BT ANNIVERSARY ISSUE: [6] LG: One = Four

B T A N N I V E R S A R Y I S S U E

The others in the top 10
[6] LG: One = Four

A performance-driven culture actually helps LG make the grade as a best employer.

By Suveen K. Sinha

The reception area at LG Electronics India's factory-cum-corporate office in Greater Noida has a distinctly blue collar look. It's packed with 18 television sets of different sizes, all beaming different images, five refrigerators, six washing machines, as many microwave ovens, four vacuum-cleaners, five air-conditioners, a coffee machine, and three receptionists. The sofas are comfortable but mismatched. Even the visitors are a motley bunch: some in tweeds, others in pullovers and sweat shirts, and a few in suits.

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Upstairs, CEO K.R. Kim is crunching numbers. He has chosen January 4, to announce his annual results, which will show Rs 2,000 crore in turnover, a 100 per cent rise over last year. A rise of another Rs 1,000 crore is projected in 2001, the year in which the company will start manufacturing refrigerators, monitors, CD-ROMs and fully automatic washing machines in India. Kim, who came to India in January, 1997, is aware that sustaining growth rates will be tough in the coming years. ''It's time to change the mindset and be more innovative. Each employee of LG must be equal to four of the rivals,'' he says. Sounds pretty impressive, and a trifle too ambitious. Consumer electronics is not a five-star sector like software. So the best talent doesn't exactly make a rush for it.

LG doesn't have a system of employee stock options. It doesn't even figure among the top 15 per cent of companies in terms of salaries. Then, a lot of LG employees were poached from rival companies when it set up shop in early 1997. They brought their own culture and mindset. But perhaps the more delicate issue is the apprehension over the Korean work culture in India.

But then Kim has a clear idea of what kind of a person the LG employee ought to be. ''We don't need geniuses. They can join the software sector. We need normal people with strong legs and a good heart.'' The strong legs come in handy during endless trips to the field. Kim does this two days a week. The 'good heart' becomes important in view of various community support programmes that LG undertakes and in creating a close-knit employee community.

The most frequently used words at LG are empowerment, freedom, transparency, and performance. Everyone has a target and a budget, in addition to a key performance index. ''Each product group head is empowered to decide his input needs,'' says Vice-President (Sales & Marketing) Ajay Kapila. Adds Vice-President (HR) Yasho V. Verma: ''It's a performance-driven culture.'' The targets are deliberately tough. As Verma points out, the Indian psyche needs tough targets to perform.

Clearly, LG's focus is on performance. Employees get two performance bonuses a year, based on the performance of the company, the department, and the individual. About 15-20 per cent of the employees get a 500 per cent bonus, while a minimum of 5 per cent are mandatorily given zero. And it's all relative. An employee may have met his targets, but will get zero bonus if everyone else exceeds their targets. For the exceptional performers, there is something beyond the bonuses: the high-flyer concept. Double promotions are given to high-flyers. Sandip Tiwary, a 1997-recruit who joined as a management trainee, today, he heads the Microwave Product Group.

Why LG is number 6

Reaching LG is a longish excursion from Delhi; it's in Surajpur. But the travel time for employees literally flies. Quizzes and other activities are held on the company bus. A free breakfast and five-minute compulsory exercise complete the morning.

LG strives to maintain peak motivation levels. Recognition is a way of life. Performance-linked bonuses are paid every six months. And special achievements warrant a one-time bonus.

The use of visual management techniques helps LG continuously emphasise targets and the current status. Posters on company values and congratulatory notices cover large chunks of wall space. There are only four cabins at LG; every one else sits in the open. The MD has a pizza lunch with a different team every week. There is a monthly 'stand up' meeting in the hall; each team spends two-three minutes detailing its productivity and performance.

Culture building is integral to work practices. Everyone eats together at the canteen. Attitudinal training and usage of psychometric tests is common. An on-site doctor caters to emergencies.

The LG Parivar extends to families of employees. HR visits employee homes and explains what employees do. An agency provides various concierge services. There are reserved seats for employee's children in good schools. Movies, picnics, and other family get-togethers are common. The LG Parivar extends to the community-each of the company's managers has adopted a village.

The LG culture is aggressively results-oriented. But all feedback is used for improvement, not evaluation. Internal competition is encouraged. Targets are quantified and communicated. Beyond this-the philosophy is 'here's what's to be done, now it's over to you'. Buddies are nominated to help new hires.

But workaholic tendencies are clearly checked. A minimum six-day vacation has to be taken each year by everyone in the company.

Madhavi Misra and Purva Misra, Hewitt Associates LLC

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