IMM faces calls to talk with Hanatour union about layoffs

Hanatour Service union members hold a rally in front of the tour agency's headquarters building in Seoul, March 3, calling for the company to withdraw its plan for layoffs. Yonhap

Questions arise over co-CEO from Boston Consulting Group

By Park Jae-hyuk

IMM Private Equity (PE), which became the biggest shareholder of Hanatour Service in February last year, is facing criticism from the tour agency's union members, who allege the private equity firm (PEF) is trying to avoid responsibility for a planned large-scale workforce reduction.

Asking for a conversation with the management about the ongoing restructuring, the union also raised questions on the latest reform measures pursued by Hanatour Co-CEO Song Mi-sun, whom IMM PE hired in March last year from the Boston Consulting Group.

According to the union, management is seeking to dismiss up to 1,000 of the company's 2,300 employees by the end of this month.

The union claimed the management hired law firm Kim & Chang to instruct team leaders on the specifics of the layoffs and order them to tell their team members about the plans. This has been interpreted as an attempt by management to shift responsibility for the layoffs to the team leaders.

In response, the union started a rally in front of Hanatour headquarters, after asking the Seoul National Labor Relations Commission earlier this month to force management to take part in collective bargaining.

“IMM PE cites financial difficulties from COVID-19 in carrying out business and workforce restructuring as it wanted,” Hanatour union leader Park Soon-yong said.

The PEF has already faced criticism for its flip-flopping on restructuring, as it had denied having any plans for workforce reduction until late last year, emphasizing the tour agency would need a large number of employees once the COVID-19 pandemic ends.

IMM PE refuted the union's claim, saying it has been unable to make any arbitrary decisions.

“We have jointly managed the company with its founder Park Sang-hwan, who still has the right to appoint company executives,” an IMM PE executive said. “It is easy to put the blame on us because we are managing the company with our fund.”

The union, however, claimed Hanatour employees have been concerned about workforce reduction ever since the PEF decided to take over a controlling stake in the tour agency in late 2019.

“Co-CEO Song encouraged us to overcome difficulties together,” the union leader said. “However, management has remained silent on details about the restructuring, such as standards, methods and compensation. Instead, team leaders without authority over personnel affairs called employees suddenly and said they will be dismissed.”

Hanatour Service Co-CEO Song Mi-sun, right, and Movv CEO Choi Min-suk pose at the tour agency's headquarters in Seoul, Feb. 24, after signing a memorandum of understanding for cooperation. Courtesy of Hanatour Service

The union leader also condemned Song's plan to foster Hanatour as a travel tech company.

“Other tour agencies have maintained their agents for group tours abroad, which served as their cash cows before COVID-19,” he said. “The company is downsizing everything for its travel tech vision and looking for partners for this business. However, those partners are inferior. The company's latest partner, a mobility company named Movv, is located inside Seoul Startup Hub building because it is a small startup.”

The union emphasized what they want the most is a conversation with management.

“Because no one has heard an explanation from the PEF, it is true that we do not have enough data to judge whether or not its management is wrong,” the union leader said. “What we want is a conversation. We have endured a year, but we do not know the reason why the company started the restructuring suddenly.”

Observers expect the management's continuous refusals may lead the union to appeal to the National Pension Service or financial authorities, as the unions of other PEF-owned companies here have done. In that case, IMM PE may face difficulties raising funds from institutional investors, taking into account environmental, social and corporate governance (ESG) criteria.

IMM PE has already struggled with its efforts to sell the Hanatour headquarters building and hotels it owns, after a buyer of the headquarters building canceled their deal last month and the tour agency's management could not reach an agreement on liquidation of the hotel business.