[Editorial] Jack Welch’s Useful Advice

Known as a management genius, Jack Welch, the former chairman of General Electric, is famous for his ability to succinctly summarize the essence of successful management.

The day before yesterday at the Sixth World Knowledge Forum 2005 held in Seoul, he said, “Only companies which succeed in winning profits can return something to society.” He asked, “What can companies return to society, when they don’t create profits?” His lucid remarks should be heeded by the government, civic organizations, labor unions and businesses.

When there are more winning companies, tax revenues and newly created jobs will increase, companies will nurture more human resources, and companies will be able to return profits to society. As was the case with companies injected with public funds, companies which failed only increase burdens on the people. More companies can grow healthily only when profitable companies are held dear and respected in our society.

However, in Korea, those who seek to derail profitable companies seem to be becoming increasingly influential.

Welch said, “The main factors that threaten Korea are the chronically precarious labor-management relations, aging, and China.” He warned, “It is worth asking whether in 10 years Hyundai Motors will end up resembling today’s General Motors (GM) or not.” GM lost competitiveness due to excessive burdens of salaries and benefits, including retiree medical coverage. Its glorious days as the “No.1 automaker” have gone, and now it is riddled with rumors that it will go bankrupt. Hyundai Motors’ labor union went strike this year, the 11th consecutive year it has done so.

The Korean economy’s chronic ailments are a moral hazard, and big company labor unions that are led by the Korean Confederation of Trade Unions. Those big company labor unions are willing to wage political struggles to win what they want. We have to take the advice seriously that if these problems go unaddressed, even Hyundai Motors will look like today’s GM in 10 years.

Aging is a challenge that we’ll be faced with in the near future. However, the government and some activists are obsessed with clearing a score with the past rather than preparing for the future. China and India continue to grow at a high speed and are running after us at a rapid clip. If companies find it more and more difficult to run businesses, it will be only a matter of time before Korea lags behind these latecomers, not to mention the advanced nations.

Not only Jack Welch, but also foreign figures with acute discernment, elders of our society, and experts have voiced their concerns. It is deplorable that those who should listen to their advices are heading in the wrong direction in pursuit of their own obsessions.