[4 Major Groups Control Tower] Chairmen Receiving Direct Reports from Affiliates, Changed Role of the Policy Office

③Hyundai Motor Group Planning and Coordination Office
Coordination Among Affiliates to Prevent Duplicate Investments
Conservative Trend Due to Risk Management
Chairman's Close Aide Held Significant Authority and Status
Changed to a Horizontal Organizational Culture

Hyundai Motor Group does not have an outwardly visible control tower. Since it is not a holding company system and most of its affiliates are connected by the single keyword of automobiles, the group naturally operates in a coordinated manner during business processes. This also indicates the strong control the group’s head has over each affiliate.

Unlike LG or SK, which utilize holding company boards or have separate organizations, the department that performs a similar role in Hyundai Motor Group is the Hyundai Motor Planning and Coordination Office. Kim Geol has been leading the Planning and Coordination Office since his appointment in 2018, nearly five years ago. Its main tasks include preventing overlapping investments among affiliates and coordinating when confusion arises.

Chairman Chung Eui-sun is inspecting the production quality of strategic vehicle models for India while touring Hyundai Motor's India factory production line. [Image source=Yonhap News]

Rather than actively directing or directly or indirectly intervening in each affiliate, the office is widely regarded inside and outside the company as a support department that listens to each affiliate’s circumstances and helps facilitate efficient decisions. For example, when major affiliates invest by dividing shares at certain ratios, such as when acquiring the American robotics company Boston Dynamics, the office backs up the process to ensure appropriate decisions are made considering each affiliate’s situation. It also has a risk management aspect, leading to a conservative approach toward major issues.

A Hyundai Motor Group official said, “Since each major affiliate is a distinct corporation, each company will make optimal decisions, but from the group’s perspective, this may not be efficient. For instance, profitable or promising businesses will likely be pursued by multiple affiliates, and the office’s role is to coordinate in such cases.”

The Planning and Coordination Office has not always been like this. According to current and former executives, Kim Yong-hwan, former Vice Chairman of Hyundai Steel and the Planning and Coordination Office chief before Kim Geol, played a practical second-in-command role within the group by overseeing the overall business of affiliates. Kim, regarded as a close aide to Honorary Chairman Chung Mong-koo, led the office for about ten years from 2009 until he moved to an affiliate in 2018. Although important decisions were made by Honorary Chairman Chung, all reports, big or small, to the chairman’s office had to pass through Kim. This aligned well with the bold business style of Honorary Chairman Chung.

In September 2018, business leaders who accompanied President Moon Jae-in as special envoys took a commemorative photo at Cheonji, Baekdu Mountain. From left to right: Kim Yong-hwan, then Vice Chairman of Hyundai Motor Group; Park Yong-man, Chairman of Doosan; Choi Tae-won, Chairman of SK; Koo Kwang-mo, Chairman of LG; Lee Jae-woong, CEO of Socar; and Lee Jae-yong, Vice Chairman of Samsung Electronics. Photo by Pyongyang Joint Press Corps.

Kim Geol, Head of Planning and Coordination Office at Hyundai Motor Company (right), is meeting with Gianni Infantino, President of FIFA, at the FIFA headquarters in Zurich, Switzerland, last May to sign a contract extension for World Cup sponsorship.

The status of the Planning and Coordination Office changed when current Chairman Chung Eui-sun began to personally lead major group decisions. This was around the time he became Vice Chairman in 2018. Emphasizing responsible management in each affiliate, he required each company’s CEO to report directly to him. While Honorary Chairman Chung emphasized a vertical hierarchy centered on the finished car affiliates during his active management period, Chairman Chung is transforming this into a more horizontal structure.

This is interpreted as reflecting Chairman Chung’s personal meticulous and detailed nature, as well as his early experience gaining management insight by visiting major affiliates. Since the late 20th century until recently, the global finished car industry’s success formula was to build economies of scale through vertical integration. However, with the essence of the industry changing due to electrification and software, there is a growing need for more agile responses. Naturally, the role and status of the Planning and Coordination Office within the group have also changed.

New business discovery and external investment tasks previously handled by the Planning and Coordination Office were separated last year with the creation of the Global Strategy Officer (GSO) position. Kim Heung-soo, who was previously in the Planning and Coordination Office, took on the GSO role. He is also responsible for the electrification transition, the biggest challenge facing finished car manufacturers.

Last July, at Intel Ireland Campus Fab24 located in Leixlip, Ireland, Kim Heungsoo, Vice Chairman of Hyundai Motor Company (from the left), Chung Eui-sun, Chairman of Hyundai Motor Group, Ann Marie Holmes, Co-General Manager of Intel Semiconductor Manufacturing Group, and Neil Philip, General Manager of Intel Fab24 Operations, posed for a commemorative photo. [Image source=Yonhap News]

The Hyundai Motor Group Planning and Coordination Office was established when Kia Motors (now Kia) was acquired before separating from the Hyundai Group. As the number of finished car affiliates increased to two, a coordinator role was needed to distinguish shared tasks such as research and development, purchasing, and various support departments. Former National Assembly member Lee Gye-an, who came from Hyundai Group, was the first to lead the automotive division’s Planning and Coordination Office. Subsequently, close aides of Honorary Chairman Chung, including former Vice Chairmen Jeong Soon-won, Chae Yang-gi, and Park Jeong-in, all from the old Hyundai Group General Planning Office, held this position.

What remains similar from past to present is that the Planning and Coordination Office is led by a strategist-type aide. Kim Geol, born in 1965, joined Hyundai Motor in 1988 and handled export and overseas sales. He was recognized for leading Kia’s establishment of overseas subsidiaries across Europe in the early 2000s and even received a government medal. This period coincided with Chairman Chung Eui-sun’s tenure as Kia president, during which he was responsible for overseas operations, and the industry views this as when they became close. Since the share transfer from Honorary Chairman Chung to Chairman Chung Eui-sun has not yet been completed, it is considered unlikely that Kim will move to an affiliate in the near future.