KEPCO Slims Down

The reorganization is aimed at transforming cost centers into profit centers

Korea Electric Power Corp. (KEPCO) became the first public enterprise to come up with steps to trim excesses in accordance with a government scheme to advance the management efficiency and transparency of public entities. KEPCO held a shareholders' meeting on Dec. 22, 2008, and approved a plan to revamp its operations calling for cutting its staff by 11.1 percent or 2,420 employees from the current 21,734 by 2012 on a gradual basis, among other measures. The reorganization is designed to turn cost centers into profit centers that create added values through the acceleration of internal competition and innovations and to gain momentum for new changes, KEPCO officials said.
KEPCO decided to reduce the number of divisions (offices) and teams by 13 percent from 24 to 21 and by 21 percent from 89 to 70, respectively. And 26 primary businesses across the nation, except on Jeju Island, will be cut by 50 percent to 13 with the goal of transforming them into full-fledged profit centers.
The independent management entity system, which is now applied to KEPCO's power distribution business, will be expanded to include all business sectors including power transmission and sales in a move designed to dramatically improve services to customers and lay a foundation for establishing a full-fledged independent management system through efficiency among businesses.
Together with the reorganization, KEPCO simplified the grade classification from the current seven-class system to a five-class one. The job classification system, which currently divides seven sectors including clerical work, power generation, transmission/transformation, distribution and civil engineering, will be integrated into three groups -- clerical work, technology and civil engineering so that a corporate culture commensurate to profit centers can be established with a focus on a performance-oriented personnel management system. KEPCO plans to step up the performance analysis and evaluation of profit centers while changing the way work can be done by integrating across-the-board innovation activities into the Six-Sigma management method, which can lead to the improvement of efficiency together with the reorganization. KEPCO plans to keep cutting manpower through such reorganization while complying with government efforts to ease the jobless rate among youths by continuously hiring new employees.
The reorganization plan was based on a recommendation by the global consulting company Accenture, which was commissioned to find ways to reform operations into profit centers. Initially, labor put up opposition during the stage of commissioning the consulting service, but, through active dialogue with management, it accepted the need to change the management paradigm into a more efficient and customer-oriented one to cope with the internal and external business environment. Senior officials of KEPCO and its subsidiaries decided on Oct. 29, 2008, to return the 2009 pay increase, and lower-echelon officials also followed suit, agreeing to return half of the 2008 pay raise in a self-rescue scheme to overcome the management crisis. The returned funds, amounting to 29 billion won, will be used to stabilize employment.

KEPCO OBTAINS ENVIRONMENT MANAGEMENT CERTIFICATION
Meanwhile, KEPCO received the international environment management standardization certification ISO 14001 from the Korean Foundation for Quality at a certification presentation ceremony held at the KEPCO head office on Dec. 16. Tertiary certification institutions issue the ISO 14001 certificate to companies after evaluating their compliance with the international standardization organization's requirements on environment management.
The certification proves that KEPCO abides by world-class procedures on the production, transportation and marketing of electricity, reflects customers' environmental demands and carries out environmental activities in a sound and transparent manner.
The Korean Foundation for Quality gave a rational evaluation into conforming KEPCO's electricity transmission, transformation, distribution and sales into environmental acts and regulations and its work toward lessening environmental pollutants and improving the environment.
KEPCO was the first Korean public enterprise to introduce sustainability management in 2005 and the first Korean company to join the Global Compact. The Global Compact is a framework for businesses that are committed to aligning their operations and strategies with 10 universally accepted principles in the areas of human rights, labor, the environment and anti-corruption. The power utility company established an exclusive environment department in 2006 and it also worked out an environment management master plan and a mid- and long-term environmental business strategy. The company also put into practice environmental accounting, an environmental performance evaluation and an evaluation of all sectors including power transmission and distribution during 2008. nw

Korea Electric Power Corp. head office in Samseong-dong, Seoul.