SK Group Chairman Chey Tae-won urged chief executives of SK companies to fully engage themselves in embracing changes to avoid falling behind amid tough business environment. He called on executives to carry out intensive reform in all sectors of business, management, and corporate culture, and emphasized that companies will have no future and that they may face “sudden death” if they do not transform and break the existing frame of SK.

Chey’s remarks were made last Thursday at an emergency meeting of company presidents at the SK Management System research institute in Icheon, Gyeonggi, following Britain’s decision to leave the European Union (EU). Concerns have mounted in the South Korean business circle over the impact of Britain’s break from the EU. The meeting was held to discuss measures to cope with such external changes in the business environment.

At the meeting, Chey delivered a speech with a message similar to the one he had presented after he returned to management last year after resigning from all key posts to serve a prison term for embezzlement - but only with more sense of urgency. Back then, he emphasized the importance of rebuilding a “powerful SK” and pursuing “disruptive innovation.”

This time, Chey told chief executives that many business indicators of SK Group have reached a serious level, noting that SK has low return on equity (ROE) and that companies’ price-to-book value ratio stands at below one. As part of efforts to overturn the current situation, Chey said that the conglomerate needs to change the way how it operates its business, how employees work, and improve asset efficiency. He advised chief executives to come up with specific plans to tackle the problems before the CEO seminar to be held later this year. The seminar, which discusses the group’s overall management, is attended by SK Group CEOs and is usually held in late October.

When it comes to reforming business operations, Chey said that each company should transform its business model, noting that if the overall business environment changes, a company should also change the way in how it earns money. Chey asked chief executives to question themselves if they had ever thought about the fundamentals of business, such as to whom, what, and how they should sell. The chairman urged them to break away from corporate customs and go back to square one and rethink about the overall business model that includes products, customers, and market.

Chey also urged chief executives to reconsider the way how they work. He noted that it is necessary to question whether current working environment such as working hours as well as holiday, evaluation, compensation, and hiring systems and regulations are adequate for the group to embrace changes it faces today.

Chey also emphasized that the group should work to improve overall asset efficiency, saying that financial resources and fundamentals are a must for the group to pursue mid- to long-term management goals.

By Chung Wook

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