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[Management in Korea] Relying on TRUST to battle health crisis and reform economy

How South Korea’s approach to COVID-19 may contribute to economic restructuring

Eugene Kim                                                         Kim Ah-jeong
Eugene Kim                                                         Kim Ah-jeong

Management in Korea is a regular column written by the members of Egon Zehnder Seoul, touching on various aspects of Korean enterprises and business leaders and offering management tips. -- Ed.



While nations around the world implemented strict lockdowns and quarantine measures, South Korea largely remained open, despite initially being one of the worst-hit countries outside of China. Rather than locking down parts of the country and closing borders, leaders in South Korea opted for a different strategy: Trust.

“Trust” stands for: Transparency; robust screening and quarantine; unique but universally applicable testing; strict control; and treatment.

Through the system, South Korea managed to report declining numbers of new COVID-19 cases and a drop in daily increases just as many countries in Europe and the United States saw their numbers worsen. Now the question is whether this same Trust strategy could help South Korea overcome its economic reform challenges.


Why Trust Worked

To understand whether this same process could apply to a reform program, it’s worth a look at why Trust worked in the first place. South Korea knew it had to act fast based on experience -- specifically the outbreak of Middle East respiratory syndrome, which slammed the country in 2015. It was the largest MERS outbreak outside of the Middle East, and the government was heavily criticized for not taking action quickly enough.

In the case of COVID-19, South Korea tested for the virus at the fastest pace in the world and began testing immediately after the virus emerged in China at the end of 2019. The quick response enabled early detection, effective isolation and timely treatment to reduce deaths. Not only did the government act quickly in this case, but it also coordinated with the private sector, boosting efforts to contain the virus.

South Korea demonstrated best-in-class practices during a global pandemic with much of the success coming from the Trust model. Building on that strategy, we believe there is a case for South Korea to apply the Trust principles to the unfinished economic reform that has lingered for decades.


Transparency

Much like with COVID-19, the government must be responsive to the public on economic transparency.

One of the main reasons the public quickly trusted and supported the Korea Centers for Disease Control & Prevention and its director, Jeong Eun-Kyeong, is because everything they did was based in transparency. For this to apply to economic reform, government and public officials must feel a sense of duty to exercise that same level of transparency.


Robust and unique

The greatest progress comes with robust policy reform, and the most successful policy reform must be based on international norms and accompanied by public consensus. Even though KCDC’s COVID-19 standard, “Robust screening and quarantine” and “Unique but universally applicable testing” was customized for South Korea, the standard or guideline was not compromised. The public is often told the same story about economic reform -- that South Korea needs gradual changes or its economy will suffer.

However, you don’t plan change, though progress may be incremental. “Gradual change” is terminology created by people who are not willing to change. For the right changes to happen, minimal standards must be set high and desirable practices must be put in place sooner than later.


Strict control

Strict control and treatment: Simply put, rules are better than discretion. The public has seen many times how the government has backed off on policies to promote reform whenever the country faced economic difficulties.

To many observers, this resulted in the government bailing out conglomerates almost every time they ran into financial difficulties. In this kind of environment, it is difficult to promote rules-based changes to the country because the public will view the government as having a double standard, with a preference for conglomerates over the average John Doe. The reason KCDC’s strategy and plan worked is because regardless of who you are, the control and treatment applied was uniform and consistent, no exceptions were made.

It did not take long for South Korea’s social media, bloggers and word of mouth to start praising the KCDC and its efforts to fight the coronavirus through a transparent, fair and impartial system. The public knew exactly what the KCDC was doing and its greater purpose. It’s a great example of how an emphasis on rules and the inclusion of all can help overcome weaknesses and push change in a constructive direction.

The government should not put its exceptions for businesses above the public good. If business follows the rules, it will reduce uncertainties about future policies and stabilize the expectations of the public, enabling government to make decisions that contribute to better outcomes for the entire country.


By Eugene Kim and Kim Ah-jeong

Eugene Kim is a managing partner of advisory firm Egon Zehnder Seoul. He can be reached at Eugene.Kim@egonzehnder.com. Kim Ah-jeong is the head of research at Egon Zehnder Seoul. She can be reached at AJ.Kim@egonzehnder.com -- Ed. -- Ed.

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