[VIEWPOINT]First, Set Up the Chairs and Offices Right

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[VIEWPOINT]First, Set Up the Chairs and Offices Right

Kim Jung-tae, the CEO of the newly merged Kookmin Bank, was hired in August 1998 to lead one of the merger partners, H&CB. He toured the bank's executive floor with his head shaking. The top executives' offices were lined up right by the CEO's office. "It looked like their job was to check on the CEO," he said.

Mr. Kim transformed the bank into a business outfit designed to make money. Executives were relocated to the divisions they were in charge of. Division managers were put where the executives had been, making the chain of reporting that much closer. And the executives were encouraged to go out into the field, to get first-hand information and insights.

Kim Jong-chang took over as CEO of Industrial Bank of Korea in May. The first thing he did was make the CEO's office smaller. A 200 square-meter space, including a receiving area, was shrunk to 132 square meters, and the resulting 70 square meters were made available to employees for coffee and rest. Executives who had occupied two floors in the bank's headquarters were moved to the departments they were responsible for.

Both banks are now recognized for efficient management, an evaluation reflected in higher share prices. That communications inside an organization can affect efficiency and performance is a fact not limited to business. If anything, it is truer in running a country.

The Ministry of Maritime Affairs and Fisheries was in hot water after botching a fisheries dispute with Japan in 1999. The ministry offices were located in a neighborhood with a heavy concentration of bars. The area was so small that all five departments in one bureau could not occupy the same floor. Officials involved in the negotiation with Japan had to go up and down stairs to meet. The ministry's 500 officials were scattered among 13 floors. The ministry has since moved to a different part of the city, but office-space conditions remain much the same.

Other economic ministries are mostly housed in the government complex in Gwacheon, south of Seoul. Buildings in the sprawling complex enjoy generous floor space. Not only departments but bureaus can share floors. Two or three floors are often enough to house an entire ministry. Com-munications and efficiency are invariably better than when a ministry is scattered on, say, 13 floors.

The Fisheries Ministry has a plan to get a building for itself and the Ministry of Information and Communication in Gwacheon. The ministries would spend 50 billion won ($39 million) to build a seven-story building. Planning was completed in 1998, then put on hold because of a policy to limit new government offices within the Seoul metropolitan area.

The Fisheries Ministry spends up to 4 billion won a year in rent. Even if it could begin work on a new building in 2003 and complete it in 2005, costs will add up by then to 38 billion won, including maintenance and utilities, since the ministry was formed in 1996. It is a hefty price for the consolidation that merged the port administration and fisheries administration. The cost is still greater if you add all the monetary and intangible expenses of going back and forth to the main government complex south of Seoul.

The situation at research institutes is no better. The state-run Korea Institute of Industrial Technology was moved in 1997 from Guro to Cheonan in South Chungcheong province under a government plan to decentralize public organizations. Cheonan is famous for grapes, but there are not a lot of industrial activities around. Some of the researchers have joked, "Call us the Grape Growing Technology Institute."

You need not be an expert in organizational communications to know that efficiency is affected by how people are laid out physically. There should be no barriers to people communicating in the course of doing their jobs. Reform and innovation must be backed by physical structure that helps the cause.

An organization run like a one-man show can never last. Whether it is a corner store or a conglomerate, competitiveness and appreciation for the work come from sound communications within the organization. The same applies to local government, the central government, the governing party, the opposition and the Blue House.


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The writer is the economic news editor of the JoongAng Ilbo.

by Yang Jai-chan

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