Koo Kwang-mo steering LG to stay agile in post-virus world

By Baek Byung-yeul

By Baek Byung-yeul

• Published Jun 10, 2020 5:18 PM KST
• Updated Jun 10, 2020 6:34 PM KST

LG Group Chairman Koo Kwang-mo is steering the conglomerate to actively diversify its business structure and reform its human resource management system in the post-COVID-19 world, industry officials said Wednesday.

Unlike its chief rival Samsung, LG Group has long pursued stability over change in terms of its overall management style, making few and only necessary changes in its reshuffles of C-level executives. Since President Moon Jae-in took power in 2017, the group has been praised for its effective contributions to society through corporate social responsibility activities.

However, industry officials said the young group leader, who took the helm of the group in 2018, is making a bid to shed its conventional image to some degree by appointing an outside expert as leader of one of its affiliates, pursuing new opportunities aggressively and reforming its recruiting practices.

They said LG Group has been actively working to embrace uncertainties caused by the virus pandemic and use them as an opportunity to advance.

“Koo is trying to bring change to the group. As uncertainty in the global economy is growing, the group is working to prepare for the post-COVID-19 era,” an official at a local conglomerate said.

In accordance with the initiatives, LG Chem, the seventh-largest listed company on the country's main bourse by market capitalization, is changing its business structure, shifting its focus from polarizers used in LCD displays toward an OLED polarizer business, on which the group's electronics and display arms are concentrating.

The chemical and battery arm of the group said Wednesday it inked a deal to sell its LCD polarizer business unit to China's Shanshan Chemical for 1.3 trillion won ($1.1 billion).

LCD polarizers are used to manufacture TVs, smart devices and automobiles but LG Chem said it will keep the unit of LCD polarizers used in cars. The decision is to focus on its OLED business, which the group thinks will become its future growth engine, it added.

The money the company has secured from selling the LCD polarizer business will be used in its material business for automobiles and batteries for electric vehicles (EVs). LG Chem has the largest market share in the global EV battery business, supplying its battery cells to numerous carmakers including Hyundai, GM, Volkswagen and Mercedes-Benz.

All these swift business decisions were made after Koo appointed Shin Hak-cheol, the former executive vice president of chemical manufacturing giant 3M, as new LG Chem CEO in November 2018. Since taking the top seat, Shin created a high-tech materials business division and restructured its loss-making electronics materials business.

In line with LG Chem's move to bolster its OLED business, LG Display, the display-making arm of the group, is also aggressively trying to improve its management efficiency, shifting its TV production line in Korea to Southeast Asia to decrease fixed costs.

LG Display, once the world's second-largest LCD maker, has been struggling with the business after Chinese rivals flooded the market with cheaper LCD panels.

To turn things around, Koo appointed Jeong Ho-young as the new CEO of LG Display last year. Known as an expert in finance and handling money-controlling strategies, Jeong is aggressively restructuring the loss-making company to better focus on the lucrative OLED business by relocating its production line and downsizing its workforce.

In terms of reforming its human resource management system, LG Group announced Tuesday it will ditch its conventional semi-annual recruitment system and adopt a year-round recruiting system.

A group official said the group is introducing a year-round hiring system to swiftly respond to changes in business management and technological trends.

While the traditional semi-annual recruiting system has been widely used by numerous conglomerates here, they are now switching to year-round hiring after they found it difficult to secure employees with the knowledge they need.

“We decided to adopt the year-round hiring system to secure the talented personnel we need in this increasingly competitiveness business environment,” the official said. “Adopting the new recruitment system is also part of our effort to proactively respond to the post-COVID-19 era.”