HR Case Study Analysis

Title: Dew Lubricants: Great (Unmet) Expectations* Author & Affiliation: Daniel D. Goering, University of Iowa

 

Dew Lubricants is a small, family-owned business located in South Korea. It has a rich and

storied history. Iseul Rang, the founder of the company, had grown up as a child in a tiny village

in the mountains of what is now North Korea. During the tumultuous times surrounding the Korean

War, Iseul, 10 years old at the time, and her mother, along with other family members, attempted

to flee at night across the now-notorious “38th parallel,” into South Korea. Their party was spotted

by guards who ordered them to stop. Iseul’s mother told her, “Run, and do not look back. We’ll

meet again when this is all over. Go!” Iseul’s last memories of her mother are of her voice

becoming fainter as she continued to slip through the moonless night across the border. “It was

like I was turning the volume dial down on the radio until I couldn’t hear her anymore. Then, when

I finally processed that I was all alone, it was like turning the volume up all the way—full blast.

All I could hear was my breathing and my quick footsteps.” Iseul never saw her mother again.

 

She finally made it across the border and eventually found her uncle who was waiting to retrieve

her at a secret rendezvous point. Deeply saddened, but ever the optimist, she exceled in school and

entered a top university in South Korea. She then went on to earn a PhD in chemical engineering

from the University of Iowa, where she began to develop several proprietary chemical patents as

part of her research program. Upon graduating, she wanted to return to South Korea to start a

business. She began a chemical fluids business that offered patented industrial-chemical products

used in manufacturing processes. She began by mixing the products in her bathtub and selling

them in small batches to automotive original equipment manufacturer (OEM) suppliers. Business

grew almost too quickly, as she struggled to scale up her business, constantly mixing small batches

in her bathroom. When she received her first order for 23,000 litres for one of her patented

manufacturing fluids, she remarked how she, “was going to have to get a bigger bathtub.” With

that large purchase order, she was able to quickly scrounge up some capital investments from her

husband’s family to secure a proper blending facility. Now, 50 years later, Dew Lubricants (NB,

“Iseul” means “dew” in Korean) has multiple locations across the globe, with its headquarters still

centred around that original blending plant, although several additions and expansions have

occurred since she moved into it. As a memento, Iseul has her original “blending bathtub” tucked

away somewhere in one of the 3 warehouses on-site.

 

A Tale of Two Egos

Iseul and her husband have several children. Similarly smart and ambitious like she and her

husband are, the children are now doctors, lawyers, and business graduates from American Ivy

League schools. This posed a problem when Iseul and her husband began discussing retirement.

They both wanted to keep the business “in the family”, but all of the children were already on

successful career paths in various professional occupations. The oldest son, Hyun-woo, felt

compelled by his parent’s repeated appeal to “filial piety” (i.e., a tradition in Confucian-based

cultures such as Korea whereby children, particularly the eldest son, are held socially responsible

for the care of aging parents) to drop his current career and take on the family business in Korea.

After discussing with his siblings and his own wife and kids, Hyun-woo “retired early” and moved

his family from the U.S. to Korea to start a new career.

* This case is based on actual events, but names and some characteristics have been changed to

maintain anonymity

 

 

 

The transition from Iseul to Hyun-woo was rocky at best. Iseul was very technically minded

whereas Hyun-woo was more of a global thinker. Hyun-woo thought Iseul was too passive in

negotiations while Iseul thought Hyun-woo was too aggressive and cut-throat. After all, to Iseul,

these were not just clients who provided a revenue stream for the company, they were her friends

and colleagues, many whom she had known for decades. “No,” was Hyun-woo’s retort, “they are

screwing you; they’re paying 1980’s prices for 21st century patented technology. Our margins are

too thin, and if you want me to run this company, then I’m going to run it my way.” Usually these

arguments ended with Hyun-woo yelling at his mom while she frowned in silence, shaking her

head in disapproval. For all their differences, what they both had in common was that they were

equally insistent that their way of thinking was the right way of thinking.

 

Eventually Iseul’s husband, who had remained in a more “stable job” at a multinational

corporation for his career, even despite Dew Lubricants’ profitability over the years, convinced

Iseul to retain an “emeritus” position and allow Hyun-woo more latitude on how to run the

business. Hyun-woo immediately began to transition the company’s strategy into that of a bulk

oil provider and marketing company promoting “eco-friendly chemical products” using various

social media. He wanted to transform the company from how his mother had been running things.

He split the company into three divisions: Dew’s patented fluids arm, its bulk oils arm, and a new

eco-marketing arm. This way he could let Iseul continue working with “her other child” as she

would sometimes refer to the patented fluids division. This allowed Hyun-woo to continue

growing the other two divisions, using the profits from the patented fluids business.

 

Offer with a Twist

Hyun-woo’s strategy seemed to be working during his first 5 years at the helm of Dew

Lubricants, with steady growth from mid-2012 to mid-2017 in both the bulk oils and eco-

marketing divisions. As stand-alone units both divisions were still in the red, but thanks to the

profitability of the patented fluids division managed by Iseul, Hyun-woo continued to hire and

expand. One recent hire was an Australian, Joshua Kable.

 

Hyun-woo had met Josh while trying to get business with Josh’s employer, a large,

multinational oil and energy corporation. Josh had been a missionary in South Korea for two years

before finishing university, and he was fluent in Korean and Japanese. Hyun-woo thought Josh’s

skills, abilities, and professional network were ways he could obtain entrance into the Japanese

market. Hyun-woo had kept his eyes on renewable energies in Japan since the occurrence of the

Great East Japan Earthquake and subsequent, ongoing Fukushima nuclear disaster. However, he

had failed to make any inroads into that market. “Josh can get us in,” he was certain. In addition,

Hyun-woo was aware of a social media campaign Josh had spearheaded that had focused on an

eco-friendly synthetic motor oil made from used motor oil. The campaign had been a hit as

indicated from the number of “likes” the campaign’s profile page had gathered. Hyun-woo was

convinced that Josh was the one he needed to turn the eco-marketing arm of Dew from red to

black.

 

Josh had met Hyun-woo at a series of professional networking events, and he thought Hyun-

woo was very bright and charming. Eventually, at one of these events, Hyun-woo was able to get

a lunch meeting with Josh and officially ask him if he would be interested in working for Dew

 

 

Lubricants. “Honestly, Hyun-woo,” he replied without much thought, as if he had been in similar

situations many times before, “I get offers from suppliers, even my company’s competitors—say

via LinkedIn, for example—on a fairly regular basis. I’m not saying I’m not interested, but to be

frank and upfront with you, it would have to be an offer that aligns with my professional and career

goals for me to seriously consider it.” Eager at the prospect of getting Josh—and consequently

entrance into the Japanese market and any number of “hit” marketing campaigns Josh would

engineer—Hyun-woo offered Josh the world. “Tuition remission for an MBA? Commission on

sales converted from social media campaigns? Free Costco membership?” The MBA tuition was

something very important to Josh. From the big things to the small things, Hyun-woo continued to

sweeten the offer. After a week of negotiating back and forth, Josh and his wife felt like this would

be a terrific career move. Hyun-woo thought this was going to be his big break: he was going to

get Josh to be a rainmaker for Dew Lubricants.

 

Hard Times

Josh’s transition into the lead role of Dew’s eco-marketing division was rocky at best. Hyun-

woo blocked out his calendar for the entire morning on Josh’s first day with the subject: “Mtg.

w/Josh – secrets to Jpn. renewable energy market.” Josh was not sure that he had any “secrets”

per se; he simply knew people in solar and wind energy in Japan and he was fluent in the language.

Coming from a large corporate setting to a small, family-owned business, Josh also noted the

absence of “buzz in the air” to which he was accustomed, being surrounded by other creative

people highly engaged in their work. Josh shared the front office with nine women including the

CFO/HR manager, while Hyun-woo was in the corner office with Iseul in the back office. Tom

was the lead lab chemist with Sariah and Jenny working as lab assistants. There was also Ron who

worked in the warehouse. Josh got along well with everyone, although he felt the front office

personnel could be cliquish—they were all blond-haired, middle-aged women who went to the

same church and even yoga class as Hyun-woo. In fact, when a supplier came to the office to meet

Josh in-person for the first time he slyly remarked, “Huh, I guess that’s his type.”

 

“Pardon me?” Josh replied back, trying to mask his thick Aussie accent.

 

“You know, his ‘type.’ Did you have to put a wig on when you interviewed?” the supplier jested

as he smacked his lips playfully. Josh merely simpered as they proceeded to the conference room.

 

Later that week at the weekly management meeting, Hyun-woo gave a pleasant introduction of

Josh, and then asked Josh to share his thoughts on what the next “smash hit” social media campaign

might be. “Honestly, besides influenza it’s hard to know what’ll go viral,” was Josh’s droll

response. Hyun-woo did not laugh. Josh, while staying late at work one night, overheard Hyun-

woo yelling at Iseul. Afterwards, Josh checked on Iseul before leaving for the night. She said she

was fine, and vented to Josh a little, mentioning that she loved Hyun-woo’s “grand vision”, but

she was disappointed that she felt that he lacked follow-through and clarity. She then asked how

Josh was settling in. “Fine,” with a smile, was his response. Josh began to wonder if he had made

a career misstep.

 

Over the next few weeks, Josh noticed that Hyun-woo began to be curt and aggressive toward

Josh. Josh felt like Hyun-woo had stopped saying “good morning” and instead would walk by

Josh while glancing at his iPhone to avoid eye contact. Josh felt that meetings between the two

 

 

had turned from grandiose brainstorming sessions to contentious standoffs where Josh began to

feel like he was justifying his employment. In fact, after 6 months Josh was impromptu called into

a meeting with Hyun-woo and the CFO. They showed Josh that they were paying him handsomely

to deliver on results, but results were not coming as quickly as Hyun-woo had hoped. Josh did not

entirely disagree. “I could hire 2 even maybe 3 employees for what I am paying you—and that is

before we even begin factoring in MBA tuition remission and all the other perks. Unless you can

give me a rationale otherwise, we may not be able to help with tuition costs. The money just won’t

be there.” The CFO nodded in tacit approval. Josh had not been able to prepare anything for the

meeting. He felt ambushed, although this confirmed what he had already come to assume.

 

On one hand, Josh could not really argue that, at least within a 6-month window he had not yet

delivered. However, he also knew that these things—building a business—take time, even years.

In response, Josh sent weekly reports to show data and evidence indicating that sales were picking

up steadily—albeit at a slow and more realistic pace. Josh also thought that perhaps he should

show more deference toward Hyun-woo as a sign of respect. As such, Josh began asking more

questions to him, such as, “Well, how do you think we can build the business faster in Japan?”

Unfortunately, this tactic backfired. After about the third time deferring to Hyun-woo for his

thoughts on how to build the business more quickly, Hyun-woo snapped. With a petulant shoulder

shrug he barked, “Why are you asking me? This is why I hired you.”

 

Josh began to avoid person-to-person interactions with Hyun-woo. He began communicating

everything via email. Josh worked with the CFO, who seemed to have more reasonable

expectations, on developing business goals over the next 2 years. Josh assured the CFO that his

unit would meet those quarterly profit targets. However, the CFO, who had befriended Josh,

quietly mentioned that Hyun-woo had privately discussed with her a change in the percent

commission they were paying Josh. Up until now, payment had been 10% of revenue of all eco-

marketing sales; the CFO was now saying that it would “probably” be 10% of net profit moving

forward. “Hyun-woo says we have to find a way to recoup the costs of hiring you,” was the

rationale she gave to Josh. She also shared that Hyun-woo had begun making sales calls on his

own to several of Josh’s contacts, without Josh’s knowledge. She mentioned that Josh’s

commission payments would only apply to net profit from sales that Josh personally closed.

 

Josh was floored. How many more times were his payment terms going to change? How was

Hyun-woo going to define “net profit”? Most of all, he was insulted by Hyun-woo calling on Josh’s

people. To Josh, sales was like planting crops: the person who picks the ripened crop is not

necessarily the person who put all the work into growing the crop. Josh essentially perceived Hyun-

woo closing sales on the contacts Josh had been working with as stealing his “crops”, in a manner

of speaking. “When was the company planning on telling me this?” Josh asked the CFO. She just

looked away and said “sorry.”

 

Things continued to worsen. Josh began reaching out to his professional network, informally

at first, to explore future employment options. The final straw came when Josh was out to dinner

with a new client—and a big client at that. Josh had been working with the client for over a year,

since he first moved to Dew Lubricants. While out at dinner that night, the client mentioned in

passing that his contract and purchase order with Dew Lubricants had Hyun-woo’s name on it, and

not Josh’s. Josh was crestfallen. “You’ve got to be kidding me,” was all he could say.

 

 

INSTRUCTIONS

 

Answer the following questions below using information from class—including from our

expert interviews, the textbook, lecture slides, etc. Please write your answers on a separate

document and limit your responses to no more than roughly 300 words per answer. Submit

your responses to Blackboard before the due date. All responses must be your own original

work.

 

1. Pretend you are the CFO/HR manager at Dew. What would you have done differently? Why?

 

 

 

2. From an HR perspective, what went wrong between Josh and Hyun-woo?

 

 

3. Using expectancy theory, explain how Josh’s perception of Hyun-woo’s leadership influenced his motivation to deliver on business objectives.

 

 

4. Using equity theory, explain how Josh’s perception of Hyun-woo’s leadership influenced his motivation to deliver on business objectives. How might Josh’s

performance have influenced Hyun-woo’s perceptions of equity relating to Josh’s

delivering on business objectives