More than 70% of state-run company executives are external personnel

Director Kim Jong-won, who was promoted to the construction division chief at Busan Metropolitan Corporation (BMC) on Tuesday, is the first executive among those who joined the corporation as a rank-and-file worker since 1991 when the corporation established. As BMC is a state-run company under governance of the Busan City, registered corporate director positions have been taken by city officials. High rank officials in the Busan City government had an eye on this director position before the former director’s term expired, but Busan City Mayor Seo Byeong-soo’s disapproval on such parachuting-in resulted in the promotion from within the company.

Executives who have been promoted from within the corporation account for less than 30 percent of top management at public enterprises in Korea. Most of the times, such top managerial positions are filled with retired public officials from higher government agencies.

Of course, there are some cases where a rank-and-file employee climbs the corporate ladder to the top, becoming a CEO of a state-owned company. Korea Gas Corporation’s former CEO Jang Seok-hyo had joined the company through the company’s first open recruitment. Korea Trade Insurance Corporation`s former CEO Cho Kye-ryung was also the first CEO promoted from within the organization, who started his career at the company through public recruitment.

However, controversy was once sparked since those insider-became-executives had been under prosecutors’ investigation for charges of corruption. “CEOs promoted from within must do a good job in management as it can open a door (to the managerial positions) to other ordinary employees. However, some of them were put behind bars for charges of personal corruption. Watchers even say, ‘parachuting from the government would have been better,’” said a public enterprise employee.

Among the top management in state-owned companies, the number of female executives is starkly fewer compared to their counterparts in private companies. Out of 30 public corporations, there were only two female executives - Korean Railroad Corporation CEO Choi Yeon-hye and Korea Mineral Resources Corporation Standing Auditor Hong Pyo-geun, according to "Statistics on male and female employees per rank in 30 public enterprises," a survey released by CEO Score, a business management performance evaluation company, in August 2014. On the contrary, the number of female executives in 30 major conglomerates was 185 as of September 2014.

“An average age of employees to become an executive is around 55, which means they have to retire in their late 50s," said an employee of Korean Electric Power Corporation. "Given that the retirement age for ordinary employees has been extended to 60, it can be said that the management has shorter tenure of office.”