Vice chairwoman returns to management, questions arise
By Park Si-soo
CJ Group is suffering from a long-running leadership vacuum, which has resulted in an internal power struggle that has caused severe brain drain among its senior executives. The absence of Chairman Lee Jay-hyun has also cost the mid-tier conglomerate a number of lucrative business opportunities.
Lee has been in prison for nearly 600 days after being found guilty of embezzlement and breach of trust in 2013.
"The chairman's health is deteriorating continuously, while the group has so far failed to find a back-up leader," said a company official asking not to be identified.
He said that co-chairman Sohn Kyung-sik was essentially symbolic, while Lee's two children are still young with no proven track record in business. They hold a negligible small stake in the group.
CJ launched an emergency management committee shortly after Lee's imprisonment; but the dominant opinion is that it is not working properly.
Lee's elder sister and group Vice Chairwoman Lee Mie-kyung, also known as Miky Lee, returned home from the United States recently to use her influence on management, after previously being ousted from the leadership for "too-much involvement" in group issues.
"She would have limited power," said another official. CJ said the vice chairwoman has been checking group issues at her office in the conglomerate's headquarters in downtown Seoul since last week.
The protracted leadership vacuum has left the country's 14th biggest conglomerate idle when it comes to making decisions about investments, business plans and personnel reshuffles. Such long-running uncertainty has cost the company its growth momentum.
CJ's combined sales in 2014 were 26.8 trillion won ($24.44 billion), down 6 percent from 28.5 trillion won in 2013. The company has turned passive in investment _ it invested 2.6 trillion won in 2013, but just 1.9 trillion won last year. CJ has yet to unveil a plan for this year.
"CJ is like a boat that is drifting on the tide without a captain and clear destination on the map," the official said.
"The biggest problem is that there is no person in sight who can quickly pull the company out of trouble."
It's being questioned whether the vice chairwoman can recover the trust of investors amid an exodus of group managers.
Several senior employees loyal to the jailed chairman left the company, complaining that the vice chairwoman was abusing her power. Many of them have have landed plum jobs at rival companies.
CJ Group President Lee Kwan-hoon was forced to move to an honorary position last year. Vice President Cho Sung-hyeong in charge of human resources management quit the company in June and moved to Maeil Dairies.
Another Vice President Kwon In-tae moved to SPC Group, CJ's biggest rival in the bakery business.
They said several other senior executives close to the jailed Lee were pressed to quit or sent to less powerful positions.
Vice Chairwoman Lee filled these decision-making positions with her cronies, many of whom are from well-known business consultancies such as McKinsey & Company, Boston Consulting Group and A.T. Kearney.
CJ officials said they have experienced a hard time adjusting themselves to new ways of working set by their new bosses.
In the latest departure, Kim Tae-joon, vice president of the group's biggest affiliate CJ Cheiljedang, quit the company and moved to food and restaurant services provide Ourhome.
CJ is expected to conduct a belated personnel reshuffle in February.
"Nothing is certain," the official said. "I hope the upcoming reshuffle will change the company in a way that moves it forward, not backward."
By Park Si-soo
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| CJ Vice Chairwoman Lee Mi-kyung |
Lee has been in prison for nearly 600 days after being found guilty of embezzlement and breach of trust in 2013.
"The chairman's health is deteriorating continuously, while the group has so far failed to find a back-up leader," said a company official asking not to be identified.
He said that co-chairman Sohn Kyung-sik was essentially symbolic, while Lee's two children are still young with no proven track record in business. They hold a negligible small stake in the group.
CJ launched an emergency management committee shortly after Lee's imprisonment; but the dominant opinion is that it is not working properly.
Lee's elder sister and group Vice Chairwoman Lee Mie-kyung, also known as Miky Lee, returned home from the United States recently to use her influence on management, after previously being ousted from the leadership for "too-much involvement" in group issues.
"She would have limited power," said another official. CJ said the vice chairwoman has been checking group issues at her office in the conglomerate's headquarters in downtown Seoul since last week.
The protracted leadership vacuum has left the country's 14th biggest conglomerate idle when it comes to making decisions about investments, business plans and personnel reshuffles. Such long-running uncertainty has cost the company its growth momentum.
CJ's combined sales in 2014 were 26.8 trillion won ($24.44 billion), down 6 percent from 28.5 trillion won in 2013. The company has turned passive in investment _ it invested 2.6 trillion won in 2013, but just 1.9 trillion won last year. CJ has yet to unveil a plan for this year.
"CJ is like a boat that is drifting on the tide without a captain and clear destination on the map," the official said.
"The biggest problem is that there is no person in sight who can quickly pull the company out of trouble."
It's being questioned whether the vice chairwoman can recover the trust of investors amid an exodus of group managers.
Several senior employees loyal to the jailed chairman left the company, complaining that the vice chairwoman was abusing her power. Many of them have have landed plum jobs at rival companies.
CJ Group President Lee Kwan-hoon was forced to move to an honorary position last year. Vice President Cho Sung-hyeong in charge of human resources management quit the company in June and moved to Maeil Dairies.
Another Vice President Kwon In-tae moved to SPC Group, CJ's biggest rival in the bakery business.
They said several other senior executives close to the jailed Lee were pressed to quit or sent to less powerful positions.
Vice Chairwoman Lee filled these decision-making positions with her cronies, many of whom are from well-known business consultancies such as McKinsey & Company, Boston Consulting Group and A.T. Kearney.
CJ officials said they have experienced a hard time adjusting themselves to new ways of working set by their new bosses.
In the latest departure, Kim Tae-joon, vice president of the group's biggest affiliate CJ Cheiljedang, quit the company and moved to food and restaurant services provide Ourhome.
CJ is expected to conduct a belated personnel reshuffle in February.
"Nothing is certain," the official said. "I hope the upcoming reshuffle will change the company in a way that moves it forward, not backward."
