Has Strategic Planning Office Outlived Usefulness?
By Jane Han
Staff Reporter
Lobbying top government officials, managing multi-billion-won slush funds and helping the company chairman illicitly transfer management control to his son were among the key functions of Samsung's infamous strategic planning office. However, experts say this case shouldn't defame other well-operated central offices.
``The months-long negative coverage of Samsung's strategic planning office sent messages to the public that such corporate divisions are all corrupt,'' said Lee Joo-sun, a senior research fellow at the Korea Economic Research Institute, a local think tank. ``But that would be a misperception.''
Samsung's ``control tower,'' after being under fire for executing the conglomerate's corrupt business handlings, is set to be dismantled by the end of June. The central unit controlled the group's diverse operations, but was slammed for doing more than that.
``A strategic planning office is crucial and necessary in managing a business,'' said Kim Tae-yong, a Seoul-based business startup consultant. ``Even a small corner shop needs strategy and planning to roadmap the big picture.''
A survey done by Bain & Company, a global management consulting firm, showed that 76 percent of 451 senior executives worldwide highlighted ``strategic planning'' as a necessary tool in business.
Locally, Lotte, Kumho Asiana, Hanjin and Hanwha are among the groups that have a similar centralized office.
Some of the most typical functions of a strategic planning office are deciding investment plans, planning new products and strategies, overall branding and making key human resource decisions.
``There's nothing wrong with a core unit, but the problem rises when external circumstances start shaking up the unit's intended purposes,'' said Lee. ``When companies start focusing on politics over market conditions, corruption and lobbying begins.''
He said a holdings company, which improves the transparency of corporate governance, is an ideal corporate structure for local businesses because politics often ends up influencing the market.
Globally, heavily centralized strategic planning offices of major conglomerates ― similar to that of Samsung ― have already been scorned and shaken up.
Jack Welch, former chairman and CEO of GE, a global industrial giant, abandoned its planning division in the early 1980s when he realized that the old-style was all about control.
Walt Disney's planning unit was dramatically downsized in 2005 to give its key division chiefs more autonomy.
``Although a central division is ideal to look at the big picture, customized tweaking is necessary if it starts practicing overwhelming control,'' said Kim. ``It's just funny how before people considered it impressive to work at a planning division, but now it comes off as a demoralizing job,'' he said.