Lotte to Sequentially Introduce Job-Based Pay System Focused on Expertise Across Affiliates... Labor Union Agreement Key

Expansion of Job-Based HR System to Lotte Affiliates Planned
Aims to Achieve Innovative Results and Secure New Growth Engines
Lotte Department Store and Lotte Wellfood to Implement System This Year
Union Consultation Required... Negotiation Process Expected to Face Difficulties

Lotte Group plans to expand its 'job-based HR' personnel system, which has already been introduced at some affiliates such as Lotte Biologics, Daehong Communications, and Lotte Innovate, to other subsidiaries. This system is designed to provide preferential treatment in terms of compensation for positions that demonstrate outstanding performance and expertise, with the goal of improving work productivity.

Lotte World Tower Mall exterior view. Provided by Lotte Corporation

On April 22, Lotte announced that it will sequentially introduce the job-based HR personnel system to selected affiliates in order to achieve innovative results through enhanced job expertise and to secure new growth engines.

The job-based HR personnel system implemented by Lotte is a job-based pay system that aims to strengthen work productivity by providing differentiated compensation based on job value and expertise. Currently, Lotte Biologics, Daehong Communications, and Lotte Innovate have adopted this system according to their respective circumstances. Other affiliates are still operating a seniority-based annual salary system, but this year, some companies such as Lotte Department Store and Lotte Wellfood are also planning to introduce the job-based pay system.

Once the job-based pay system is implemented, compensation will vary according to job expertise, even for employees who receive the same performance evaluation. Employees in higher-rated job categories, such as research and development (R&D), will receive higher annual salaries.

To introduce the job-based pay system, management must consult with the labor union. This is because the Labor Standards Act requires the consent of a majority union when making unfavorable changes to work rules. However, in order for Lotte to implement the job-based pay system, it will be necessary to distinguish between those performing critical tasks and those in less critical roles, and to establish different compensation structures. As a result, resistance from the labor union during the consultation process is expected to be inevitable.