[Reporter's View] voluntary resignation with compensation

Korean companies must establish a standard

As the year-end is nearing, several pharmaceutical companies are considering restructuring.

 

Rumor has it that these companies may have plans for reducing OTC businesses and laying off staff who are age 55 or older.

 

It remains uncertain whether it is a rumor or an actual plan, but restructuring could be possible.

 

Over five pharmaceutical companies that were mentioned.

 

There is a solid reason companies have chosen restructuring.

 

It is for business efficiency.

 

Restructuring could be an enormous benefit if laying off results in efficiency within the company.

 

It is an approach of 'selection and focus,' losing a few if taking all is not an option.

 

Voluntary resignation is frequently used as a method of job cuts.

 

It is implemented to reduce the number of employees at once.

 

It is the same as layoffs in business.

 

However, companies utilize the voluntary resignation program instead of layoffs because layoff requirements are selective according to the Labor Standards Act and may result in conflicts and management.

 

Korean pharmaceutical companies employ a similar method.

 

Voluntary resignation is less frequent than that of the multinational companies, but the Korean companies have used it more often recently.

 

At the end of last year, Korean mega-pharmaceutical companies, Ildong Pharmaceutical and GC Biopharma, conducted voluntary resignations.

 

Likewise, Korean pharmaceutical companies are favor voluntary resignation when reducing the number of employees.

 

Then, what is the next important step?

 

We must consider compensation for those who are subjected to restructuring.

 

Pharmaceutical companies' goal for restructuring is to reduce the number of employees.

 

However, it would be better to achieve such a goal by offering a good compensation package.

 

If restructuring is inevitable, a win-win structure must be set.

 

Although companies may have to spend a large sum of money at once, they may have to sacrifice considering the cost-effective outcomes in a few years following restructuring.

 

Yet, a compensation criterion has not been established for voluntary resignation.

 

Compensation criterion vastly differs by company.

 

Direct comparison may be difficult, but the criterion in Korean companies is different from the (consecutive years of service*2)+ N months in multinational companies.

 

Few companies urge voluntary resignation without compensation.

 

Companies will continue to undergo restructuring.

 

Then, it will be necessary for Korean companies to establish a compensation criterion for voluntary resignations.

 

Precedence will serve as a standard for those who follow.

 

If leading restructuring companies set low compensation, latecomers will also set low standards.

 

The situation in small and medium-sized companies will be much worse, causeing a vicious cycle.

 

Now, an agreement between Korean companies for voluntary resignation compensation may be necessary.

 

Better compensation will lessen the backlash from restructuring.