[EDITORIALS]A lesson in labor relationsNick Reilly, the former head of GM Daewoo, revived the once-dying company over four years and has left for China. Both workers and management were sad to see him go. At a farewell ceremony, the chief of the labor union, Lee Sung-jae, gave the former president a plaque that read “We will always remember you.” Holding a farewell ceremony for a foreign president is unusual and moreover, presenting a plaque is a first in history, particularly for labor unions at carmakers, which are notoriously hard-line.
Former president Reilly’s devotion to the company was behind the healthy labor-management relations of GM Daewoo. In 2002, when he became the president and chief executive officer of the company, GM Daewoo was suffering from a deficit and a militant labor union, which represented the 1980s and 1990s. Mr. Reilly promised that all of some 1,700 people who had been laid off would be re-employed as soon as the company became healthy but few workers believed him. However, things changed little by little. He visited factories in Bupyeong, Gunsan and Changwon and explained the company’s situation to unionized workers. When making important decisions, he explained everything until the union workers were persuaded. To form a bond, he drank soju, a Korean liquor, with unionized workers and played soccer with them. He even participated in a customary shamanist ritual called gosa to pray for the success of the company.
Mr. Reilly’s management style that focused on real contact with staff touched cynical workers. A labor-management relationship that used to be filled with fights and hostility was transformed into one of mutual respect and understanding.
The finances of the company have naturally improved. In 2002, 400,000 cars were produced. In 2005, the number of cars jumped to 1,150,000, and the company recorded its first surplus since Mr. Reilly became president. He re-employed all the people who had been laid off, as promised. Those people learned the importance of the company and their jobs while they were laid off and are reportedly working even harder than before.
Mr. Reilly said, “70 percent of the responsibility for worsening labor-management relations lies with the president.” The president extended trust to the labor union first, accepted it as a partner and initiated dialogue and then compromises were found.
Companies that are suffering from labor-management disputes should learn a lesson from the case of Mr. Reilly and the labor union of GM Daewoo.
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