Control Paradox

Years ago, I conducted a field stuty with several Korean chaebol comanies. The following is a small piece of my finding with regard to control-oriented management common to them. The quotation is from my dissertation.

 

            Control Mania. It is one thing for major decisions to be made by top management, and it is another for minor decisions to be approved by them. At most Korean companies, even small decisions should be approved by senior management. They want to know all the details of what employees are doing. Moreover, reports and decisions should in principle be written down in formal documents and come up through the corporate hierarchy to top management. The result is mounting paperwork and delay in decision-making.

             The same thing applied to the HQ-subsidiary relationships. Even minor decisions required approval from the HQ at many Korean MNCs: recruitment of local staff, local staff's pay-hikes, payment of customer claims, write-offs in accounting and the like. The HQ wanted to know almost everything that happened at the subsidiary. Many expatriate managers at a foreign subsidiary were burdened with making reports to the HQ, weekly, monthly or annually (cf. Appendix E). The HQ habitually wanted to be involved in the subsidiary's matters, large or small. Such involvement was maniac.

             At many of the U.S. subsidiaries, senior management (which was comprised of mostly Korean executives) required the employees, local staff or home staff, to follow the Korean-style work process. Senior management approved most of the decisions, large and small. For example, SaturnU employees had to get the president's approval for all the outward payments which were included in the annual budget. Employees had to prepare various types of documents to report to senior management. For example, all MercuryA managers were supposed to submit a detailed weekly report to the CEO of the subsidiary regarding what they did in the past week and what they planned to do in the coming week. The Korean management at the subsidiary was control-maniac, too. The results were ineffectiveness (slow decisions often removed from the marketplace) and inefficiency (time consumed on paperwork). In addition, American staff were demoralized by the excessive control.

 

             Control Paradox. If senior management tries to control too many things too specifically, it may result in loss of the real control. Since human beings' ability is limited, senior executives cannot know everything and cannot control everything. If they try to sign every document over one thousand dollars, they might not have much time to review a one-million-dollar project in detail. Moreover, they may lose sight of the forest, if they try to see each tree from the bottom to the top. That is not the real control. That is what happened at some of the Korean companies, especially MercuryA and SaturnU.

             If many people are involved in a decision-making, it may be nobody's decision. People may lose enthusiasm and commitment to the decision. Moreover, people may not be motivated to come up with new ideas, if they have to explain the same thing over and again through the corporate ladder. That is not the real control, either. That is what happened with many of the American staff at Korean companies.

   After all, the more control you seek, the less control you will have!