Thirty years of South Korea’s miraculous economic development, which began in the early 1960s, hauled the then underdeveloped South Korea (hereinafter Korea) into the ranks of developed countries. As a result, per capita Gross National Product (GNP) was over $10,000 in 1995. However, behind the rapid economic growth lie inconsistencies and irregularities not only in sociopolitical aspects but also in economic aspects. Corporate growth, which had formed the basis of the economic growth, was also full of problems despite its quantitative growth.
Beginning in the early 1990s, Korean firms were burdened outwardly with the need to compete simultaneously with the firms in the advanced countries and of the least developed among developing countries (LDDC) and inwardly with the need to change their organizational structure and human resources systems from the ones fit for rapid growth to the ones for the low growth era. In addition, the increase in income was accompanied by noticeable changes in the mentality and attitude of the people, and since the early 1990s, Korean companies have strived to innovate and transform their HRM systems under the name of ‘New Human Resource Management (New HRM) Systems’. Such efforts, however, failed to significantly increase the corporate competitiveness mainly due to organization’s feeble attempts at innovation and by opposition from the employees. In these circumstances, rapid economic downturn due to the shortage of foreign currency in the end resulted in the bail-out of Korea by the International Monetary Fund (IMF) in 1997.
The IMF bail-out was an extremely shameful experience for Koreans who had courage and were proud not only of having joined the ranks of developed countries with the most rapid economic growth in the history of the world, but also of having achieved democratization on their own. However, the foreign currency crisis can be regarded as a blessing in disguise since it brought rapid transformation in hard-to-change aspects such as mentality, attitude, behavior and systems. The recent economic trials etched in the minds of the people the importance of competitiveness based on transparency, rationality, and capability, and provided a chance for the people to change their quantity-oriented way of thinking to a quality-oriented one. As people’s way of thinking and behavior go through rapid transformation, so do the contents of the organization’s HRM.