hankyoreh

Former Samsung chairman Lee Kun-hee abruptly returned to his post yesterday as chairman of Samsung Electronics. This comes twenty-three months after he stepped down, taking responsibility for the “Samsung incident” that began with a declaration of conscience by attorney Kim Yong-cheol. Samsung management explained, “In order to preemptively seize global business opportunities in a situation where uncertainty is deepening in the global economy, we determined that Mr. Lee’s experience and leadership are necessary.” However, Lee’s reinstatement is not only weak in its justification but procedurally inappropriate as well.

As a justification for Lee’s return to management, Samsung cited the “Toyota affair.” In other words, they felt threatened by that incident and pleaded for Lee’s reinstatement. But this explanation does not add up. The reason for Toyota’s recent crash was its lack of communication with the outside and the closed-off nature of its internal decision-making. Therefore, if Samsung had learned any lesson from the Toyota affair, it should have first adopted an approach of ensuring smoother communication with the outside and humbly accepting criticisms from the people. Instead, it has sustained the “imperial management” system, where all authority is concentrated in a single conglomerate head, leading to a greater chance that it will face the same type of crisis as Toyota.

Lee’s decision to reverse a recently announced management reform plan and revert the control structure back to its previous form is representative of an even bigger issue. In April 2008, when he took responsibility for the Samsung incident, Lee promised to retire from the front lines of management, dissolve the Strategic Planning Office, and allow independent management of affiliates. Three months after his presidential pardon and exoneration, however, he has gone back on all of those promises. One must question how much trust a conglomerate head can obtain domestically and overseas when he changes his words according to the situation.

It is difficult to comprehend both the process and procedure of Lee’s reinstatement as chairman of Samsung Electronics. In returning to a position where he will effectively wield absolute management authority, he has shown a complete disregard for the procedural step of asking shareholders for their opinions. No reference whatsoever was made to his return at the Samsung Electronics shareholders’ meeting held late last week. Without following any type of proper legal procedure, Lee has risen to the position of chairman with power only and no responsibility.

Owner-based management is not without its advantages. In situations where the management environment is undergoing rapid changes, a conglomerate head can break through the crisis through bold adjustment and investment decisions. But even that is only possible when there is consent and support inside and outside the company, within a set legal framework. If, as is happening now, Samsung unilaterally reverts to its imperial management system, not only will citizen antipathy only grow, but we also cannot hope to see any of the advantages of owner-based management.

Please direct questions or comments to [englishhani@hani.co.kr]