Innovations for Survival

Vice Chairman Nam of LG Electronics introduces many changes including holding executive meetings in English

"Hi, CEO"this is what Director Ma Chang-min of LG Electronics, says whenever he runs into Vice Chairman Nam Yong. Director Ma is U.S. educated, but he drops his head toward him when he says those English word unlike office manners in foreign companies. And it also shows changes in the electronics giant that have been made in its office manners in recent months.
Vice Chairman Nam as soon as he took over the electronics affiliate of LG Group as its top manager, he called for a meeting of some 350 officers of the company in January and what stood out at the meeting was that every one spoke in English.
The vice chairman is no stranger to English having stayed in the U.S. for 7 years assigned by the electronics company and interpreted for Group Chairman Koo Ja-kyung as his personal secretary.
The announcement of top executive meetings held by Chairman Nam, Vice President and CFO Chung Ho-young, Chief Technical Officer Lee Hwi-kook and Vice President Chief Strategy Officer Park Min-sok are made in English. Vice President Park is a U.S. citizen. They hold the meetings in English. An LG Electronics officer said meetings presided over by Vice chairman Nam is done in English in many cases.
The common language at the company will be English, company officials expected. In order to prepare for the eventuality, the company set up 'English Center'in April. The center works on the English vocabulary for the joint use by all the company's overseas subsidiaries and branch offices totaling some 111 around the world. The center collected the English words most often used by the company's outfits and is working to standardize them based on the company's business practices.
The company also unified the personnel policies of all foreign employees working for the company at home and abroad so that its 80 subsidiaries will refer to the standard personnel policies including salary scales and promotion for foreign employees.
Vice Chairman Nam has already announced that the company will hire foreigners in the company's key positions including personnel officers, marketing and purchasing and top SCM officers. Using English at meetings has caused something unexpected to happen: Many laughs and shortening of the meetings, a company official said.
Those who are not yet fluent in English don't speak much at the meetings and many laugh aloud at mistakes made in English announcements. Another company official said the vice chairman's push to make every company meetings done in English is related to the fact that some 80 percent of the company's sales come from abroad and also activate the company employees to work harder by giving a stimulus to them.
Anyhow the entire company has been reacting positively to the vice chairman's moves. The company posted more than 10 trillion won in sales in Q2 with operating profit amounting to 463.6 billion won, up 1,578 percent from the preceding quarter, while sales is up 8.7 percent. Mobile phone sales played a big role in boosting the performance record in Q2. The company charged $159 per phone at a profit of 11.9 percent, ranked next to Nokia the frontrunner in those categories. The sale of mobile phones recorded 1.91 million units in Q2, the highest quarterly record in the company's history.
The company expects its sales will be the highest for the whole of this year in its history thanks to the superb performance by the mobile phone sector. The company has unexpected break going in its operation: the depreciation of the Korean currency against the U.S. dollar. The sales value increases in U.S. dollars, although the actual sales don't rise in tandem with the fall in Korean won't value against the U.S. dollar.
The word that best represents LG Group is 'harmony.'Its personnel policy used to be based on the number of years of employment with the company. But not any more. The company introduced the competitive factor in the system so that talented employees would be promoted faster than others.
Lately, the company selected 10 best marketing experts among marketing managers with more than 15 years of marketing experience. They will be sent to top business schools in the world and get education on marketing from world-renowned professors. They will take charge of marketing strategies for the company when they return.
The company also began to operate the product business leader system by which talented employees will be selected to be groomed as managers. Those PBLs will be teamed up with talented managers and work on all phases of products the company has including their development, marketing plans and termination when they acquire enough experience. The outcome of these personnel strategies will not be known for a long timer, but the company also knows that it can't survive from tough competition unless it changes. nw

Vice Chairman Nam Yong of LG Electronics delivers a speech on the need for innovation at a recent company meeting.