KEPCO's Innovation Continues

Classified the top innovative Level Six category in a survey by MPB

Korea Electric Power Corp. (KEPCO), one of Korea's largest public organizations, was once associated with negative names like a dinosaur because of its jumbo-size organization and decades-long rooted tendency to keep the mould.
However, KEPCO is striving to innovate itself with the goal of becoming a globally-recognized company in the world's electricity market. KEPCO has been recognized as one of the most innovative public organizations in Korea as the corporation was classified to the top innovative Level Six category together with four other public organizations in a survey of assessing the performance of public organizations, released last July.
KEPCO has been selected as one of the most innovative public organizations as the company has used innovative systems like an educational program designed to change the attitude of executives, assessment of their integrity and a contract on execution of innovations under the innovation system dubbed "BEST 700."A collection of best innovative practices, entitled "The Way of Innovation, which was published by the Ministry of Planning and Budget, introduces KEPCO's innovative practice.
KEPCO has made efforts to minimize the side effects of its jumbo-size organization. One of these innovative efforts the Korean utility company has made so far is its decision to make distribution an independent management entity.
KEPCO Chairman and CEO Han Joon-ho has been recognized in Korea and abroad for conducting remarkable management innovations since he took the helm in March of 2004.
KEPCO's innovative steps have paid off. KEPCO has recently won the international prestigious Edison Award for outstanding managerial achievement, and KEPCO became the first non-American company to grab the 2005 Demand Response Annual Award (Outstanding Achievement in Demand Response) from the Peak Load Management Alliance.
Domestically, the Korean utility giant won the Customer Satisfaction Award for its seventh year in a row and KEPCO was selected as the most innovative public organization and various other acknowledgments were garnered. However, the Korean utility company refuses to rest on its laurels. KEPCO is striving to adopt powerful management innovation plans internally with an eye of getting a step closer to becoming a global integrated energy group while solidifying their competitive edge in the power generation industry.
The reorganization calls for the introduction of an independent management entity system in KEPCO's power distribution business, among others.
Competition has been in place in the power generation sector since April 2001 when six power generation subsidiaries were split from KEPCO under the government scheme to restructure the domestic electricity power industry. In accordance with a policy recommendation by the Korea Tripartite Commission, made in June 2004, a plan to spin off the power distribution sector from the Korean utility company has been suspended due to possible electricity charge hikes arising from a oligopoly and such uncertainties as an unstable power supply, and instead, the projected independent management entity system has been considered a viable option.
The independent management entity system will be expanded in stages to buffer the effects of the power generation industry caused by the full-fledged implementation of the system and adopting an optimal system, based on assessments. The new system will initially be in place in nine branches with a competitive size of more than 1 million households. The remaining seven branches will be placed under the current management system, and expanding the new system or other management efficiency steps will be considered after two years of management assessments.
Each branch subject to the independent management entity system will be given more autonomous rights like operational rights and responsibility. On top of independent accounting, each branch will be operated as a separate, decentralized entity whose business performances are reinforced, as each branch chief is obligated to directly conclude a management performance contract with the KEPCO CEO.
Outside experts had been commissioned during the period between January 2005 and June 2006 to study the introduction of the independent management entity system in a bid to spur inside competition and ensure management innovations. The head offices of KEPCO and business departments have been overhauled to maximize customer satisfaction and management innovations by building up customer-oriented IT facilities. Transfers to each job classification will be expanded and KEPCO officials with the rank of first grade or higher will have their assets registered on a voluntary basis as part of its efforts to beef up ethical management.
The head office will be restructured in the way field business departments and manpower can be augmented to raise competitiveness.
The business sector will have horizontal system of teams instead of the current vertical system comprising of divisions and departments to delegate more leeway and enhance organizational efficiency.
As part of an effort to make contributions to society, KEPCO inaugurated its social volunteering group under the catchphrase "Light to the World and Love to Neighbors"in May last year. KEPCO has been gained a reputation as one of corporations with "a warm heart"as the company has proactively participated in volunteering activities for the victims of the typhoon and floods that hit Gangwon Province last July. About 6,400 KEPCO employees or some 30 percent of the manpower on the payroll are active in 269 volunteering service corps across the nation. KEPCO employees, for example, have been engaged in volunteering activities like offering high-efficiency electricity devices to low-income households free of charge and a campaign for searching missing kids in which 93 out of the 195 missing children, who were posted on the electricity bills, have successfully located their natural parents so far. nw

KEPCO Chairman and CEO Han Joon-ho

Public Organizations'
Innovation Improves

KEPCO receives highest innovation stage ranking

Public organizations generally made headway in reforming the way they conduct management activities, but they are showing signs of a large gap among them. A great majority of surveyed organizations are still at the initial or immature stage of innovation, according to a recently unveiled survey.
The outcome of a 2005 management survey of 210 public organizations, conducted and released by the Ministry of Planning and Budget, indicated that the average organization rose 0.6 notches from Level 2.5 in 2005 to Level 3.1, with the number of organizations rated at Level 4 or higher soaring from 34 or 16 percent to 84 or 40 percent, showing signs of improvement.
Korea Electric Power Corp. and Korea Highway Corporation were given the highest, coming in at Level 6 among the surveyed organizations, followed by Level 5 earners that included KOTRA, Korea Land Corp., Korea Development Bank, Industrial Bank of Korea, Korea Credit Guarantee Fund, Korea Railroad Corp., Korea Agro-Fisheries Trade Corp. and Korea Housing Guarantee.
Classified in the Level 4 category were Korea National Housing Corp., Korea National Oil Corp., National Health Insurance Corp., National Pension Service, Korea Technology Fund, Korea Deposit Insurance Corp., Korea Gas Safety Corp., Korea Institute of Industrial Technology Evaluation and Planning.
MPB said 126 or 40 percent of the surveyed organizations remained at Level 1 through Level 3, at the initial, immature stage of innovation. However, the overall innovation levels of public organizations improved somewhat as the portion of public organizations rated to be Level 4 or higher increased from 16 percent to 40 percent.
Kim Yong-jin, director of MPB's Public Innovation & Planning Team, said, "Public organizations"average innovation level rose from Level 2.5 to Level 3.1. Innovation levels are determined according to 10 percent of management assessment points each public organization gets, so the higher innovation level, the higher performance payment each public organization receives.
KEPCO was also given the highest innovation mark in recognition of developing an innovation program into a brand. In particular, the utility giant upgraded its innovation activities by designating 700 tasks the company will implement by the year 2007. nw