The Korea Land and Geospatial Informatix Corporation (LX) is pursuing an organizational restructuring, and it has been revealed that the regional headquarters included in the merger target list was where the organizational separation occurred just two years ago.
LX divided the Gyeonggi regional headquarters into southern Gyeonggi and northern Gyeonggi regions in early 2022, citing safety management and relief from excessive workloads as reasons. However, due to chronic deficits, it is pushing for a plan to merge this regional headquarters again with the Seoul and Incheon headquarters to create a more extensive operation.
Decisions regarding reorganizations that require substantial expense and time for adjusting duties and personnel are being reversed in a short period, raising concerns internally that it is undermining both the efficiency of the organization and the stability of its operations.
◇Regional headquarters that were separated two years ago for 'safety' reasons... now targeted for consolidation
According to the 'rational organizational and personnel operation plan' document LX explained to its non-executive directors on the 26th, it is pursuing a plan to merge the Seoul regional headquarters with northern Gyeonggi, and the Incheon regional headquarters with southern Gyeonggi. LX management disclosed to the board that it plans to reduce its organization from the current 13 headquarters, 36 divisions, and 10 levels to 11 headquarters, 31 divisions, and 10 levels, considering geography, scale, and services comprehensively. This organizational and personnel operation plan is scheduled for discussion at the board meeting on the 27th.
The regional headquarters of southern and northern Gyeonggi included in the merger targets were separated in January 2022. At that time, LX decided to divide the Gyeonggi regional headquarters into two regional headquarters due to difficulties in safety management and the inability to respond promptly to customer inconveniences and complaints due to an increased business volume.
However, as LX continued to incur deficits, it is pursuing the consolidation of regional headquarters, citing the improvement of inefficiencies in small organizations. With a cumulative deficit projected to reach 388.2 billion won by 2029, there is a concern of a liquidity crisis, leading to the decision to respond to the crisis through organizational restructuring.
If the integration of the Seoul-Northern Gyeonggi and Incheon-Southern Gyeonggi regional headquarters occurs as planned, the workforce allocated to these headquarters will see an increase of over 100 people. This is in contrast to the earlier plan to reduce the scale two years ago, leading to a growth in the size of the organization again.
An internal source at LX said, “The southern and northern Gyeonggi regional headquarters, which were separated again two years after the CEO changed, are now facing new organizational consolidation,” adding that, “The risks related to organizational restructuring are too great every time the CEO changes.” This source further pointed out that, “The 2022 separation of the Gyeonggi headquarters for proper organizational and personnel management has become a decision that contradicts the original purpose if it consolidates again.” LX is a public institution under the Ministry of Land, Infrastructure and Transport and appoints its CEO through the minister's recommendation and presidential approval. Typically, appointments from the current government go to public institution CEOs.
◇”Consolidation of organizations threatens employee safety and expands public inconveniences”
LX employees believe that the quality of land surveying services will deteriorate if the organizational consolidation takes place. When LX receives land survey requests, it dispatches personnel from the nearest headquarters or branch, but if the headquarters are consolidated, the distance employees must travel will increase. Consequently, surveying times may be delayed, and fatigue may rise. LX employees perform about 400,000 field land surveying tasks on average per year. In fact, after the merger of the Yeongdeungpo-Dongjak branch and the Gangseo-Yangcheon branch, the number of near-miss accidents (incidents that could cause injury or illness) increased by 250%.
It is the opinion of LX employees that the inconveniences for surveying clients will also rise. If the organizational consolidation occurs, a surveying client will have to travel a long distance to submit a request or complaint. For example, a resident of Incheon must go to Suwon, where the southern Gyeonggi regional headquarters is located, to file a complaint regarding land surveying.
Another internal source at LX stated, “We conduct surveys to protect national property rights, but as travel distances increase and employee fatigue accumulates, it will ultimately affect the public.” This source further explained, “As surveying is sensitive because it is linked to property rights, there are many sensitive complaints” and added, “Currently, complaints can be resolved within Seoul, but after the consolidation, clients may have to go all the way to Goyang City in northern Gyeonggi.”
In particular, there are also concerns internally that the consolidation of organizations will reduce competitiveness in projects commissioned in areas such as Seoul and Incheon. Local projects give advantages to companies based in the area where the headquarters are located, and if the headquarters move due to consolidation, these advantages may be lost. An LX official said, “In reality, when securing projects, even 0.1 points is significant, and if local companies cannot receive preferential points, we will not be able to compete with private firms,” and pointed out, “Although the sale of currently used real estate can quickly secure funds through organizational consolidation, in the long run, it is tantamount to giving up on project revenue.”
◇LX to reduce workforce by 20% by 2029 through natural reductions and planned layoffs
LX is reportedly reducing its workforce by implementing voluntary retirement plans and other measures as part of management efficiency efforts, with 107 employees leaving the company just this year. This trend of workforce reduction is expected to continue until 2029. LX plans to reduce its workforce by about 30 employees annually through voluntary retirement and such measures until 2029. Over the next five years, combining voluntary reductions with natural attrition, the total workforce at LX is projected to decrease by about 20%, resulting in approximately 3,539 employees.
LX employees are pushing back against these decisions by management. They joined in efforts to overcome the company's financial crisis by renouncing overtime pay and wage increases but feel that management is unilaterally advancing reorganization and workforce reductions.
On the 23rd, the LX labor union issued a statement titled “Stop the autocratic management of executives,” criticizing, “We actively participated in sharing the pain through the abolition of overtime pay, vacation pay, and the renunciation of wage increases, but the company only forces unilateral sacrifices.” The union emphasized, “The plan for organizational consolidation should be halted immediately, and alternatives should be prepared through sufficient discussions.”