Biz groups gearing up for sweeping personnel reshuffles

○ Spurring running horses

Samsung Group and Hyundai-Kia Automotive Group have made great strides despite the global economic crisis but will use personnel reshuffles to consolidate managerial control by members of the conglomerates’ founding families and survive competition with foreign rivals.

A number of factors are behind Samsung’s planned reshuffle, including the promotion of Samsung Chairman Lee Kun-hee`s son Jae-yong from vice president to president and reinstatement of the business group structure.

After Lee mentioned a “young organization,” watchers say many staff and executives will be promoted even before they finish the required terms of service for their respective job grades.

At Samsung, the promotion of a staff member before his or her term of service ends by one year is called “selection,” and a promotion obtained two years earlier is called “great selection.” Since Lee has repeatedly emphasized “young organization,” Samsung executives and staff with high work evaluations are expected to receive the “selection” or “great selection” designation.

The conglomerate will reduce the required term of service for promotion from managing director to executive director from seven to six years. A Samsung source said, “But chances are not high that the group will intentionally reduce the required term of service for each job grade and thus promote staff en masse.”

At Hyundai-Kia Automotive Group, Chairman Chung Mong-koo’s son Ui-sun was promoted as vice chairman last year. The conglomerate also conducted the largest executive promotion in the country’s history.

As such, the scope of this year’s personnel restructuring will likely remain at the level of previous years also because of Hyundai-Kia’s practice of irregular and surprise reshuffles of affiliate CEOs and key executives.

Market rumors suggest that the automotive group will conduct a personal reshuffle to punish employees responsible for its failed bid for Hyundai Engineering & Construction.

A source at the automotive group said, however, “Some might have made such comments without any knowledge of the conglomerate’s internal mood,” adding, “The personal reshuffle is expected to be conducted in a way that boosts quality improvement and research and development efforts.”

Analysts predict that Hyundai-Kia’s reshuffle will give incentives and compensation for Kia Motors’ domestic sales division and Hyundai Motor’s overseas sales division, both of which posted record performances this year.

○ Misfortune turns into blessing

SK Group and LG Group, which have relatively lagged behind in performance this year, will likely utilize personnel reshuffles to make a comeback.

At LG, chances are high that LG Electronics, the conglomerate’s flagship unit, will conduct personnel restructuring. LG Electronics replaced its CEO with Koo Bon-joon, who was LG International Corp. vice chairman and a member of the conglomerate’s founding family, after the company posted an operating deficit in the third quarter.

LG Electronics will expand organizations at production lines and R&D to establish a structure for a faster decision-making process and implementation systems, a move which foreshadows a personnel reshuffle.

Koo used to work at LG Display, so personnel changes between that company and LG Electronics are expected. Analysts say this could affect the personnel restructuring of the conglomerate overall.

For SK Group, its main unit SK Energy is scheduled to undergo spinoff early next year. The company will change its corporate name to SK Innovation, remain a holding company, and spin off its oil refinery and petrochemical businesses as independent units.

Accordingly, SK Energy will conduct a reshuffle of executives to supervise respective operations. The scope of the reshuffle will likely be determined by the degree of work assignments to subsidiaries and their independence.

○ Recovering lost territory

Hyundai Group, which is preparing to take over Hyundai Engineering & Construction, and Kumho Asiana Group, where Park Sam-koo returned as chairman, will likely conduct customized organizational reshuffles that consider the respective variables of each conglomerate.

Hyundai Group will likely conduct an organizational reshuffle after its acquisition of the builder is finalized. The reshuffle is expected to be implemented in a way to generate synergistic effects between the construction company and Hyundai Asan Corp., whose operation has been reduced to a minimum due to stalled inter-Korean ties.

Kumho Asiana is scheduled to conduct a personnel reshuffle in January. Its restructuring will be centered on Chairman Park, who returned to management after a 15-month hiatus. The majority of analysts say change will be insignificant, however.

The conglomerate scaled down the size of its strategic management headquarters, which serves as its command central, by about 40 percent and cut the number of executive posts about 30 percent.

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