Insufficient executive pool a problem for Seoul

By Lee Sun-kyo

Companies considering opening a branch in Seoul can shake off worries about finding and retaining quality employees. An HR expert says the city is relatively “low-risk” compared to other Asian countries when it comes to human capital issues.

But its insufficient executive talent pool, along with lack of top MBA programs in local schools, poses a problem, says Alan Pang, the director of global research center for Aon Hewitt, a human resources consulting firm. Aon Hewitt has developed a People Risk Index to assess and help manage organizations’ human capital risks that can drive down business performance.

“With an overall People Risk ranking of 45 out of the 110 cities in the index, Seoul is relatively low-risk due to its high level of economic development, relatively low crime rate, strong government support for business and good education and talent development resources,” said Pang.

According to him, there are three categories of People Risk — recruitment, employment and redeployment. Recruitment risk is related to difficulties in hiring people with the necessary experience or capabilities. Employment risk has to do with retaining good workers — high staff turnover, increased training costs, and difficulties in providing the right training for employees in promotions. Redeployment risk includes legal restrictions on corporate restructuring — laws against layoffs, pay cuts, as well as ambiguous pension laws are all negative factors in this category.

Seoul has scored fairly good marks in the above categories. But Pang says the city should be concerned about the effects of “brain drain.” Workers with high skills tend to quit easily in Seoul than most other cities in East Asia except for several Chinese cities, he said.

Another problem Seoul faces is an ageing society that is likely to shrink its workforce in the future. The city’s small executive recruitment resources also contributes to its recruitment risk for foreign or global companies who want to set up branches here, said Pang.

Lack of executive recruitment resources can be attributed to not enough internationally recognized leadership and management training resources such as MBAs, which in turn increases Seoul’s employment risk.

“Seoul’s employment risk is slightly higher than its overall People Risks partly because of the shortage of internationally recognized leadership and management training resources, and its relatively high turnover rate,” Pang said.

Seoul’s redeployment risk — primarily related to the flexibility and feasibility to redeploy or restructure business operations in times of change — is higher than its overall People Risk, according to the expert.

“The major redeployment risk factors include the insufficient multilingual skills and government-mandated retirement benefits,” he said.