Posco empowers workers to get the big idea

Posco Chairman Kwon Oh-joon, third from right, encourages employees while visiting the Pohang plant in July. Provided by the company

In most Korean chaebol groups, the opinions of the owner are generally absolute.

Unlike most conglomerates, however, multinational steel giant Posco isn’t led by someone who succeeded his or her father to sit at the head of the company’s board of directors. The person who leads the world’s No.1 steelmaker is appointed by and accountable to the board.

And if the selected chairman’s performance is considered poor, he or she can be replaced more easily than at any other chaebol group. This drives the appointed chairman to encourage employees to perform their best and be more open-minded in promoting a staff-friendly working environment, unlike other chaebol groups that enforce a strong chairman-centered, management-heavy system.

Posco’s chairman, Kwon Oh-joon, has shown his character matches the requirements of the job well. Last year, he emerged as the savior of the financially troubled steelmaker.

As soon as he became the leader of Posco Group, he announced a core vision named “Innovation Posco 2.0” that included plans to improve the profitability of the business and reduce expenses, as well as establishing better ethical codes that place heavier responsibility on executives for their decisions.

The vision has been carried into action under a project the company named “Posco Total Innovation Methodology,” which involves plans to promote a project-based working system, a method to generate profits; QSS+(quality, stability, safety, plus), a process to promote efficient assembly lines; and smart workplace, to provide an environment where employees can concentrate on working.

In order to accelerate its overall innovation process and improve its business profitability, Posco is trying hard to promote a project-centered working environment.

Since August last year, the company has been operating the Posco Project Management System, which delegates a high level of authority and allows the leaders of small business units to realize their ideas into specific projects. The company has utilized performance-based incentive systems more than it did in the past and is trying to make the experts in each business field achieve its management vision.

The company believes great ideas come from consistent efforts to think about and study a subject based on expertise. It sometimes tries to mix ideas from different business fields or combine ideas to create a unique solution. The company encourages employees to put forward their business ideas anytime, regardless of their
position.

The top 20 percent of ideas are considered, and employees give their opinions to help transform the idea into a specific business model through the company’s Idea Management System. After collecting the opinions, each business division involved in the initial idea studies the input and decides on implementation.

Employees call the unique brainstorming process “Fun & Carrot”, where ideas can be promoted as if they were playing games. Those suggestions are evaluated by experts within 72 hours, and employees who come up with the top ideas are awarded pizzas.

After going through the process, leaders and executives of each division put the ideas before management leadership, and the best are designated as an official IP Project (Innovation Posco Project).

If an idea is selected as an IP Project, the employee who came up with the initial idea receives “smart points” that can be exchanged for cash once the points reach 5,000. Points are given based on the level of value. A person who suggests an initial idea at the highest level can receive 500,000 points.

The company started operating the project-based working system last year to achieve its goals of improving profitability and started a special reward system to encourage employees to participate in the challenge of creating an IP Project. It pays special bonuses to a team that operates an IP Project that makes a profit of more than 1 billion won ($850,000).

Kwon reviews the progress of the system at least twice a year. When he visited the company’s Gwangyang steel mill in South Jeolla on Sept. 11, he asked the staff if there were any difficulties operating the IP Project.

“Since the IP Project is one of our most significant innovation activities directly related to Posco’s performance, it is important to provide perfect solutions when any problems that need to be resolved are found,” Kwon said. “Those problems must be given to experts related to those subjects, and all employees need to try their best to invent as many of the world’s first and best technologies.”

“It was a good opportunity for us to listen directly to our chairman about directions that tell us what and how we should work through problems that are found,” said Cho Jae-young, a researcher at Posco. “Now it is our turn to make an outcome.”

Posco is making some financial improvements this year. The company reported a total revenue of 13.3631 trillion won in the first half, a 10.6 percent drop from a year earlier, but operating profit rose by 13.4 percent during the same time to 1.2292 trillion won.

The company said it made 1.5 trillion won by successfully restructuring its organizations.

“With aggressive management reform, the company is now able to focus more on its core businesses, including steel, which will make Posco improve its business profitability in the second half for sure,” a spokesman said.

“We will try to increase our sales by expanding our investments on car steel sheet production plants and by expanding our share in high-value product markets.”

BY KWON SANG-SOO, KIM JI-YOON [kwon.sangsoo@joongang.co.kr]