Lotte Department Store will introduce a new 'HR system centered on professional growth.' This is part of a group-wide initiative to implement a job-based pay system. The aim is to enhance employees' job expertise and increase work productivity. Lotte Department Store is currently conducting a consent process for the system among its employees.
According to the retail industry on the 26th, Lotte Department Store held an explanatory session introducing the new personnel system, 'HR system centered on professional growth,' for employees in mid-month and will carry out the consent process for members by the end of this month. According to the semi-annual report submitted to the Financial Supervisory Service, as of late June, Lotte Department Store had a total of 4,210 employees.
Once the majority consent from members is secured through the process, the system will be implemented after amending relevant employment rules and personnel management regulations. The implementation timing is expected to be in the second half of this year.
'HR system centered on professional growth' is part of the personnel and wage system reform that Lotte Group has been promoting since last year. Until now, Lotte has applied a seniority-based system where wages are determined according to years of service. However, in the future, evaluations and compensation will be based on the expertise, difficulty, and responsibilities of the job, regardless of an individual's years of service or rank, under a 'job-based HR system.'
A representative from Lotte Department Store said, 'We decided to implement a system suited to the department store in line with the group's direction for a job-based pay system. The essence is to ensure that those with expertise can grow, regardless of their years of service,' and added, 'We are currently in the consent process for members, and the decision on whether to implement the job-based pay system will be made based on the results.'
To implement the job-based pay system, Lotte has classified jobs into five levels, from 1 to 5, based on the difficulty and importance of the jobs within each affiliate since last year. The system is reportedly based on consulting by the global HR strategy consulting firm Mercer.
A representative from LOTTE Corporation explained, 'The existing job-based pay system evaluates based on job differences, but Lotte has developed its own 'job-based HR system' that considers the growth potential and abilities of members along with their jobs, providing a comprehensive evaluation system.'
Previously, Lotte Biologics, Daehong Communications, and LOTTE Innovate have implemented the job-based pay system. Since the 1st of last month, LOTTE Chemical's advanced materials division has been operating under the job-based pay system.
LOTTE Wellfood, a food subsidiary, also completed the consent process for the introduction of the 'job-based HR personnel system' last month. More than half of the total 2,073 members (56.6%) agreed, and after reporting to the Ministry of Employment and Labor and amending the personnel management regulations, it is scheduled to be implemented on the 1st of next month.
In this context, Shin Dong-bin, chairman of Lotte Group, requested at the group's strategy meeting (VCM, former executive meeting) held last month to focus on strengthening employees' job expertise and establishing a performance-centered personnel system to enhance productivity.
Lotte Group is overhauling its personnel and wage systems due to rising crisis awareness over poor performance in core businesses such as retail and chemicals. Lotte Shopping recorded a revenue decrease of 3.9% to 13.99 trillion won last year compared to the previous year, with an operating profit down 6.9% to 473.1 billion won. Although the operating profit in the first half of this year increased by about 11% compared to the previous year, sales decreased by about 2%. LOTTE Chemical reported a deficit of 1.8 trillion won last year, followed by an operating loss of 377.1 billion won in the first half of this year.