Hyundai Capital: Case Study
As a company grows, it’s natural for new layers of complexity to be added.
New functions and departments are created—along with new roles and responsibilities. For a company with operations spanning several continents and numerous subdivisions designed to meet the needs of their customers, organizational complexity is inevitable.
Who is Hyundai Capital?
Hyundai Capital Services (HCS), which serves as the financial unit for the Hyundai Motor Group, is one such organization. Over the last decade, Hyundai Capital has grown immensely—providing loan servicing to Hyundai Motor Company’s many customers in the USA, UK, Europe, Australia, China, Korea, Canada, Brazil, Russia, and India. Each of the regions that HCS services are managed by different “global entities” with headquarters located in their respective region.
Between the different Global Entities, central headquarters, the Global Business Development (GBD) group, and the Hyundai Motor Group, HCS was faced with numerous challenges, including:
1. Cultural Differences Between the Global Entities and Headquarters
The Global Entities were often torn between adopting Hyundai Capital’s Korean culture, the local culture, or a hybrid of the two. This led to a lack of understanding and cultural insensitivity between Headquarters in Korea and the different Global Entities, leading to miscommunications and decreased efficiency. For example, at the central office, there was an expectation of compliance with requests, while the leaders of the Global Entities in the US and Europe were more accustomed to discussing and clarifying expectations and being involved in decision that affected them.
This resulted in a perceived lack of transparency because it was not uncommon for a request to come from HQ without any explanation of who was making the request and why it was being made. As a result, local leaders felt there was a lack of trust in their ability to handle business problems when they arose.
2. Misalignment of Goals Between HCS, the Global Entities, and the Motor Group.
The primary goal of the Motor Company was to surpass the competition and become a “Big 3” auto manufacturer. As such, they wanted to make and sell as many cars as possible. This put pressure on HCS to generate more loans—even if it meant accepting less than ideal loan quality.
This was a problem because Hyundai Capital Services needed to ensure that every loan they provided was high quality—i.e. the borrower was likely to repay the full amount of the loan. Providing loans that had a high risk of defaulting ran counter to HCS’ needs and goals; even when the vehicles of a defaulted loan were recovered, a significant portion of their value was lost the moment they were driven off the lot. This led to net losses for each vehicle sold rather than gains.
3. Complicated Organizational Structure with Unclear Roles and Decision Authority.
There was confusion among employees in the Global Entities about who to communicate with and when. For example, an employee might talk to a risk management specialist in Global Business Development, only to be contacted later by a risk management specialist from the central headquarters stating that they were the person that needed to be consulted for that issue.
This lack of clarity on who to involve in decisions was contributing to miscommunications between HCS, GBD, and the Global Entities, causing inefficiencies and delays that made meeting Hyundai Capital’s goals difficult.
HCS contacted OnPoint to partner with them to help clarify the factors that were negatively impacting the performance of their multi-functional teams and to design and deliver a solution that would help all the parties work effectively within a global matrix structure.
1. A Data-Based Approach to Improving Collaboration
OnPoint began the project by interviewing a cross-section of executives from HCS, the Global Entities and GBD on the challenges of working in a matrix structure. This helped ensure that the OnPoint team had a solid understanding of the business as well as the issues and challenges team leaders and team members faced on a daily basis. The interviews also helped to clarify what was currently being done well to support multi-functional teaming and what factors inhibited team performance.
The results of the interview findings were used in three ways:
- The data became the basis for creating a shared view among senior leaders about what the opportunities for improvement were—creating a common starting point
- The data also established a benchmark that could be used to measure progress and evaluate the effectiveness of the intervention
- In addition, the information was used to design the solution and customize the materials that would be used
2. Working On Both Skills and Structure
One of the most important findings from OnPoint’s interviews with Hyundai Capital’s global leaders was that not only were there cultural differences and skill development needs, there were also structural issues; in addition to a lack of clear roles, decision authority and transparency of communication, there was a lack of shared (or even complementary) goals among the different groups as well as a lack of standardized processes.
For Hyundai Capital to address both the structural and skill issues that were inhibiting the performance of its matrix teams there needed to be higher levels of trust and improved understanding between groups and individual cross-functional team members. The solution OnPoint developed had two components: a training session to address the trust building and skill development needs of the organization and consulting with senior leaders to address Hyundai Capital’s structural issues.
3. The Training Sessions
OnPoint designed a skill training session that gathered managers and other senior-level personnel from each region and function together to participate in skill building activities and problem solving conversations focused on real-world issues that Hyundai Capital faced. By gathering managers who represented each of the different regions and groups in one location and encouraging open dialogue to work together on resolving key challenges, the Hyundai team was able to:
- Assess and agree on the current state of their matrix organization
- Understand the challenges facing other business units
- Build trust among matrix team partners and open lines of communication
- Understand how to gain support for ideas without authority
- Develop the emotional intelligence skills needed for working in a global matrix (active listening, empathy, and balanced response)
4. Consulting with Senior Leaders
In addition to the face-to-face problem solving and skill building sessions, Onpoint met with Hyundai Capital’s senior leadership team to discuss the organization’s structural issues (e.g., shared goals, clear roles, standardized processes) and made recommendations designed to make collaboration across organizational boundaries both desirable and feasible.
Using the tools and skills provided during the face-to-face session, combined with the actions of the senior leadership team to help further align the goals and clarify roles of the different business units, Hyundai Capital was able to make progress on addressing their key challenges.
As a result of its partnership with OnPoint, HCS experienced four major changes:
- HCS opened discussions with the Motor Group to align goals. By doing this, HCS was able to address the mismatch between production targets and the requirements of sound loan-making practices.
- HCS and HQ reorganized to improve transparency and communication. This clarified who the Global Entities needed to contact and when which helped improve communication, the speed and quality of decisions, and overall trust.
- Clarified roles and decision authority among GBD, Global Entities, and HQ. The simplification of organizational structures and more clearly-defined decision authority reduced confusion and miscommunications that wasted time and resources.
- Provided managers with the skills to build and sustain cooperation and collaboration with matrix partners. Through the face-to-face meetings, managers across the organization were able to improve their soft skills, helping them better understand and influence others in a positive manner that engendered commitment and cooperation.
These results were achieved by Hyundai Capital Services because OnPoint took the time to:
- Understand Hyundai Capital’s business
- Develop an appreciation and understanding of the cultures of both the Global Entities and HQ
- Ensure key decision-makers understood the current situation and what needed to change
- Work on both the skills and the structural causes of the problem
- Used mixed groups during the face-to-face sessions to facilitate cross functional interaction and relationship building
- Have multi-functional teams work on real-world challenges rather than generic case studies
- Provide specific tools and strategies to improve individual and matrix team performance
Hyundai Capital Services is one of many companies that OnPoint has assisted by providing a customized solution for their unique needs.
You can contact OnPoint Consulting for a custom solution to meet your needs—whether you want assistance resolving the challenges of a matrix organization, improving cross-functional and remote team performance, or filling your pipeline with high-potential candidates!