[Editorial] Evaluation of State-run Organizations

The Steering Committee of State-run Organizations has proposed the dismissal of Korea Consumer Agency President Park Myung-hee, National Youth Center of Korea Chairman Kim Dong-heun, Korean Film Council Chairman Kang Han-seop, and Korean Workers Accident Medical Corp. Chairman Jeong Hyo-sung. The four received the lowest grade in the committee’s assessment of 92 heads of state-run organizations. Except for Park, all of them were appointed by the incumbent administration. The assessment program was introduced in 1984, and this was the first time since 2001 that the committee proposed dismissals along with releasing the evaluation’s results. Eight years ago, the committee urged the dismissal of then Korea Resources Corp. chief Park Moon-soo.

The heads of 17 organizations with low ratings received warnings, including those of the Korea Land Corp., the Korea National Housing Corp., the Korea Coal Corp., and the Korea Broadcasting and Advertising Corp. They will be asked to resign if they get another warning in the next assessment. This assessment follows the “contract management system for state-run companies,” which forces the heads to submit a plan for management and sign a contract. Strategy and Finance Minister Yoon Jeung-hyun said, “We must modernize state-run corporations with the mindset that this assessment is only the beginning, not the end.”

To make state-run companies more responsible, the government must replace the dismissed heads immediately and pay them based on performance. The grades and results of the assessment should be released, and the corporations and their heads must accept the results and reflect them in their plans to improve management. If the public CEOs use tricks to prevent their dismissal or avoid warnings instead of trying to improve management, the assessment is meaningless.

This assessment should serve as an opportunity to get rid of nagging practices, namely designating former officials to lead state-run corporations, a frequent custom in the past, and backroom deals and profit sharing by unions. The government must crack down on secret deals between management and union and false reporting like that of the Korea Coal Corp. If the assessment fails to discover and tolerates illegal contracts between the CEOs and unions of state-run corporations, there is no need to conduct the evaluation.

The Lee Myung-bak administration has announced plans to modernize state-run corporations six times and unveiled specific plans - privatization, integration, adjustment, sales of asset, layoffs, sale and integration of subsidiaries, and making management more efficient. Its lackluster effort to reform the public sector is under heavy criticism, however, except for the plan to merge the Korea National Housing Corp. and the Korea Land Corp. scheduled in October. Hopefully, this management assessment can speed up reform at state-run corporations.