[Inside Chodong] Is the Key Personnel Keyword in Business Circles Stability Amid Reform?

Change Is Needed So That Organizational Stability Does Not Lead to Complacency

Organizational stability or organizational reform for innovation. Every year-end personnel season, companies struggle between organizational stability and reform.

Both stability and reform are choices that companies cannot afford to discard. The ideal scenario is to maintain a stable organization while boldly replacing parts that need change through reform. However, it is difficult to embrace stability and reform simultaneously. For an organization to be stable, the strategy must focus on enhancing capabilities within the existing team of well-matched members, but innovation is often difficult within the existing organization. On the other hand, if everything is changed for innovation, there are side effects such as having to start from scratch to build synergy again at a time when capabilities need to be gathered, along with transitional periods and trial and error.

This year, companies likely faced especially many dilemmas between stability and reform.

It was a challenging environment to strategize how to build people and organizations. Due to inflation and high interest rates, many companies found it difficult even to maintain past performance records as consumers were reluctant to open their wallets. While urgently needing new breakthroughs in a worsening business environment, everyone knows that changing the person in charge will not restore the deteriorated market conditions.

For these reasons, many companies this year settled for minor changes rather than bold personnel reforms. Among the four major conglomerates, only SK announced bold choices, while most opted to retain their CEOs or transfer them to other affiliates as part of their personnel strategies. The only notable reform was the active appointment of young executives, such as vice presidents born in the 1970s and managing directors born in the 1980s.

Passive changes in year-end personnel under the excuse of a difficult business environment are far from the principle of meritocracy pursued by companies. It is no different from the political practice of "scapegoating" from the bottom up while shifting responsibility away from the top decision-maker when problems arise.

In fact, companies have never faced a time without a difficult business environment. Phrases like "challenging business environment," "a year of challenges," and "a time for change" appear regularly in CEOs' New Year's addresses every January. In the upcoming New Year's addresses, CEOs who remain in office will likely use similar phrases, urging employees to work harder and emphasizing change and innovation. It may be contradictory to desire change and innovation while personnel and organizational reform are absent.

Companies need reform rather than stability especially in difficult environments. In an era where innovation is essential for survival, the word "stability" is no different from complacency. In fact, a senior executive of a major corporation said regarding the sharp criticism of this year's passive personnel atmosphere in the business community, "The phrase 'organizational stability' has become an environment where it is not well received."

Is innovation possible by changing the framework without personnel and organizational reform in South Korea, where vertical and conservative corporate cultures still prevail? It is time to raise the question of whether our companies are complacent with reality, using the difficult environment as an excuse.