I’m sure when I woke up on Saturday morning I had entered into some strange new world where Korean cinema had taken over reality. My Korean is limited, so I couldn’t quite make out the story, but I had a hunch from the images of the Hanwha Group chairman, interrogation rooms, police chief from Namdaemun and lots of images from a Korean nite club. I was startled by the hype itself; the news broadcast must have had at least 6 separate but related items.
According to the Korea Herald (latest news) on Tuesday, “the case allegedly involves [Kim Seung-youn, chairman of Korea’s 12th largest conglomerate (chaebol)] and a team of his bodyguards kidnapping and physically assaulting employees of a bar in Seoul on behalf of his 22-year-old son.” His son reportedly suffered facial injuries that required 11 stitches following a fight with the bar employees.
Analysts from Meritz Securities Co. are saying that the impact is only short term. However, the incident makes fun of the group’s grand vision for 2007 where the chairman Kim promised that the company “will become the greatest brand of all mankind that improves humanity and the value of life.” Hmmm.
Keynes once wrote, “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” I think Keynes was exaggerating, but I don’t think, if these allegations are founded, that this would apply to even this most extreme situation.
Putting the incident to the side, Hanwha’s ambitions are unquestioned. However, can Hanwha deliver on its audacious promise, even whitewashing this recent incident? Should companies make promises it can’t keep?
I think we all know the answer to this.
Corporate Social Responsibility (CSR) is a term that is thrown about flippantly. It is neither philanthropy, volunteerism or ’cause marketing’. Simply, it’s about businesses doing the right thing within the context of the society in which it operates and provides goods and services. CSR is achieving commercial success in ways that honor ethical values and respect people, communities and the natural environment. What’s changing now is that global companies, and ambitious Korean companies, need to adhere to global standards.
To say the least I’m skeptical that Hanwha will achieve its corporate vision as it looks to become a global company. CSR visions, which I believe the Hanwha statement to be, should not be throw-away-catch-phrases that earn short term admiration and perhaps marginal brand equity. CSR is a way of doing business and is more about what a company does from between 9 to 5 and how it treats its employees than slogans, donations or other such activities. At its core is reputation management – the stakeholder perception of how a company runs its business. When a company treats its employees well, there are fewer supply chain or customer disruptions. Robust environmental management practices result in reduced energy inputs, more efficient production systems, and less waste to manage.
I think Korean companies need to think more carefully when it comes to CSR and growing their reputation in a global context.