Poor-Performing Public Firms Face Wage Cut
By Lee Hyo-sik
Staff Reporter
Most state-run companies and quasi-government organizations performed poorly last year, failing to live up to management goals, and will face cuts in employee salaries and budgets this year.
After evaluating the management performance of 24 public firms and 77 quasi-government bodies, the Ministry of Strategy and Finance said Friday that their overall showing deteriorated in 2007 from a year earlier on sluggish business performance and rising inefficiency in organizational management. Also, heads of state-run firms and government-financed institutions posted poorer management results and will face a reduction in year-end bonus.
Twenty-four public companies received 73.2 points out of 100 on average last year, down from 75.7 in 2006. Korea Electric Power Corp. topped the list. The company was highly rated for its effort to reduce power outages by 49 percent in 2007. The electricity generator received high marks on its successful advancement into Azerbaijan and other foreign countries.
Korea District Heating Corp. also got high scores on its effort to promote and use renewable energy for heating generation.
However, Korea Coal Corp. ranked at the bottom for its poor financial status. Jeju International City Development Center was also rated low because of its failure to implement effective programs to attract investment from outside.
Most heads of 24 state-run firms received lower scores in 2007, compared to the previous year, as they were unable to deliver management promises. The average score stood at 71.4 last year, down from 77.5 a year ago.
Among 77 quasi-government organizations, the story is not much different. Their average score in business performance fell to 71.4 in 2007 from 72.4 a year earlier. Korea Energy Management Corp. topped the list on its effort to build databases on greenhouse gas emissions and promote energy conservation.
But Korea Securities Depository received the lowest points for its inefficient management of budget and business information. Top executives of semi-government bodies received an average of 67.9 points.
The ministry said it will differentiate bonus payments to employees and executives of public institutions in accordance with assessment of their management performance. Employees are entitled to the maximum 500 percent of their annual base salary as a bonus, while presidents and executives can receive up to 200 percent bonus.
``We will also boost the annual budget by 1 percentage point for 16 state-run organizations that posted superior performance. But we will issue an administrative warning to 15 institutions which performed poorly, and slash their annual spending by 1 percentage point. They will also be required to go through a rigorous management consulting program to increase organizational efficiency,'' he noted.