Let the competent take charge
For some reason, you may think Japan is not stingy with money. SoftBank’s president and COO Nikesh Arora is paid 16.6 billion yen, or $133.7 million, a record in Japan. The former Google executive became the highest-paid executive there for his service from Sept. 2014 to March 2015. The pay includes a signing bonus but is still an enviable number, more than 100 times the salary of SoftBank’s founder, Masayoshi Son.
And Son wants the Indian-born Arora to be the next chairman. What makes him a strong candidate is his competency; he has proven to be excellent in discovering promising companies and expanding them. Answering critics of the generous pay, Son says that it is still less than Arora’s ability.
It would have been nice if the leadership transition had been so amicable for the Lotte Group. Whether they had chosen one or two leaders, they could have chosen a better option for the future of Lotte. A rivalry between brothers would have been acceptable if they had been competing in competency and performance. Then the winner could become the leader. The battle of the brothers was especially bitter because we have just witnessed the war between Samsung and Elliott Associates. It has taught us that there are still more problems to be solved.
But there is one thing that must be made clear. The argument that a certain form can be the ideal corporate management structure is not valid in the real world. While some hired CEOs are competent leaders, others have sacrificed the future of the company for immediate performance gains. Of course owners are obliged to prevent moral hazard for the executives and employees, but their morals are often compromised first.
I am not arguing that companies should be left to do as they wish. The conglomerate system was important in Korea because they could effectively mobilize and amass capital when the country was developing. But we need to keep asking ourselves whether the current structure meets the needs of contemporary times.
Korea is trapped in low growth with many concerns and no clear solution. The only escape is to have competent leaders take authority and responsibility and lead with creativity. Management structural reform would allow competent leaders who are low in the hierarchy system come out and display their superpowers.
We need to first make sure the heads of each division in companies are doing their jobs with conviction. If they are keeping a low profile and only try to please their bosses and owners, they are practically sabotaging their duties. When all executives and employees are allowed to think like entrepreneurs and founders, it is a secondary issue whether an owner or a hired manager is leading the company.
The author is a deputy business news editor of the JoongAng Ilbo.
JoongAng Ilbo, July 30, Page 30
BY KIM YOUNG-HOON