"Hard to Endure" Aftermath of CJ ENM Organizational Restructuring... Remaining Challenges

CJ ENM's Largest Organizational Restructuring Since Inception
Internal Atmosphere Unsettled, Austerity Management Anticipated

[Asia Economy Reporter Lim Hye-seon] As Koo Chang-geun, CEO of CJ ENM, has launched an 'organizational reform,' internal employee dissatisfaction is growing. Although the organization was streamlined under the pretext of 'improving productivity and efficiency,' there are criticisms that the focus is solely on creating profits through workforce restructuring.

CJ ENM recently reorganized from one general headquarters and nine business divisions into five core business divisions. Overlapping functions were integrated, and the business system was simplified around core functions. With the consolidation, the number of business divisions was halved, naturally reducing the number of division heads. The previous director-level positions were also eliminated to create a simpler decision-making structure. It is estimated that about 20% of employees were dismissed from their posts during this process.

A CJ ENM official said, "With the removal of the director position, directors moved to become division heads, and division heads moved to team leaders," adding, "The number of people submitting resignations is also increasing."

When CEO Koo Chang-geun moved from CJ Olive Young to CJ ENM, 'tight management' was anticipated. It is known that CEO Koo received a special order from CJ Chairman Lee Jae-hyun to 'revive CJ ENM.' Within the CJ Group, CEO Koo is regarded as a 'restructuring expert.' During his tenure at CJ Foodville, he withdrew Bibigo from the Southeast Asian market, and in the case of Twosome Place, he prepared the groundwork for its sale through a physical division. While serving as CEO of CJ Olive Young, he also wound down the struggling Chinese business.

The entertainment division of CJ ENM recorded an operating profit of 92.6 billion KRW in the first to third quarters of last year, a 47% decrease compared to the same period the previous year. The media division, which accounts for 80% of total sales, posted a loss of 14.1 billion KRW in the third quarter. To strengthen CJ ENM’s internal management, CEO Koo took decisive action in the first organizational restructuring. He separated the production divisions such as Studio Dragon and CJ ENM Studios, judging that each was operating its workforce inefficiently.

An employee working at CJ ENM said, "I understand reorganizing the structure due to difficult market conditions, but it is unfortunate that employees are being held responsible," adding, "There will continue to be a storm of layoffs, and even if we survive now, every day feels like hell due to the pressure of first-quarter performance."

There are also reports that young employees are being targeted. A company employee said, "There is a mood of cutting two people per team," and "I have heard that once the reorganization is complete, about 15-20% of the total employees will be reduced." As of September last year, the number of employees in CJ ENM’s entertainment division was 2,521. This means about 380 people could lose their jobs.

Amid the company’s unsettled atmosphere, star PDs, CJ ENM’s greatest asset, are leaving their home base. PD Lee Jin-joo, who directed 'Transit Love' and 'Youn’s Kitchen,' moved from CJ ENM to JTBC. PDs Na Young-seok and Shin Won-ho are also moving to the production company Eggs is Coming. Although Eggs is Coming is a production company under CJ ENM Studios, it is positioned somewhat apart from CJ ENM’s performance-driven environment.

A business insider explained, "To stabilize the organization, it is a prerequisite to quell internal resentment and soothe employees," adding, "The content business has many variables and requires the capabilities of its members, so it is important to take care of employees who have loyalty and dedication."

A CJ ENM official stated, "The purpose of this organizational restructuring is to implement responsibility management by industry unit to respond quickly to the market and secure strategic execution capability," and drew a line by saying, "The movement of some PDs is unrelated to this organizational restructuring."