the “free-rider theory” regarding the conversion of non-regular workers, arguing that it should occur without any competition or testing. In response, the non-regular union members argued for the legitimacy of direct employment, saying that having performed the same tasks in the same space without any problems for seven years was itself proof of “eligibility,” and that no further qualifications were needed, thereby showing a sharp confrontation between labor and management. Moreover, the regular workers’ union insists that the executive must take responsibility for reaching such an agreement, and by attaching a vote of no confidence in the union executive at the time, about 55% supported it, resulting in strong opposition from regular union members to the extent that the union is now being operated under an emergency committee system without an executive. More conflicts are expected in the process of determining in detail the treatment and working conditions of regular workers who will be directly employed in the future or of those converted to separate companies. 

 Meanwhile, Seoul Metro announced that after three days of negotiations starting December 28 last year, it had reached an agreement to convert 1,288 existing indefinite-term contract workers, who are responsible for platform safety, train inspections, and subway security, into regular employees (general staff). The labor unions participating in this negotiation are the regular workers’ unions: the Seoul Subway Union (Lines 1–4), the Seoul Metropolitan Rapid Transit Union (Lines 5–8), and the Seoul Metro Union. The difference from Incheon International Airport Corporation is that, unlike the regularization of non-regular workers, the regular labor unions and management have agreed on a fully integrated form of regularization that absorbs indefinite-term contract workers—who were already directly employed within Seoul Metro and were guaranteed employment until retirement—into the personnel management system of regular employees. 

 However, even during this process, about 30% of the regular union members opposed the integration of indefinite-term contract workers into regular employment, and groups composed of regular employees, such as the “Seoul Metro Youth Group for a Fair Society,” criticized the process at a press conference, saying, “Stop the ‘goal-oriented’ regularization that is being pushed forward with a fixed deadline.” Even on the corporation’s internal bulletin board, all kinds of abusive and derogatory remarks from regular employees toward indefinite-term contract workers appeared, and eventually, on the 7th, the Seoul Metro Working Committee filed a petition with the National Human Rights Commission, asking them to stop the blatant verbal abuse and personal attacks by regular employees toward indefinite-term contract workers about to be converted to regular positions.

 Even in the private sector, cases where such conflicts between labor groups have emerged are not easy to find. In April of last year, the Kia Motors union held a vote among its members on the 27th and 28th on a proposal to amend the union bylaws to separate the non-regular workers’ union, and it was approved with 71.1% in favor. Out of a total of about 31,000 union members, including approximately 29,000 regular employees and about 2,800 non-regular workers, around 26,000 participated in the vote, changing the eligibility criteria for joining the Kia Motors union from “workers employed within Kia Motors” to “workers employed at Kia Motors Co., Ltd.” As a result, so-called non-regular workers—such as in-house subcontracted workers, cafeteria staff, logistics workers, dispatched workers at partner companies, and sales agency employees—were excluded from the scope of membership in the Kia Motors union. The background to these results also lay in the process of discussing the conversion of non-regular workers into regular workers. In November last year, Kia’s labor union reached an agreement with management to first conduct a special hiring of 1,049 out of about 4,000 non-regular workers, but the non-regular workers’ union went on multiple independent strikes demanding conversion of all workers to regular status. In response, the Kia Motors union explained, "We made every effort to resolve the issue of irregular workers, but the conflict on the ground instead spread, so we decided to revise the regulations." 

 As seen in the cases above, the serious conflicts between labor groups that arise during the conversion of non-regular workers into regular workers will cause damage to organizational culture not only in the short term but also in the medium and long term, and it can inevitably have a negative impact on corporate operations; this is entirely foreseeable.

In a dual-structured labor market, the government’s policy direction itself to convert non-regular workers into regular workers in order to reduce excessive wage gaps and improve the quality of employment cannot be said to be wrong. However, I also believe that the attitudes and positions shown by the regular workers’ unions and members of organizations such as Incheon International Airport Corporation, Seoul Metro, and Kia Motors should not be disparaged recklessly simply because they are defending their own interests without compromise, as so-called privileged elite unions do. Although it is not an easy issue, it should not be understood merely as a power struggle within the conflict zone between labor and management, but rather approached from the perspective of HR’s organizational management to analyze its causes and consider possible solutions. 

Problems of Intergroup Conflict

 If intergroup conflict persists within an organization, changes occur both within the group and in intergroup relations. This generally involves negative changes, and when conflicts between labor and management of the kind examined earlier intensify, the following changes can be anticipated. First, the cohesion within each labor union—the agents of conflict and confrontation—as well as within the regular workers’ groups or non-regular workers’ groups will be further strengthened, and loyalty to those groups will also increase. If that happens, collective perception can become distorted. In other words, each group will be more faithfully aligned with its own interests, and it will perceive itself as being the only ones playing an important role within the organization. Therefore, rigid prejudice against the other group gradually grows, and when negative homologous attitudes exist, each group tends to perceive the differences within its own group as less than they actually are, while the differences between itself and another group are perceived as much greater than they actually are. In addition, communication between elderly people will gradually decrease, and it may even become severed, potentially leading to physical conflict. 

 Of course, if the conversion to regular employment occurs in the form of a subsidiary, the scale of the problem may be relatively smaller, but if the directly employed workers or the labor union internally maintains a conflict situation within the organization based on prejudice and misunderstanding toward each other with the existing regular labor union, it can cause problems that damage not only the organizational culture but also the organization’s performance itself. It should be noted that if such internal organizational conflict persists to a serious degree, it may drive the entire organization into crisis. Therefore, it is necessary to closely identify, from the perspective of organizational management, the fundamental causes of such inter-group conflicts (not the practical causes such as changes in labor policy) and prepare alternatives accordingly. 

Causes of Conflict Between Groups

 According to the views of organizational behavior expert Pondy, the causes of intergroup conflict may arise from competition over scarce resources or from one group trying to control matters belonging to another group in order to protect its own interests. It can also be understood that they sought to intervene in the process and methods of converting non-regular workers into regular workers, as well as in post-conversion treatment, because it is clear that the resources allocated exclusively to regular workers during the conversion process (for example, welfare benefits, wages, and other resources subject to working conditions) would be divided by the direct employment conversion of non-regular workers. Unless the total amount of resources is increased, the share they can allocate will be smaller, so it can be understood that they intended to intervene in the process and methods of regularizing workers, as well as in post-conversion treatment. 

 Robbins believed that the causes of group conflict may include the heterogeneity of members’ backgrounds, values, education, and types of social relationships, as well as inaccurate perceptions based on distorted communication. Even according to this analysis, there are aspects of the current conflict between labor and management that can be sufficiently explained. From the perspective that the current distinct separation of entry routes for regular and non-regular workers, the differences in perception regarding the purpose of conversion to regular employment, and the spread of distorted information arising from insufficient communication processes, could all be understood as causes that further intensified the conflict and confrontation between the two groups, the validity of Robbins’ argument can also be acknowledged.

No-No Conflict Resolution Measures

 Rather than approaching the conflicts between the senior and junior executives solely from the perspective of complex political confrontations based on the interests of each faction, if we consider them as challenges that must be resolved through organizational management, I believe the following solutions can be explored.

 First, a solution for mutual problem-solving can be proposed, and this method is regarded as the best way to resolve conflict between groups (J. Gibson, J.M. Ivancevich, J.H Donnelly). This method brings the parties involved in a conflict face-to-face, forcing them to confront the root causes of the conflict head-on in order to find a solution. Its purpose is not merely to reconcile differing viewpoints, but to fundamentally resolve the problem. Therefore, as in the case of Incheon International Airport Corporation, efforts by the parties involved in the conflict to directly and actively seek solutions through a “Joint Labor-Management Operation Council” for future conversion to regular employment are considered a reasonable approach. 

 Next, there is a way to resolve the current sources of conflict during the process of deriving a common overarching goal that all parties involved in the conflict can agree upon and work toward achieving greater value. By making people realize that achieving these common goals is impossible through the efforts of only one group and can only be accomplished through the interdependence between the two groups, they can avoid focusing only on individual concerns and instead channel their energy toward efforts to generate greater synergy. Therefore, in the case of labor and management in the public sector, rather than focusing solely on improving working conditions for the members of each group, it is possible to derive a higher-level goal beyond the overall performance of the institution—such as its contribution to creating public social value—and build consensus on that goal, while also seeking ways to resolve sources of conflict in the process of achieving it. 

 In addition, there is a need to promote both formal and informal communication. Generally, to resolve labor-management relations issues or to maintain harmonious labor-management relations, it is necessary not only to engage in official activities such as collective bargaining or labor-management councils, but also to activate a wide variety of unofficial communication channels.