KAI speeding up ethical management
A KAI T-50 Golden Eagle trainer jet stands in front of the firm's headquarters in Sacheon, South Gyeongsang Province, in this file photo. / Courtesy of KAI
By Lee Min-hyung
Transparent management stands at the center of sustainable growth for any corporation.
Ethical management is particularly crucial for large organizations, such as conglomerates and state-run companies, as the potential failure to carry out this puts a brake on growth of not just the company, but its shareholders and the local community.
A growing number of companies here have, for this reason, jumped on the ethical management drive by realigning their business structures in a way to guarantee the removal of corruption.
The Korea Aerospace Industries (KAI) is also seeking to transform itself into a new organization represented by transparent management.
The drive started gaining steam in October last year when new CEO Kim Jo-won took office. He put top priority on establishing a renewed corporate culture represented by ethical management.
The KAI had a total of 11 divisions, but Kim cut the number to five after taking control. One of the newly-launched units includes the Ethical Management Support division. The move reflects his strong willingness to change the organization into a corruption-free company.
“Under Kim's firm determination, the KAI has identified ethical management as the top priority in corporate values,” a company official said. “The team is dedicated to fostering a transparency-driven corporate culture, conducting a series of strict inspections on decision-making processes within the company.”
Since its establishment, the division has begun playing a crucial role in boosting the firm's management efficiency, according to the official. The organization engages in work to make sure that other divisions make policy- and rule-based decisions.
To be more specific, the division has three sub-units. Their work includes management diagnosis, international compliance and legal consulting.
The major task of the management diagnosis team is to maximize efficiency by inspecting all management-related decisions before and after they are made, the company said.
“Its role is very important in that the inspection process prevents us from falling victim to any potential business risks,” said the company official.
The legal team was formed to give a hand to other divisions to carry out anti-corruption business activities and foster a law-abiding atmosphere within the company, he said.
“The team will widen its activities down the road at a time when other companies are also establishing units handling similar work for sustainable growth,” he said.
As part of a first step to realize the drive, the company said more than 99 percent of its employees have attended ethical corporate management classes.
“After declaring our vision outlining ethical management later last year, we began offering education programs for our employees this May and June,” he said. “The completion rate for the education is virtually 100 percent, as only those who take a leave of absence or are on an overseas posting did not attend.”
The company aims to achieve its goal of educating all employees on work ethics as soon as possible. This February, KAI employees and those from its partner companies took an oath to realize ethical management.
The company is also tightening its internal inspections on a regular basis.
“We have introduced a monitoring system with which we can keep a close eye on all internal purchasing procedures with subcontractors,” the official said. “The KAI is also on track to institutionalize regular inspections of contracts with subcontractors and all purchasing activities with other companies.”
On top of that, the company is keeping tabs in real-time on any possible breach of intellectual property rights to prevent any possible risks in the future.
A group of KAI executives take part in a class on ethical management earlier this year at the company's headquarters in Sacheon, South Gyeongsang Province. The company hopes to become a global player by realigning its management structure in a more transparent and ethical way. / Courtesy of KAI
Global drive
Earlier this year, the company set the goal of reaching annual sales of 30 trillion won ($26.8 billion) by 2030, and becoming one of the world's top five aerospace companies.
The KAI believes its ongoing efforts toward ethical management will play a key role in achieving these goals.
“It is essential for us to establish an international-level ethical management system, as we rely a lot on overseas markets,” the official said.
In particular, the United States demands any companies be responsible for following their corporate compliance program, and if not, the government can impose strong penalties.
“The KAI's ethical management team will continue to make sure employees maintain compliance in every corner of their work,” he said.
The company has recently passed requirements for certification of the ISO 37001 anti-bribery management system. The certificate will be issued to the company sometime next month.
“The achievement is expected to help us win more trust from our overseas clients, proving that we fulfill social responsibility by complying with global anti-corruption standards,” he said.
The ISO certificate is becoming a global standard that includes a series of specific action plans against corruption.
The company expects the certificate to enhance the firm's global competitiveness and reduce potential risks surrounding corruption issues at a time when its former CEO Ha Sung-yong is behind bars over suspicions that he used a slush fund to lobby government officials to extend his presidency.
The KAI believes its ongoing efforts for transparent management will stop it from being involved in such corruption scandals.
By realigning the business systems in a more efficient and transparent way, the company also hopes to reduce its reliance on the local market and raise its overseas sales volume.
In mid-August, a consortium of Lockheed Martin and the KAI submitted its final bid on a $16 billion jet trainer replacement project by the U.S. Air Force.
The Korean company hopes to win the bid, as it will provide a key momentum to expand its sales channels to other counties.