Lotte, Which Laid Off 500 Employees Through Voluntary Retirement, Accelerates Generational Change in December Personnel Reshuffle

[Asia Economy Reporter Jo In-kyung] Lotte Group is moving away from its traditional in-house talent development and pure-blood system by actively recruiting external experts and promoting young executives, aiming to improve its organizational structure through workforce restructuring. Lotte Department Store plans to conduct its first-ever voluntary retirement program since its founding, letting go of many employees with over 20 years of service and replacing them with new staff who can swiftly respond to changes in the MZ generation customers.

Restructuring for a More Efficient Workforce

According to the distribution industry on the 18th, Lotte Department Store received applications from about 500 employees for voluntary retirement, which was offered last month on the 23rd to employees with over 20 years of service.

Originally, out of approximately 4,700 total employees, about 2,000 were eligible for voluntary retirement, and roughly 25% of them chose to leave the company. Those who applied for voluntary retirement will work until the 31st of this month, take paid leave throughout November, and then retire.

Since the voluntary retirement was implemented to resolve personnel stagnation and improve organizational health, Lotte Department Store plans to immediately inject young talent to create a 'virtuous cycle' of workforce. A triple-digit scale of new hires is already scheduled for next month. Those selected through internship programs linked to recruitment will be placed on-site, complete a four-week internship, and then be converted to full-time employees after a final interview.

Additionally, Lotte Department Store is currently conducting special recruitment for regional areas and hiring service specialists. The regional special recruitment will proceed with interviews starting this week, placing a double-digit number of hires on-site next month, while the service specialists will be hired in triple digits within this month and deployed sequentially.

Promoting Young Talent and Recruiting External Experts

As the retail market rapidly shifts online and suffers a direct hit from the COVID-19 pandemic, Lotte carried out structural adjustments to offline stores last year and also implemented personnel reforms at the group level by reducing over 100 executives. About 200 long-term employees from retail affiliates such as Lotte Mart, Lotte Super, and Lotte Hi-Mart chose voluntary retirement by early this year.

Following the appointment of Na Young-ho, former head of eBay Korea’s Strategic Business Division, as CEO of Lotte On in April, Lotte Holdings established healthcare and bio teams under its ESG Management Innovation Office in August, appointing executives in their 40s with Samsung backgrounds as team leaders. Recently, Lotte Holdings also established a Design Management Center, appointing Professor Bae Sang-min from KAIST’s Industrial Design Department as the center head.

Separately, at the group level, starting next year, the company will merge the manager and deputy general manager ranks into one, allowing those at the senior rank with five years of experience to be eligible for executive promotion. This simplification of the rank system aims to invigorate the organization and nurture young talent.

Industry insiders expect that Lotte’s executive personnel reshuffle at the end of this year will also focus on management efficiency and innovation. Last year, 45 out of 50 newly appointed executives were born in the 1970s, and major generational changes were made by appointing executives in their 50s as representatives of underperforming affiliates such as Lotte Mart, Lotte Chilsung Beverage, and Lotte Food. This year, it is anticipated that bold personnel changes will continue based on meritocratic evaluations and personnel reforms.

A Lotte official stated, "The entire group is striving to become a young organization that can quickly respond to the rapidly changing business environment. However, contrary to rumors that personnel changes will be faster than usual, they are scheduled to take place as planned in early December."