These were major projects and I spent a large amount of time and effort completing them. It was also a significant learning experience for me, since I was able to use the skills I learned during my college years and apply them to a real life situation. I therefore felt very satisfied with my work on a variety of levels, not least because I felt it was worked well and professionally done. I was very pleased with the finished product. I felt it was my first truly important job in a professional setting. It was a wonderful and satisfying experience.
My second defining moment was a conflict situation that arose between my executive director and CFO. What happened was that the Korean Financial Supervision Institute required the bank to use the Economic Capital method in the Internal Capital Adequacy Assessment Process (ICAAP). My executive director, who is Korean, wanted to maintain the existing use of Economic Capital. The British DFO, on the other hand, wanted to change the use of the regulatory capital method, since this was required by the British Financial Supervisory Authority. At its basis, it was therefore a conflict that stemmed from different nationalities and loyalties, while culture possibly also played a role. What defined this conflict for me was the way in which it was resolved. The CFO and executive director reached a compromise by using the varied Economic Capital in ICAAP in the Korean branch. In this way, the method would satisfy the local Financial Supervision Institution's requirements, while some of the requirements in Britain were also satisfied. They also agreed to investigate, prove and report the value differences between the Economic Capital method and the regulatory capital method. What was interesting about this is that it required the two professionals to work together in a productive and functional way to reach a common goal. Despite the fact that they were in disagreement about the best single method to use. Later, the variations in regulatory capital reported for the British FSA would help the Standard Charted Bank to vary Regulatory capital. The final outcome was that the head CEO in Britain allowed the use of Economic Capital in Korea to satisfy the local regulation.
What was important for me in experiencing this conflict was the fact that two professionals with completely divergent opinions were able to resolve the conflict without letting it escalate to a full-blown disagreement or even a "fight." Instead, they provided an excellent example of effective conflict resolution that ultimately resulted in a complete resolution of the situation itself. Furthermore, by compromising, they also created an opportunity to work together effectively, and ultimately they created a platform for a solution and for working together in the long-term. This type of conflict resolution is good for any business, since escalating conflict creates a situation where employees and managers either relocate or create an unfavorable atmosphere at the workplace. Replacing managers affects a significant proportion of the business, and it is likely that a significant period would be required to return all the functions of the business to their previous status of optimal functioning. On the other hand, when conflict is resolved amicably, the negative effect upon the work atmosphere and functioning is much less pronounced. This is an important principle that I will be able to use for the rest of my life in my business relationships.
A third defining moment during my internship is the strikes that occurred during this time. This is probably the most intense manifestation of corporate disagreement. Observing these strikes provided me with a vast amount of information about conflict, negotiation, and resolution. At the heart of these lessons is the understanding that the lifeblood of any business is its employees. Without them, the business cannot succeed. It is therefore vital that managers do what they can to provide employees with a sense of purpose and satisfaction in their work. When the specific reasons for the strikes in question are observed, it becomes clear that there is a link between worker satisfaction, work excellence, and the health of a company.
The first strike, as reported by Cynthia J. Kim, lasted for only one day. At the heart of this strike was the managerial proposal of a change to the payment system from its current basis on seniority to one that is based on performance. The reason for the proposal was to provide an incentive for employees to perform better in their work.
However, the fundamental flaw in this reasoning is that managers did not take into account the existing satisfaction levels of employees. From the article, it also does not seem that employees were consulted before the proposal was made. A major transition like this, especially where the livelihood of employees is concerned, requires a sensitive approach. At bottom, the most important consideration is that payment is one of the primary drivers of work satisfaction. The scale of the strike implies that very few, if any, employees were satisfied with the proposed change. Another important consideration is that, employees who are not happy with the way in which salaries are awarded are very unlikely to be satisfied in their work, and will furthermore be unlikely to provide the desired improvement in performance.
On the other hand, it can also be understood that managers want to provide incentives for their employees to perform better, especially since the bank is providing a service to the public. The reputation of the business therefore depends upon the level of service provided by employees. The principle that drove the decision to change the payment structure is therefore sound. However, the flaw lies in the fact that employees were never consulted. In today's business world, employees can no longer be treated like automatons who are expected to simply accept decisions handed down by management. Concerns like salaries, which directly affect their well-being, should be fully disclosed and discussed with all concerned. It should also be ensured that an agreement is reached that is favored by all concerned. There should be a recognition that both sides have valide concerns: management seeks improved performance; and employees seek continued financial well-being and job security.
The employees involved in the strike as cited appear to be willing to negotiate, having engaged in strike action only for one day, after which they stated their willingness to meet with managers. It is important to note that they also indicated that a lack of concession from managers would result in further strike action.
The second article, by Kim Yon-se, indicated that the negotiations were, after all, unsuccessful. More than half of the bank's wokers proposed to strike following the negotiations, in which management made several concessions and compromises regarding the proposed change to the salary system. From this article, it appears that the union members do not wish for any compromise, but rather for the salary system to remain as it has been. There is no willingness to concede on the part of the employees.
What becomes clear from this type of conflict is that the unwillingness to compromise on the part of one of the negotiating parties results in an impasse and prolonged conflict. The main problem is that these employees hold considerable power over managers, as strike action could cripple the functioning of the institution. Although the bank would send non-striking employees to the branches most affected, a prolonged strike would severely affect the ability of the bank to maintain excellence in its customer service sector.
The question is then whether management should yield to the striking workers and maintain the status quo of the seniority-based pay system, which has been the protocol in Korean business of the kind. The main driver for the proposed change was the projection of increased competition and improved customer service. However, the way in which the change was proposed was faulty to begin with. Management simply proposed the change without negotiating with employees. This was a shortcoming on the part of management and it instigated the conflict. The conflict, however, continued as a result of the failure of employees to compromise, even in response to a much improved offer that would be to the advantage of the employees affected. A later article reported that, after three weeks of strikes, the bank was considering closing 43 of its branches temporarily to prevent work overload for the remaining employees.
The main reason for the continuing strike was that the bank's concessions appears "insincere" to union leaders. However, the continuing strike appeared to bring neither managers nor employees any positive outcomes, since the bank was driven by a mandate from its headquarters. Perhaps a good compromise would have been to accept the bank's offer. In the even that it indeed proved to be insincere, employees would then be within their right to strike.
Personally, observing these strikes was a defining moment for me for several reasons. First, the sheer scale of the strikes was significant. It was quite an experience…