The photo shows the Euljiro office building of Daewoo E&C.
[BizCheck Eunjoo Lee] Daewoo E&C has begun a massive restructuring, notifying 29 executives of their dismissal on the 8th. About 35 percent of the company's 83 total executives will leave the company at once. Daewoo E&C will complete the reorganization and promotion of executives this week to form a new management team.
The move comes just three days after Kim Bo-hyun, executive vice president of Daewoo E&C, was named president and CEO on May 5. Kim is the son-in-law of Jung Chang-sun, chairman of Jungheung Group, and has been leading the streamlining of Daewoo E&C since its acquisition. The restructuring is interpreted as a sign of Daewoo E&C's transition to the Jungheung Group system.
Massive layoffs, including at the general manager level...9 in the housing division
In this restructuring, many executives at the headquarters level also packed their bags. Kim Yong-hae, executive director of the Civil Engineering Division, Lee Yong-hee, head of financial management, and Kim Young-il, head of safety and quality, among others, left the company. In the housing division alone, nine executives were notified of their termination. As the deterioration of Daewoo E&C's performance this year was mainly caused by the housing division, it was inevitable to blame the executives.
Six and five executives were also dismissed from the civil engineering and plant divisions, respectively, while three executives from the safety and quality division, two each from the finance and strategy division, and one each from the overseas business and legal division were included in the list.
In particular, Lee Yong-hee, the former head of finance, was known to have played a key role in the acquisition of Daewoo E&C by Jungheung Group, including providing financial data. However, in this restructuring, he was reportedly targeted for dismissal due to his lack of performance improvement after the acquisition.
◇Kim Bo-hyun to lead reorganization amidst personnel turmoil
Kim Bo-hyun has been praised for his decisiveness as a former air force general in handling large-scale personnel changes quickly. According to Daewoo E&C's public relations office, executive promotions will be announced as early as this week. The appointments, which are being made in conjunction with the reorganization, are expected to reveal the colors of the Jungheung Group in earnest.
In particular, the promotion of Jung Chung-gil, the son of Chairman Chung Chang-sun, to vice president has been rumored. Jung was born in 1998 and worked as a deputy CEO of Jungheung Construction before joining Daewoo E&C as a deputy CEO after the acquisition, and was promoted to CEO within a year. If he is promoted to vice president this time, it will be an unusual case of rapid promotion from deputy to vice president in three years.
On the other hand, Kim Bo-hyun's two sons are still employed at Daewoo E&C. It is possible that the sons, both born in 1995, will be promoted to deputy or division chief in the new appointments, raising the possibility of subtle tensions between the old and new forces within the conglomerate.
◇Signaling improvement in Daewoo E&C...Jungheung's system in full swing
The restructuring is seen as a way to hold executives accountable for Daewoo E&C's poor performance, while also injecting Jungheung's management philosophy into the company. As the group enters the third year of its acquisition of Daewoo E&C, it is expected to erase the old Daewoo E&C colors and reorganize the organization in line with the group's strategic direction.
“In the early stages of the acquisition, the group respected Daewoo E&C's autonomy to a certain extent, but now it seems to have entered the stage of applying its management style in earnest,” said a former Daewoo E&C executive. ”Already, the colors of Daewoo E&C are showing up in many places, such as the procurement headquarters, where the head of the headquarters is a senior executive.”
Inside Daewoo E&C, the company is watching to see if these changes will improve management efficiency and strengthen the company's competitiveness in the long run under the Jungheung Group.
The results of this week's reorganization and promotion announcements will be an important test of Daewoo E&C's new management system.
By Eunjoo Lee leigh86@hanmail.net
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