Drastic Cut of LG Affiliates` Executives

LG Group defined a personnel policy based on reducing many executives of each affiliate company, and planed to designate the executives within the year and to execute its management by new executives from next year.

As the reorganization of the executives group has been visualized in its early stage, it will seem to affect other groups.

A high-ranking official of LG Group said on October 30, “We will start a business performance check by business unit against a goal by affiliate companies and will finish the personnel evaluation process in November. The personnel outline will come out in the middle of December at latest.”

He explained, “We won`t have the large range of personnel transfers, but will reduce the executives of 10~15% by business unit. On the other hand, the promotion personnel will be the level of 10%. We have continued to execute the organization slim process this year since a financial crisis.

LG simplified the officers` position to three steps of a president, vice president and managing director from July 2000. Accordingly, LG will reduce the maximum 90 officers out of total 600 officers.

The official of LG Corporate Restructuring Office said “We will complete the performance evaluation in December in December and will officially announce the personnel policy in the early months of next year.” It said that there couldn`t be the any personnel transfer before a general meeting of shareholders in March 2003. But, the personnel period will be moved over the original schedule.

Especially, an interview with Ku Bong-Mu, president of LG Group and CEO of each affiliate will be executed from next month.

The president will grasp the state of each affiliate and discuss about the business plan for the next year in the interview. But, in there, CEO of each affiliate will approve the business plan for the next year. If the president doesn`t agree, the officers and CEO will leave a place directly as is the custom.

LG advances the personnel shake up because the economic prospect of the next year is uncertain. It is part of the strategy for executing the business focused on new managements and arranging the officers by business unit in advance.

The official of the economic world said, “Samsung Group also seems to move up the personnel period like LG. But, it doesn`t disclose it because it is conscious of the general meeting of shareholders and external eyes. He also said, “It is reasonable to manage the company by the new management, but it takes 2 months to wait for the general meeting of shareholders. When LG carries out the officers` personnel in advance, the other groups will go along with LG.”

Keuk-In Bae bae2150@donga.com