Korean CEOs Face Leadership Crisis

By Yoon Ja-young

Staff Reporter

Leaders of Korean enterprises are facing a great deal of discontent as a growing number of employees are becoming dissatisfied with their poor crisis management following the global financial meltdown.

The results were revealed in a "2010 Global Workforce Study" conducted by Towers Watson, a global consulting firm. The study was based on a survey of over 20,000 full―time employees in 22 markets around the world, including over 1,000 from Korea.

The survey showed that only 37 percent of Korean employees were satisfied with their senior leadership's overall effectiveness, which compares with the global average approval of 50 percent.

Employees especially think "crisis management," "engaging others" and "caring employers" were the weakest aspects of senior management.

Asked whether their senior leaders were effective at managing the risks they face, only 34 percent agreed, 13 percentage points lower than the global average. Only 27 percent agreed that their leaders have a sincere interest in employee satisfaction and wellbeing, which compares with the global average of 38 percent.

The leadership crisis led to a question about organizations' executives. Two out of three employees indicated that executives receive too much money for the work they do.

The consultancy concluded that Korean business leaders are "failing to motivate employees."

"Business leaders should make more efforts to have closer relationships with their employees and encourage them to perform at their best," said Ryan Park, managing director of Towers Watson Korea, citing communication, transparency and innovation as the most critical issues.

With failing leadership, Korean workers are seriously disengaged from their duties compared with workers in other countries, the survey showed. Lack of management leadership, more than anything else, is behind such a negative mindset, it added.

The company said that only 6 percent of Korean employees are fully engaged in their work. This is 15 percentage points lower than the global average of 21 percent.

Employee engagement gauges how much time, thinking and energy the employees are willing to invest as part of discretionary efforts to ensure business success.

In addition, employee engagement is known to have a positive relationship with corporate performance. According to another research by Towers Watson on 40 global businesses, businesses with high employee engagement saw operating income grow by 19 percent on average annually, and earnings per share (EPS) by 28 percent, while those with low employee engagement saw operating profit fall by 33 percent and EPS by 11 percent.

"Employee engagement has a major influence on business performance, such as customer satisfaction, sales increase, cost cutting and profitability," said Park.

Among Korean employees, however, 46 percent were disengaged from their work. Many of these workers turned out to be looking for another job or making plans to leave their current jobs.

The report showed that the lack of leadership lowered employee engagement more than anything else. "Senior leadership effectiveness is the lowest among all of the subject countries of study," the report said.