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*** Well-managed Companies ***

In the face of relentless global competition, some companies are growing dramatically. What theses successful companies have in common is their successful
labor-management relations based on mutual interests. Overall, their
labor-management relations encompass the following six principles:

1. Include workers in corporate core values

The world’s leading companies create core values that can be shared by labor and
management. Camera maker Canon’s core value is “Living and working together for
the common good.” As reflected in this phrase, the Japanese company places a
considerable weight on good relations with the labor.

Similarly, under the slogan of “Toyota Way 2001,” the Japanese car maker
emphasizes respect for human beings, creating a corporate culture in which the
growth of employees is linked to development of the company.

The US delivery company FedEx set its corporate philosophy as “People-Service
-Profit.” Placing people at the head of this question, it underscores the value of its
workers above other factors.

2. Communicate with employees

Companies with solid achievements usually set up several communication channels
to facilitate better understanding with workers and efficiently deal with their complaints.

A good example is the US-based IBM, which runs diverse communication programs
such as “Panel Review” (a panel consisting of three relevant workers and two
managers makes decision after discussing work-related problems), “Speak up”
(giving employees chance to ask questions or express concerns anonymously on
any company-related issue), “World-Jam” (enabling all IBM workers across the world
to suggest ideas through Intranet), and “Open Door” (helping employees to talk to
senior supervisors when their immediate supervisors fail to solve problems).

Microsoft's managers have one-on-one interviews with their staff every two weeks
and talk about their goals and career development. Moreover, leading companies
swiftly understand workers’ needs through regular survey on workers’ satisfaction.
When they find workers have problems, whether serious or not, they rush to deal with
them and boost workers’ confidence in the management.

3. Deal with complaints on the spot

In well-performing companies, managers work hard to keep small complaints from
ballooning into serious disputes. Knowing that labor-management relations are closely
linked to relations between supervisors and workers, rather than relations between
the management and workers, Toyota gives line managers more discretion in dealing
with complaints and problems brought by workers. For instance, Toyota’s line
managers resolve discords between regular workers and non-regular workers,
disputes arising from generational gaps, and complaints coming from workers who
get new assignments.

Microsoft empowers line managers to hire, evaluate, reward or fire workers. The
world’s largest retailer Wal-Mart has taught line managers its corporate core values,
leadership, role of managers, and legal risks management in order to boost their
organization management skills.

4. Satisfy employees

The leading global companies successfully reduce worker’s complaints through
proactive human resource management system. For example, Microsoft places a
priority on remuneration package. Even though its income level does not top the
industry, it includes stock options in remuneration package and encourages workers to
remain loyal to the company even after their retirement.

Computer maker Dell Inc. takes a similar approach. Its rewarding system consisting of
incentives, 401k pension contributions, profit sharing and stock options has coined a
new sobriquet of “Dellionaire” in reference to its workers becoming millionaires thanks
to Dell’s generous remuneration package.

Companies efficiently dealing with labor-management relations also give new chance
to low performers. Microsoft, IBM, Wal-Mart, and FedEx give job-related trainings to
low performers or transfer them to other departments. They run relevant programs
under diverse names such as Performance Improvement Plan and Collective Action
Plan.

5. Emphasize conversation and cooperation

Unions in leading global companies are well prepared for negotiations with
management and finish the negotiation process earlier than scheduled. General
Electrics has Coordinated Bargaining Committee (CBC), comprised of 13 unions that
represent GE workers. The committee allows GE’s unions to coordinate their
bargaining proposals before negotiation process begins.

At Toyota, the union representative, deputy representative, and secretary general have
several meetings with Toyota’s executives and coordinate their opinions well ahead of
formal labor-management talks begin in mid February. It even sets up permanent
labor-management council and holds labor-management meetings regularly in order
to narrow the gap between labor and management.

6. Treat unions as partners

At leading companies, unions play a pivotal role in boosting corporate competitiveness. They understand the importance of mutual trust and strive to take due responsibility.
As a management partner, unions speak not only for improvement of working
conditions but also for corporate growth.

Toyota’s labor and management announced “Resolve of Labor and Management for
the 21st century” and set up new principles of “mutual trust and responsibility” in 1996.
Since then, both parties have stuck to the principle.

IN order to introduce flexible workweek scheme and improve productivity, German
carmaker BMW has created “working time account” for each employee. With the new
system, employees could save up their overtime work in their accounts without
receiving extra salary from the company. Later, they can use the “time deposits” when
they do not have much work.

German appliance maker Siemens is another company whose union gives higher
priority to corporate competitiveness. When it had no choice but to move its factory to
Hungary in June 2004, Siemens’ management and Works Council agreed to lengthen
working hours without wage increase for the sake of the company.

*** Recommendations ***

Korea’s labor and management face a slew of unsolved issues. The unions lock
horns with management over a new law protecting non-regular workers, on measures
improving labor-management relations, and over a free trade agreement between
Korea and the US. Furthermore, the two parties have also shown divergent attitudes
towards a new law allowing more than one union to operate at a single workplace
from 2007.

For stable labor-management relations, Korean companies need to learn from leading
global companies. In doing so, however, they should consider differences in
business environment and take a step-by-step approach.

As a first step, Korea’s labor and management need to show more respect and trust
to each other. Without such efforts, they cannot begin talks in a productive way. To
make this happen, they should share corporate vision and philosophy, create
organizational culture, and abide by laws and regulations.

Next, they must set up permanent labor-management councils through which they
can coordinate their opinions and cooperate closely. In this regards, line managers
should be given more authority. As a bridge linking labor and management, line
managers can deal with complaints from workers and help them adjust at workplaces
and be satisfied with their work.

Ultimately, both labor and management have to understand that more efforts are
necessary to boost corporate competitiveness. Management should provide
appropriate rewards for workers and create good and friendly working environment.
Labor, in turn, should set their goals at fostering their capabilities and improving the
status of workers.

As for the government, it can encourage both labor and management to build a
consensus for improving their relations, and help companies nurture labor-
management relations in a way beneficial to both parties.