LG Electronics holds major organizational reshuffle

LG Electronics conducted Wednesday a major organizational reshuffle encompassing both its Korean headquarters and overseas branches.

The move comes amid two consecutive quarters of operating losses and is part of LG’s plan for a “slimmed down organization” and “speed management.” The decision-making structure is also known to have been streamlined as overlapping roles and authorities among project headquarters, regional headquarters and overseas corporations were eliminated.

LG will restructure its organization from five headquarters and 15 divisions to four headquarters for mobile communications, TVs, home appliances and air conditioners, and energy and 16 divisions.

Eliminated will be the business solutions headquarters that had been formed to strengthen business-to-business transactions. Divisions will also be reassigned.

The monitor and solutions divisions under the business solutions headquarters will be merged with the TV headquarters. The air conditioner headquarters changed its name to the air conditioner and energy headquarters to cover photovoltaic and LEDs, both of which are new growth engines.

LG summarized the direction of the reshuffle as an integrated system focusing on headquarters, thorough preparation for the future, and acceleration of innovative management. Full authority and responsibility will go to the four headquarters that lead the company’s business lines.

This is the opposite of the matrix management system under former vice chairman Nam Yong, who distributed responsibility and authority by making nine C-level positions such as the chief human resources officer and the chief marketing officer at headquarters apart from chief of headquarters and chief of regional headquarters.

Consequently, five foreign vice presidents who represented the globalization of the electronics giant will step down. LG declined to keep three of them whose contracts expire at year’s end and will terminate early the contracts of the remaining two that have one to two more years left.

Their roles will be transferred to the management innovation (quality, six sigma, service and procurement) and global marketing divisions (brand, sales capability of foreign corporations, SCM and logistics) directly under the CEO.

In addition, eight overseas headquarters were replaced with eight “regional representatives” in name, putting more focus on the tasks of the overall enterprise and managing the organization. They will be directly related to the Korean headquarters by forming TV and home appliances teams in major overseas markets such as the U.S. and China.

LG Electronics will also appoint new executives in mid-December.

sukim@donga.com sublime@donga.com