CASE OF LG GROUP: DEVELOPING TOMORROWS GLOBAL LEADERS

There is no company which is resistant to environmental changes, especially business environment. As the year comes by, new inventions or innovation will absolutely give impact on every type of business in the world. However, the causes of the impact, in other words, the root of the changes in the environment is not merely coming from company external territory; in most cases the impacts (either negative or positive) can come from external territory and internal territory of the company.

This written analysis focuses on the LG Group’s Chairman Koo who once stated and defined his vision for the LG group to develop and improve significantly and to be a leading company in its local market area (Korea) and the wider market scope, international market and increase its revenue significantly within 7 years period. This is known as “LEAP 2005”. Even though is not an easy task to do, he is much certain that the group can do that. He considers the past performance of the group and the major internal changes within the company will enable it to achieve what its chairman wants. The main key success, as the management agrees, lies on the future leaders of the group. There are several questions that arise as the result of the discussion between the management in relation with this key point, namely where and how to find these future leaders, what capabilities of competencies these leaders should possess how to develop these key competencies and so on.

ANALYSIS OF LG GROUP SITUATION

Briefly speaking on LG historical background, a common first impression on the company is that it has tremendous historical records in terms of business performance and business revenue. Citing the record, LG was established for the first time in 1947 as a small chemical company. As the time went by, there are expansions that the group has done. As a result the company got bigger and bigger. The applied several strategies that really work well are the main reason why the company grew bigger within a relatively short period of time. These days, LG is one of the strongest players in Indonesia industry.

As the case of LG Group already describes, what is meant by “LEAP 2005” desired by Chairman Koo reflects the his dream to make LG Group as the leading company in Korea and leading company in the world as well. This leads to for sure the increasing revenue to US$380 billion. To achieve this, certain development an improvement towards the company as an organization is an urgent necessity.

The significant matter or points which are at the same time can be the conclusion of this brief analysis is that the improvement on internal aspects of organizations, which at the end should result in the transformation of “LEAP 2005” into reality. Further, it is agreed that the management should focus on the human organization and make the first priority above all. The analysis is written as follow.

LG GROUP’S DESIRED CHARACTERISTICS OF HUMAN ORGANIZATION

An ideal human organization that can facilitate the achievement of Chairman Koo’s “LEAP 2005” vision of future definitely has three most fundamental characteristics namely: 1. Strong LG company culture/values, 2. Qualified competent people as its component, 3. Good managerial strategies and operations by the management. These all explains how the company will provide itself its needed sources to meet the requirements of the company to achieve the vision. Each of this characteristic can be described as follows.

Strong Company Culture

A company with certain strong culture (or some term it as “values”) can usually stand up against all turbulence that occurs during its operations. The LG Group itself has already passed some bad period with great success and continues showing positive progress. Addition to this, there is for sure changes of transforming (STABILITY, HARMONI, RESPECT) to the cultures (CHALLENGE, SPEED, SIMPLICITY, BOUNDARYLESSNESS). These changes are in line with the demand of business environment which requires a company to quickly adapt themselves to the changes.

Competent Human Resources

The core component of a business organization is the humans who move it and run the company’s operation. The more competent the person of the company the more prosperous the company will be. If the all person in the company are competent in their own field it will lead to best product that the company produces. Furthermore, this will end up in the achievement of customer satisfaction target (consumers demand and wishes). This all will result in better competitive advantages that the company has.

Good Managerial Practices by Best Management

Company management can be is the back bone of the company. They are the key person who drives the company towards certain direction. They are the decision maker of in the company. The fate of the company is in their hands. The culture that the management builds inside the company will also influence the day to day operation of the company. In terms of external relation, the management acts as the representative of the company. The can influence the business partners as well as potential consumers.

Specifically speaking, in relation with human resources, the management should provide strategies that relate to human resources management such as defining organizational strategy, defining organizational structure and man power planning, defining the critical jobs, defining the job description that matches with the company’s competencies, setting competency model and implementing it in form of setting HR tools and functions such for performance appraisal and reward and compensation recruitment, promotion, training and development.

The human organization with the above mentioned characteristics that LG Group have and will help the company to achieve the “LEAP 2005” vision will face obvious problems related to the organization and business the period of the vision achievement progress, they are for example the impact of paradigm or culture changes towards the company, process of setting up the company’s core competencies, the changes on business orientation and target (e.g., business goals, from international to international (global) player, the internal (company value) and external cultural change, the demand of new employees to fulfill the need of increasing work load and competent employees, to prepare human resources management system and its tools in line with the company development.

As the human resources management plays significant roles the process of translating the chairman’s vision in 2005 they should be discussed further in details. The overall implementation of strategies, policies, programs, and or practices by Mr. Y. K. Kim’s LG Human Resource Team that can help Chairman Koo transform his “LEAP 2005” vision into reality must link to how the management organizes and manages the human resources that the company has. These could be the strategies of attracting best new employee, develop the star performers (or other may call “high potential”) in terms of soft and hard skills or competencies, retain the best performers, manage work effectivity etc.

LG GROUP STRATEGY: DESIRED CHARACTERISTICS FUTURE LEADERS

As explained before, the key success of the company in transforming the vision “LEAP 2005” into reality relies on how the organization prepare and develop the future leaders of the company which will determine how the company will operate and run in the future.

These leaders will be having several capabilities as what Chairman Koo desired so that these competencies will enable them to perform well. First and foremost, these leaders must possess a sense of competition for global perspective. This competency strongly connects with the capability to fight and compete with the world class companies. Secondly, this has a relation with how wise and strategic a leader can create a global management system. Finally, a sharp sense of global perspective will assist a leader on how to create a world class business.

The other attributes that a future leader must hold is his ability to maintain the quality of the company output. In relation to this they must have capability to create maximum value for customer. In other words, the satisfaction and loyalty of the costumer towards the company has to be the first priority and target for the future leaders that the group will need in the future. As important as the focus on outputs (products) the leader must also embrace the values that have been the LG values directly given by the Chairman. The two other values that basically are the required attributes for all future leader of LG to have are the skills (managerial) to conduct the business with integrity and the good level of contribution towards social development.

Practically speaking, when it comes to day to day business activity, the basic capabilities for them to master is that the knowledge on what and how the company process runs. Thus, when there is a problem in certain area of the business, they can quickly tackle down the problem and solve it. Finally, they must have what so called global orientation and global leadership capabilities. These will define the company orientation in the future as well as solve the problem that may occur such as significant and drastic different environmental and business condition changes.

LG GROUP STRATEGY: HUMAN RESOURCES APPLIED STRATEGY

To discuss the case of future leaders in more detail, the whole process of preparing the future leaders can be described in more specific process and stages as follow:

To identify and attract the best leaders. Here research I believe will benefit the company much in the sense of tracking the best candidates in the future. Nowadays, competition is occurring not only attracting best costumers/consumers but also in attracting the potential competent employees.

To select, recruit and hire the future leaders. The activities are the follow up of the research conducted in the first phase. Citing the case of LG, the company will need a really significant number of employees, both Korea and Non-Koreans. These involve certain strategy to achieve best output in terms of attracting future leaders with competent capabilities.

To train and develop the future leaders of the company. Here, a training center such as what Dr Lee runs with his LG Academy plays an important role. Their task involves defining the current employee competencies required for better performance and a set of competencies on which they can focus assessment and development activities in the future. This also one of the main concerns of the management. They see training and development for technical competencies as the main component to achieve the “LEAP 2005”

To provide motivation, appraise, and rewards as implementation of strategies to retain the competent company future leaders. The company should not reenact what so called as “Bamboo Ceiling” which most Japanese company once faced. The management must develop clear and transparent career path for all employee. The assessment for promotion should also be made fair so that all employee can see the progress of their career and most importantly, and equal opportunity for career improvement must exist in the company. This will guarantee the all employee can achieve higher position as their performance says so.

In regards with the future plans in “LEAP 2005” vision, the company plans to attain 50 % of the whole revenue from international market the number of non Korean employees will increase significantly. In the practices, the company and the management plan to fill 3 or 4 business presidents with non-Koreans out of 50 positions and give 20% portion of all executives at the office at Seoul. To maintain the unity and fairness of the management approach, the team could take the same approach to the both Korean and non-Korean employees.

However, the customization may take place in accordance with the background of culture of those two groups. However, in general the common strategies must be implemented to both groups. What must be emphasized is the output which is all employees can implement the strategies in to the business and provide the desired outputs.

CONCLUSION

In summary, by analyzing the case of LG Group: Developing Tomorrow’s it can be concluded that a company business activity can not be separated from internal and external influences. Internally the management may have a set of future plans and strategies or even vision that must be implemented and transformed by all company components. Externally, the changing business environment in each different period often requires the company to constantly prepare a set of strategies to cope possible problems and stay survive in the midst of uncertain condition. Here, the human resources team plays an important role since a competent future leaders are the key person that can manage the company through the hard time that may happen in the future. It is the responsibility of the human resources team to attract, develop, and maintain those future leaders for the sake of company stability.