SK Chemicals CEO says paradigm shift needed

The Korean business community seems to finally be starting to accept the separation of ownership and management as business owners take one step back from frontline management.

At a press conference yesterday, Kim Chang-geun, chairman of the Supex Council and CEO of SK Chemicals, who recently replaced jailed SK Group Chairman Chey Tae-won, sent a message that there needs to be a paradigm shift in the Korean business community after stellar growth under the strong leadership of owners.

Chey was sent to prison for four years on Jan. 31 after being found guilty of embezzling 49.7 billion won ($45.6 million) from corporate coffers.

“Until now, owners’ strong leadership has been leading the group’s growth, but the collective intelligence [of CEOs] will replace such leadership for another leap,” Kim said. “My role will be coordinating the interests of each affiliate, not ordering.”

The Supex Council is the highest decision-making body of SK Group, consisting of six committees that oversee the group’s key issues. Seventeen CEOs of major SK affiliates are members of the council. Under a new management system called “Separate, but Together 3.0” this year, SK Group decided to separate the role of the group owner from that of the Supex chairman. Chey held both positions until last year. The chairman will serve as a long-term strategic investor, being less involved in short-term business and the daily operation of each subsidiary.

So it was Kim who unveiled the group’s business plan for 2013. SK will make a 16.6 trillion won investment this year, up 10 percent from 15.1 trillion won last year. The group will hire 7,500 entry-level employees, about the same as in 2012.

However, the Supex chairman said there are some areas where hired CEOs like him can’t fill the void of owners.

“Chairman Chey has established his own philosophy for the group by making connections with political and business leaders from other countries for more than 15 years,” Kim said. “This is what hired CEOs can’t do, who are tasked with daily affairs.”

“There are both advantages and disadvantages in management systems run by owners’ families and by hired CEOs,” said Kim Kwang-hyun, management professor at Korea University. “In terms of claiming responsibility, owners’ family members could do better than outside people.”

Samsung Electronics also decided to empower four CEOs of major divisions by nominating them as members of the company’s board of directors in a bid to enhance management of the CEOs rather than the power of Jay Y. Lee, vice chairman and heir-apparent of the group.

Named as new members of the board last Friday were mobile unit head Shin Jong-kyun, Chief Finance Officer Lee Sang-hoon and consumer electronics head Yoon Boo-keun. Device solutions head Kwon Oh-hyun has been a member since last year.

By Song Su-hyun [ssh@joongang.co.kr]