‘Digital innovation without effective HR management meaningless’

29-Oct-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

The government should devise a long-term compensation scheme based on effective human resources management as defined by greater monetary reward and early promotion opportunities for competent employees, a state think tank said Wednesday.

Korea Development Institute (KDI) said policy priorities should be about promptly identifying reasons why many small and medium-sized enterprises (SMEs) remain inattentive to improving overall business practices ? especially concerning human resources management, a more fundamental and efficient approach to bolstering productivity.

Continued failure to closely tie the use of certain advanced technologies to some form of incentives offered to workers for using them will pose a major stumbling block to Korean information technology businesses with great growth potential.

This will leave them further behind their global peers including from the US and European countries, many of whose competitive edges were sharpened due to fierce competition in the market.

According to a report commissioned by the KDI of 106 businesses in the US, on a scale of zero to one, the score for their manufacturing management averaged 0.643, whereas that for human resources averaged 0.583.

The score for the 1,000 Korean firms analysed averaged 0.625 for manufacturing management and 0.366 for human resources management.

Of note is that the difference in management between manufacturing and human resources for Korean firms was 0.259, over quadruple the 0.06 difference between the two average scores for firms in the US

“With all other factors considered, Korean business practices remain poor compared to those in the US, and the main reason behind that is because local firms fall far behind in terms of their human resources management,” the report author Chung Sung-hoon said.

Unless local firms seek measures to dramatically improve productivity, polarisation between strong market players and weak ones will exacerbate.

The same study showed the productivity of firms in the top 10 percentile in terms of their business management was 59 percent higher than those in the bottom 10 percent, indicating that competently managed firms are linked to better performance.

The high-achieving firms are more open to embracing new technologies and working environments, helping them challenge themselves through trial and error, a great feedback loop for making progress and updating existing systems as a whole.

Chung said future research should focus on how a much greater number of firms can improve their overall corporate practices involving both manufacturing and human resources.

“This study is more of a pilot. Studies to come should be about how managerial and executive figures need to be constantly trained via firm-organised sessions or outside consulting,” he said.

The ongoing policy initiative spearheaded by the SMEs ministry should be reviewed for efficacy including ways to expand current policies to help more firms and remove excessive benefits.

Under the policy, the ministry offers support to firms that hold certification from the ministry to assist with financing, tax incentives, finding export partners for overseas sales, consulting and hiring.

“Without structural reform, pouring taxpayers money in to a firm with a longstanding problem will draw little intended outcome.”



Category: Korea

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