Sweeping Personnel Changes at LH

The move is part of a reform package to make the company debt-free and viable

Korea Land and Housing Corp. (LH) had a sweeping personnel reshuffle lately under President Lee Ji-song’s plan to reorganize the state-run company to solve its mounting debt problems.
Under the reshuffle announced on Jan. 19, 30 percent of the first-grade managers were replaced by promoting second-grade managers and 75 percent of 139 team managers were also replaced by those promoted from lower grades on Jan. 31.
President Lee said the unprecedented personnel change, the likes of which the company had never seen before, was a key move to give the company, born of the merger of Korea Housing Corp. and Korea Land Corp., momentum for its survival, adding that the personnel reshuffle is a basic move to turn the company into an advanced one.
Industry sources said the personnel change was a “Lee Ji-song-type move,” which was characterized by openness from the beginning, and thus every move thereafter should be carried out under consensus from everyone concerned at the company and be very transparent from the beginning.
A key philosophy behind the move has been the selection of next-generation leaders by promoting younger managers with proven abilities and qualifications to the more responsible positions in a fair and just manner.
The promotions were based on such factors as capacity to do given jobs, leadership, ability to get along with people, and a track record with the company.
The company launched the Personnel Promotion Recommendation Committee made up of directors and headed by the vice president. The committee was given personnel promotion recommendations from the expert committee, which picked the personnel for promotion based on the guidelines. The personnel promotion committee then made the first list of personnel for promotion.
The final selection committee, led by the CEO and made up of the auditor and department heads, had the right to decide who received a promotion.
Out of 428 mid-level managers, 322 have been replaced under the personnel move taken in January. It takes 12-13 years to be promoted to a second-grade manager from a third-grade manager, but some were promoted in six years this time. Those who still remained as third-grade managers have been promoted to team chiefs.
President Lee said he rejected all moves by outsiders to help their people to be promoted for the sake of fairness of the personnel reshuffle, which he sought to be one of the best works in his career.
Lee’s leadership has not only shown itself in personnel matters, but also extended to the company’s moves to integrate the head office buildings. Recently, he took action to have 600 personnel from the head office building of the Housing Corp. move to the head office of the Land Corp. located in Seongnam City, Gyeonggi Province, in a move to integrate the home office of the LH. Space was created by turning a lobby on the ground floor of the building into offices, along with the integration of conference rooms into two or three conference rooms, and making corridors in the building narrower to create more office space.
The company put up the old head office building of the Housing Corp. for sale. A key official of the company said the personnel reshuffle was part of the CEO’s plan to truly integrate the two merged companies into one organization in a transparent and just manner.
LH was launched last October with a total workforce of 6,800 and total assets of 128 trillion won, but with debts totaling 107 trillion won and a debt ratio of 522 percent. The company’s debts are expected to increase to 198 trillion won in 2014. The company’s debts ballooned to that level when it had to pay for land to secure sites to take charge of government projects to build homes for lease and industrial complexes, requiring a significant amount of funds. LH’s reform plans are based on its policy to cut down debts and put itself in a normal operating condition.
President Lee Myung-bak, during the launching ceremony for the newly merged company, said the government is considering giving more autonomy to enable CEOs of government-run companies whose operating conditions are good. Under such a government effort, LH plans to cut its payroll by 24 percent by 2012. nw

LH President Lee Ji-song