Visionary CEO builds exemplary company
Gyeongnam Steel founder shows how to manage employees
This is the fourth in a series of interviews with regional leaders of the Korea Chamber of Commerce & Industry. — ED.
CHANGWON, South Gyeongsang Province
— All happy families are alike: each unhappy family is unhappy in its own way.
To paraphrase the l egendary Russian novelist Leo Tolstoy, all happy companies are alike. They are profitable, grow and share their gains with their employees through high wages and generous benefits.
Gyeongnam Steel would be the perfect example of a good company. Since its beginning in 1990, the sales partner of the country’s top steelmaker POSCO has never lost money.
It has chalked up fast growth to mark around 270 billion won ($238 million) in annual sales and is popular among jobseekers thanks to high salaries.
The Changwon, South Gyeongsang Province-based company provides money for tuition of employees’ children from kindergarten to university no matter how many children they have.
The firm offers monthly support to employees with newborns. It also covers the medical expenses of its workers and their family members.
Such policies are based on the management philosophy of its founding CEO Choi Chung-kyung, who says the company has never suffered any troubles with regard to its management-labor relationship.
“Over the past quarter century, we have never had any labor problems. In fact, we don’t even have a trade union as employees have no interest in forming one,” the 71-year-old said in a recent interview.
“I always encourage our employees to work hard to make profits so that we can share them. They have done so and that’s why we have been profitable every year since we started.”
Choi points out that offering higher remuneration than the market norm benefits the company in the long run. He seemed to talk about the efficiency wage although he didn’t mention the term specifically.
This hypothesis argues that management has incentives to offer higher wages than market equilibrium to increase productivity and efficiency.
As a result, employees hardly move to other firms that pay lower market wages for their labor. And the low turnover rate reduces the high cost of replacing labor.
“If people worry about their job security, they cannot do their best. Plus, as our salaries are higher than those of our competitors, they work much harder,” the CEO said.
“I strongly believe, as we increase input, the output jumps. I appreciate my guys for their hard work.”
Another outstanding policy of Gyeongnam Steel is that it has never employed irregular workers, a strategy that President Moon Jae-in would love to spread.
“Even those who are working at our in-house restaurants are regular workers. I think that’s why they provide such great meals to our employees,” Choi beamed.
Balanced growth
Choi also heads the South Gyeongsang Province office of the Korea Chamber of Commerce & Industry (KCCI). He is vice chairman of the Seoul-based KCCI.
As a regional leader of the KCCI, he stresses the balanced development of the country where most companies want to operate in Seoul and its vicinity.
“The size of Seoul, Incheon and the surrounding Gyeonggi Province is just 11 percent of our territory. But the three areas accommodate almost four-fifths of the country’s 100 largest conglomerates,” he said.
“Against this backdrop, talented people just don’t want to work in regions far from Seoul. This should be addressed as soon as possible for the balanced development of Korea.”
He pointed out that imbalance is not just specific to Seoul but also applicable to South Gyeongsang Province.
“Changwon accounts for 37 percent of our industry and this appears to be too much. I am trying hard to boost development in other cities,” he said.
He is also known for being an outspoken proponent for unification of the two Koreas, which failed to happen after the Korean War (1950-53).
The two countries are still technically at war because the three-year conflict was halted by an armistice, not by a peace treaty.
“Unification would offer great opportunities to South Korea. North Korea is filled with rich natural resources and an inexpensive but great labor force. We have to put forth great efforts to achieve unification.”
I always encourage our employees to work hard to make profits so that we can share them.