Costco: The Culture Fit In The South Korea

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The first dimension—Power distance

This dimension deals with the fact that all individuals in societies are not equal – it expresses the attitude of the culture towards these inequalities amongst us. Power distance is defined as the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally.[9]

The score of South Korea is 53, which means it is a slightly hierarchical society. Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat. On the other hand, the United States has a low score of 31. Within American organizations, hierarchy is just established for convenience.[10]

The second dimension—Individualism

This dimension is about the degree of interdependence a society maintains among its members. It has to do with whether people´s self-image is defined in terms of “I” or “We”.

South Korea has a very low score of 14, which means it’s a collectivistic society. In a collectivistic society, strong relationships are fostered where everyone takes responsibility for fellow members of their group. The relationships between employer and employees are perceived in moral terms. Also, hiring and promotion decisions take account of the employee’s in-group, management is the management of groups. While the United States has an extremely high score of 100. Its employment relationship is much weaker than South Korea’s.[11]

The third dimension—Masculinity

A high score on this dimension indicates that the society will be driven by competition, achievement and success. While a low score on the dimension means that the dominant values in society are caring for others and quality of life.

The score of South Korea is 38 which indicates South Korea focuses on“working in order to live”. Conflicts are resolved by compromise and negotiation and incentives such as free time and flexibility are favored in South Korea. However, most people in the United States believe that“strive to be the best they can be” and that “the winner takes all”. As a result, assessment system within organizations are always with precise target setting by which American employees can show how successfully they did.[12]

The fourth dimension—Uncertainty avoidance

This dimension has to do with the way that a society deals with the fact that the future can never be known, and reflects the extent to which the members of a culture feel threatened by ambiguous or unknown situations.

South Korea scores 74 in this dimension and is one of the most uncertainty avoiding countries in the world. There is an emotional need for rules and security is an important element in individual motivation in South Korea. At the same time, the United States has a very low score of 37. Most Americans do not require a lot of rules and are willing to try something new or different.[13]

The fifth dimension—Pragmatism

This dimension describes how people in the past as well as today relate to the fact that so much that happens around us cannot be explained. A low score indicates that most people have a strong desire to explain as much as possible. While a high score means that most people don’t have a need to explain everything.

South Korea has a very high score of 87, indicating it’s a pragmatic, long-term oriented country. Long term orientation is in the priority to steady growth of market share in the organizations rather than to a quarterly profit. Pragmatic serves the durability of the companies in South Korea. On the other hand, the United States scores 21. This reflects that Americans are prone to analyze new information to check whether it is true, and they measure their performance with profit and loss statements being issued on a quarterly basis.[14]

The sixth dimension—Indulgence

This dimension is defined as the extent to which people try to control their desires and impulses. Low scores in this dimension mean“restraint”, while high scores mean “indulgence”.

With a low score of 29, South Korea is a restraint country. People in South Korea have a tendency to cynicism and pessimism and control the gratification of their desires. In contrast, with a high score of 68, Americans hold the value “work hard, play hard”.

The culture fit about Costco’s HR policies and practices

After the analysis above, it’s obvious that South Korea is different from the United States almost in every dimension. Nonetheless, this doesn’t mean that none of the HR policies and practices Costco uses in the United States do not fit the culture of South Korea, because even in the United States, Costco’s HR policies are so different from the rest.

As to the power distance, people in South Korea are used to hierarchy which is exactly one of the most obvious characteristic of retail industry. Costco is committed to promoting from within the company. The majority of their current home and regional office team members are home grown.[15] Costco fosters ideal bosses who are sophisticated in its business through its hierarchy. This means that Costco can fit the hierarchy culture in South Korea.

For the second dimension, South Korea has a collectivistic society, which means that the relationship between employer and employee is very strong. Fortunately, unlike other retailers, Costco has a very low turnover rate, and it supports and respects employees. Employees in Costco can feel their important values and have a strong relationship with Costco.

Since South Korea has a low score in the Masculinity dimension, people value the quality of life more important. Thus, the rigorous target and schedule model does not fit the culture in South Korea. One way to achieve work-life balance is a flexible job design. Costco can offer flexible work schedules and paid time off policies.[16]

People in South Korea have an emotional need for rules and security. People don’t like risk and any unorthodox behaviors and ideas, even though it may be an opportunity of innovation. Yet Costco, a retailer, has little connection with those innovation job, so it can easily make its job description clear. Besides, working in Costco, a company with very low turnover rates, is not risky. Costco can meet the