From Hyundai and LG to SK, we at SK hynix have integrated different cultures from three of Korea’s top four business groups since foundation in 1983. Now, as more investors look to non-financial factors such as corporate governance and several cross-border deals involving tens of billions of dollars in the semiconductor industry awaiting regulatory approvals before completion, our efforts to embrace difference in gender, generation, religion and race should go global now.
The call for companies to do better with diversity, inclusion and equity (DI&E) can’t be more compelling now, so we asked Dave Ulrich, “the father of modern human resources,” on what should be done to make every voice of SK hynix members heard in the era of cultural fusion.
The Cultural Agenda for SK hynix: Creating Social Values in the Era of Culture Fusion
Peter Drucker, the founder of modern management, is attributed to have said “Culture eats strategy for breakfast.” While he may not have been the first to say it, the statement is more true today than ever before.
To understand how true that statement remains today, look no further than the semiconductor industry. Mergers and acquisitions in the sector set records in 2020. And while corporate strategies may have driven those deals, their successes would actually depend on the cultures that would form from the combined companies. Our research has consistently shown that paying attention to culture during a merger increases the probability of success from 30-40 percent to 60-70 percent.
SK hynix already has a history of integrated cultures from three of South Korea’s top four business groups – but only through inbound efforts. Now, those efforts need to go global, making it critical for SK hynix to meet its own Social Values 2030 campaign (green, advance together, social safety net, corporate culture) without failing to sustain its global market leadership in semiconductor memory. Its competitors are also spending a lot of resources to meet the growing social demand by appointing diversity executives and creating alliances for inclusion.
Just as semiconductor technology has advanced, so has understanding of social values – corporate culture, in particular.
Traditional social values focus on beliefs that shape behaviors inside a company. Often described as the “roots of the tree,” they reflect the values of the company that are upheld by all employees.
Increasingly, they need to reflect the “right” culture, or the identity of the firm in the mind of its best customers today and tomorrow. Identity is about brand and its values in the minds of customers. SK hynix brand identity “Technology Innovator for a Better World” and brand slogan “We DO Technology” provide a purpose that’s real to both customers AND employees. The “right” culture means making this customer-centric brand identity real to every employee every day.
For SK hynix, this means that the four social values resonate in the marketplace with customers, investors, and communities.
- Being “Green” helps protect the planet and makes SK hynix a contributing social citizen
- “Advancing together” implies co-existence with business partners
- Creating a “social safety net” means caring for physical, emotional, and social needs of not only employees but also the community and the vulnerable social groups
- Establishing “corporate culture” focuses on diversity, inclusion and equity means that SK hynix cares for employees’ development
These four social values do not just define how SK hynix operates but are also key drivers of the technology brand identity in the marketplace. When customers see these social values in practice, they prefer to do business with SK hynix. When investors recognize the commitment that SK hynix has to these social values, they increase confidence in future earnings and increase stock price. When communities recognize SK hynix citizenship actions, they build the reputation.
With this in mind, the “right” culture starts with the aspiration of the Purpose (making a better world with all members of the society by leading the tech-based IT ecosystem) and promise of the brand. The right culture becomes less about the roots of the tree and more about the leaves that grow and change over time.
Diversity, inclusion and equity have been ingrained in SK hynix’s social values and culture from creation and have become a driving force for what matters to customers, investors, and communities today and tomorrow.
Diversity requires divergence and respecting differences. Divergence means that the company is constantly open to new ideas and ways of working. Innovation occurs not only in products and services, but in encouraging different backgrounds. Divergence comes from open dialogue, seeking others’ opinions, and looking for new answers to old problems. Divergence means that every employee has something to offer the company and that opinions will be respected. Diverse organizations create a pipeline of innovation because employees share their best ideas and disagree without being disagreeable.
Inclusion requires convergence and unity. True diversity begins with unity. Unity, or convergence, means that every employee believes in the SK hynix purpose and works to make the marketplace brand into workplace actions. Unity about the social values means that employees are all moving in the same direction, with different skills. Diversity without this unity is random action; unity without divergence leads to groupthink and a lack of innovation. Inclusion also instills a sense of belonging where each employee feels a sense of personal connection to the firm. This sense of belonging comes when employees not only share the values but enjoy working together with each other and learn and grow from that work. Equity means that everyone has an opportunity to live up to their potential.
The DI&E culture is not just for employees inside the company, but also customers, investors, and partners. These external stakeholder groups are also comprised of people who want to be respected for their diversity and feel a sense of belonging through inclusion.
A positive DI&E culture begins with senior leaders who model how to manage the divergence/convergence ongoing process. These leaders use their power to empower others by seeking input and fresh ideas (divergence) and by focusing attention on the key priorities (convergence). Employees will often do what their leaders do, and when leaders empower others, employees will not only respect their leaders, but also follow them.
Ultimately, every employee at SK hynix is responsible to help create and embed the right (DI&E) culture so that it is not an abstract ideal, but an action-oriented daily practice. Here are some questions each employee can ask to help make the right culture real:
Peter Drucker’s insight about culture being equal to or more important than strategy applies even more today. In a world where strategies, products, and technologies are changing faster than ever, the right culture must also adapt to deliver future success.
ByDave Ulrich
Rensis Likert Professor
Ross School of Business
University of Michigan
Partner, the RBL Group
