High Employee Turnover Is Fatal to Technology Company
Continuous technological development and recruitment to that end are essential for any enterprise to survive in competition. This is even more so in the global market.
Growing companies spare no investment in employment and employee backup. This is because their members’ pride and loyalty mean low turnover, organizational stability, continuous prosperity and technology leak prevention. High turnover is particularly fatal in that it means a simultaneous loss of talent, expertise and know-how.
When it comes to LG Chem, which recently spun off LG Energy Solution, the number of staff members who voluntarily left the company before their retirement age totaled 300 in 2016, 453 in 2017, 505 in 2018 and 488 in 2019 and their ratio was 2.42 percent in 2019, 2.74 percent in 2018 and 2.69 percent in 2017. In that period, the overall turnover was 3.87 percent, 4.14 percent and 3.93 percent, respectively. In short, the number of employees who opt to quit is very large in LG Chem.
It is said that only 76 out of the 1,746 persons moved to SK Innovation and no less than 1,670 moved to other companies, including Chinese and European ones. These days, Chinese battery manufacturers are attracting an increasing number of Korean engineers amid the dispute between LG Chem and SK Innovation. The examples include Evergrande Group, which is one of the largest property developers in China and entering the electric vehicle battery market with its huge capital. We hear that many LG Energy Solution engineers are moving to Evergrande Group.
In 2019, a new battery company in Sweden, Northvolt, included LG Chem as one of the representative former workplaces of its employees in the company introduction posted on its website, but deleted the Korean company's name after LG Energy Solutions filed a lawsuit against SK Innovation.
The average annual salary of LG Chem battery division staff members was 76.34 million won in 2019, when that of their SK Innovation counterparts was more than 116 million won. LG Chem is one of the top players in the global battery industry and yet the staff salary is relatively low and this is why employees opt to leave.
“Paradoxically and ironically, it can be said that LG Energy Solution is supplying manpower to Chinese battery manufacturers to the point of making them the strongest in the world,” said an industry insider, adding, “In the past, China completely took the place of South Korea in the LCD industry by technology absorption, and exactly the same is imminent in the electric vehicle battery sector.”
An individual moving to another company for more money cannot be blamed at all. A company offering a higher salary and other incentives to hire more people cannot be blamed at all, either. LG Chem’s high turnover is because the leading subsidiary of the fourth-largest business group in South Korea failed to remain attractive to those who left.
Immediately after the spin-off, LG Energy Solution president Kim Jong-hyun remarked in January this year that the company would become where global talents wish to work, implying an overhaul of its personnel management and pay systems. Though belatedly, the company made a right decision.
The continuation of a legal fight abroad between Korea's two representative enterprises is a national disgrace and loss. We look forward to an amicable agreement as soon as possible.