By on September 7, 2010


I hate to get all “workers of the world unite”, but management seems to get away with a hell of a lot more than the rank and file. Take Prudential’s bid to take over AIG’s Asian arm. The bid failed and the whole exercise cost Prudential £377m (about $579.5m). Digest that figure for a second, then digest the next fact. The CEO, Tidjane Thiam, refuses to stand down over this mistake. Now consider this, if you, as a rank and file member, would cost the company you work for just 1 percent of that previous figure, could you honestly expect to keep your job? Now let’s look at the FIATsco incident. The whole affair cost GM $2b. Again, had you have cost the company you work for just 1 percent of that figure, could you keep you job? After writing this paragraph, I find the next story almost heartwarming.

The Wall Street Journal reports that Kia Vice President, Chung Sung-Eun has resigned. The reason for his resignation was to take responsiblity for a series of recalls which Kia had to issue. Michael Choo, spokesperson for Kia, said that Chung Mong-Koo, CEO of Hyundai, which owns 39 percent of Kia, allowed Chung Sung-Eun to leave as he failed to ensure the quality of Kia vehicles. The recalls in question are 104,047 units of the Soul, Sorento, Borego and Cadenza cars.

The problem was faulty wiring. Business Week posits that resigning over 104,047 recalled cars is a bit harsh, but that’s the way the industry is going since the recalls of Toyota. “Jeong (Chung) resigning is a pre-emptive action, “said Chae Hee Guen, Korean analyst for Mertz Securities Co., “Quality is a top priority for Kia and Hyundai Motor Co. management. They don’t want to tarnish their image.” While this is admirable, are we going too far in the other direction?

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6 Comments on “Kia Recalls Its Management...”


  • avatar
    John Horner

    You make an excellent point. Top management errors are usually rewarded with more cash. If the CEO really does a bad job, he/she (Fiorina anyone?) gets paid millions of dollars … to leave. Meanwhile, workers are constantly told to do more with less and so on. When was the last time the executive pensions and medical benefits got hit with an axe?
     

    • 0 avatar
      psarhjinian

      John: +1
       
      Carly Fiorina, piece of work that she was, pales in comparison to Bob Nardelli, who got a quarter-billion dollar Dear John from Home Depot.  Both of them went on to other positions of significant pay.
       
      Heck, Mark Hurd (Fiorina’s successor) just got made co-president of Oracle after falsifying expense reports at HP to compensate an intended mistress.  If I falsified expense reports, I’d probably be prosecuted and would be lucky to get a job at McDonald’s afterwards.
       
      Again, tell me how the UAW making a buck-sixty an hour extra is somehow worse than the top guys at, say, Mitsubishi who green-lighted the dead-on-arrival Project America products those UAW workers are building.  And that’s Mitsubishi: they operate at Japanese wage disparity levels, which are only an order of magnitude out.  In the US those figures rapidly become obscene.
       
      The calls for people to “be more competitive” rings a little hollow when they’re being made by people whose compensation is in the millions, have no effective penalty for failure, and huge “Old Boys Network” safety net to fall back on.   Snide as it was, Robert Farago was right to ask Bob Lutz if his pension was bankruptcy-proof.

      Good for Mr. Chung to show some executive-level responsibility. Granted again, this isn’t uncommon in Japan or Korea: Katsuaki Watanabe was acknowledging and apologizing for (minor) performance and quality problems before PedalGate (eg, when Toyota was raking it in hand-over-fist). Have we seen a mea culpa by Wagoner yet?

  • avatar
    Educator(of teachers)Dan

    My only question is if he recieves a golden parachute or not.  But wow, way to stand up and take responsibility, even though it’s not likely directly his fault that the wiring is faulty.  But then again as they ask us in our administrative classes in education; “As principal, what are you responsible for at your school site?”  (A: EVERYTHING that happens on your watch.)

  • avatar
    zerofoo

    I’ve long said that executive management at large companies view themselves as stewards of the company, but not really directly responsible for the company.  Most of these guys I’ve worked for see themselves as representative of the company shareholders merely executing the will of the shareholders.  When the shit hits the fan, everything in the world is to blame (markets, unions, politics, the weather..etc) except the executives who made the key decisions.
     
    It’s the classic “I was only doing my job, it’s not my fault” defense.
     
    Of course, during good times executives are well rewarded clearly accepting the credit for a job well done.

  • avatar
    CarPerson

    OTOH, T. A. Wilson, the well-liked and respected head of The Boeing Company, stepped down when a Boeing-repaired JAL 747 bulkhead failed, causing a crash that killed 356(?) people. Japan Airlines is a major Boeing customer.  They let it be known this is how this works.

  • avatar
    Steven02

    I agree CEO’s get paid too much and that they often fail and get paid a huge amount to leave.
     
    But resigning over 100k vehicles… WOW.  With parts sharing today among cars of any manufacture, a recall is going to be a 100k vehicles minimum.  I am really surprised by this.  Furthermore, because this wasn’t like a few of the bad mistakes that were mentioned in the article when upper management was largely at fault.  This could simply be a supplier issue, manufacturing issue, or design issue that doesn’t likely really involve the CEO.


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