Chaebol owning family members rise to executive five times faster than normal employees

Posted on : 2017-02-09 16:12 KST Modified on : 2019-10-19 20:29 KST
Quick promotion of family members who lack business experience may increase “owner risk”
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It takes the family members of the owners of chaebols less than five years on average to become executives after starting work at a chaebol, a new survey finds.

CEO Course, a site that assesses corporate business performance, announced on Feb. 8 the results of a survey of management participation by 208 family members of the owners of the top 50 groups (among groups with owners). The survey found that it took an average of 4 years and 11 months for these individuals to become executives after entering the group. On average, these individuals started working at the age of 29 and were promoted to executive at the age of 33. After this, they rose to the position of CEO (company president or higher) by the average age of 42. This rate of promotion was nearly five times faster than ordinary office workers, for whom it typically takes 24 years to become an executive.

The survey found that it took less time for family owners to be promoted to executive when there were more generations separating them from the chaebol founder. Members of the parent’s generation (corresponding to the chaebol founders and their children) on average became executives at the age of 34.6, five years and one month after joining the company at the age of 29.5, but the “silver spoon” children’s generation (corresponding to the founders’ grandchildren and great-grandchildren) entered the company’s elite ranks at the age of 33, four years and two months after joining the company at the age of 28.8. It took nearly one year less for them to be promoted to executive than for their parents‘ generation. This means that even though chaebols are much larger than they used to be, individuals with little experience are rising to decision-making positions.

The youngest family member of a chaebol owner in the top fifty groups to become an executive is Chung Yoo-kyung, president of Shinsegae Department Store, who entered the company as an executive at the age of 24. SBS Media Group Vice Chairman Yoon Suk-mynn and Hanwha Group Chairman Kim Seung-youn became executives at the age of 25, while Samsung Electronics Chairman Lee Kun-hee and Samtan Chairman Yoo Sang-duk did so at the age of 26. Members of the owner’s family who became executives at the age of 27 include Korean Air Senior Vice President Cho Hyun-min, AmorePacific Chairman Suh Kyung-bae, Hanwha Q Cells Senior Managing Director Kim Dong-kwan, Shinsegae Vice Chairman Jung Yong-jin and Seoul City Gas Vice President Kim Yo-han.

The business world has recently been paying attention to the rapid promotion of Kin Dong-kwan and Hyundai Heavy Industries Senior Executive Director Chung Ki-sun. Chung Ki-sun, son of Chung Mong-joon, majority stockholder in Hyundai Heavy Industries, entered the company as a senior department director in 2013 and was promoted to executive director in 2014 and senior executive director in 2015. Kim Dong-kwan, son of Hanwha Chairman Kim Seung-youn, began working at Hanhwa in 2010 and rose to the position of executive director of Hanwha Q Cells in 2015 and to senior executive director in 2016.

The rapid promotion of the family members of chaebol owners increases the “owner risk,” some believe. “When the grandchildren of a chaebol owner are promoted rapidly, they lack experience on the ground, which means they‘re forced to rely on reports and on the people around them for their decision-making. It’s also common for them to be incapable of exercising effective leadership because of their poor ability to communicate with or relate to others,” said a managing consultant who has worked at two chaebol.

By Lee Wan, staff reporter

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