Daewoong Pharmaceutical is known for its strong marketing ability among local drugmakers. However, an increasing number of its salespersons, who bolster its business ability, are unhappy about how Daewoong’s management is running the company.
Their complaints focus on the new personnel system introduced by Chairman Yoon Jae-seung 윤재승 since he took office in September 2014. After Yoon’s inauguration, Daewoong대웅제약 removed a hierarchy system and integrated all the company titles into one -- putting the honorific of “nim” as the suffix to every employee’s name.
The management also decided to give roles by ability. It appointed young executives in their 30s and 40s to important positions to boost work performance.
However, many workers who had served for a long time at Daewoong recently moved to its competitors. It also handed over its rights to sell Januvia, Atozet, and Vytorin, which had long been the most profitable products, to its rival Chong Kun Dang Pharmaceutical.
Daewoong hopes to regain a growth momentum with alternative products such as Zemiglo and Crestor. It also aims to release Nabota, a botulinum toxin strain that the company developed itself, in the U.S. market.
However, employees at its sales division are increasingly complaining about the management’s pressure. They said the pressure started to weigh on them since Yoon set the goal of reaching 1 trillion won ($869 million) in annual sales by 2020. Daewoong’s annual revenue last year stood at 883.9 billion won on a consolidated basis.
“Since Chairman Yoon took office, the company froze employees’ salaries for three years. In the sales division, the management has down away with bonuses on national holidays,” said a salesperson at Daewoong’s sales division. “Despite growing sales, the company didn’t improve working conditions for the employees, who had to cut their salaries to boost operating profits.”
After Yoon took control of the company, Daewoong’s annual revenue continued to grow from 682.5 billion won in 2013 to 735.8 billion won in 2014, to 839.6 billion won in 2015, and to 883.9 billion won last year.
However, its operating profit declined from 71.3 billion won in 2013 to 51.9 billion won in 2014, to 43.5 billion won in 2015, and to 25.8 billion won last year. This shows the management is pushing employees to improve earnings, Daewoong’s salespersons say.
Daewoong’s salespersons also take issue with the change in the performance assessment criteria from a sales goal to a year-on-year sales growth comparison. The company gives five grades -- S, A, B, C, and D – to the sales increase of 26 percent or more year-on-year, 20-25 percent, 15-20 percent, 10-15 percent and 0-10 percent, respectively.
“Since Yoon came as chairman, salespersons are evaluated as S, A, B, C, D grade, and the assessment criteria was changed from a sales goal to sales growth rate,” a Daewoong’s salesperson said. “If you’re an S grade, you get double the promised incentive. Those with A grade get 1.5 times of the incentive, those with B, receive 100 percent, Cs get 50 percent, and Ds, no bonuses at all.”
According to the salesperson, Daewoong includes bonuses in the salary. Consequently, the company pays different amount of wages because the promised incentive is not guaranteed, depending on the employee’s performance. This contradicts the initial salary contract that the employees signed, the salesperson said.
Such salary payment system will bring down the average salaries of workers who have worked at the company for long, Daewong salespersons say.
“Among ourselves, we say we did a pretty good job if we can get a B grade and receive the promised incentive. It is necessary to improve our business through a new system and boost earnings. But the company should not ‘squeeze out’ employees to boost the performance,” another salesperson said.
He also criticized the company for not filling the vacant posts in some provincial branches.
“A regional branch could not receive any salesperson for the vacant position, so the branch head personally went out to visit clients. We have Career Development Program period in July and December. Another branch head had to double the job as a salesperson for a year because he failed to supplement the workforce,” he said.
While a significant number of employees are quitting, the company is still stressing its goal to reach 1 trillion won annual revenue by 2020, he went on to say. Due to worsening working conditions, salespersons are moving to Chong Kun Dang and Seoul Pharma, he said.
“With Yoon’s chairmanship going into the third year, the company needs a strong solidarity, but conflicts are only growing,” he said.
“Blind,” an anonymous mobile app for Korean workers, shows a number of complaints against Daewoong’s management and the new ability-based personnel system.
Postings about Daewoong on Blind say, “The personnel management team does not communicate with employees over salaries.” Others say, “the ability-based personnel system without proper preparation and a clear goal to reduce labor costs only irreversibly ruined the company.”
Some Daewoong employees say the complaints of the salespersons are part of the process to adapt to a new management system. The new personnel system has its strength and weakness, although some could not be happy with it, they said. The previous performance evaluation criteria based on a sales goal could be unwelcome for those working in a favorable region, but could serve as the stimulus for those at an unfavorable region, they said.
“Removing the job titles and using ‘nim’ helped the company remove a hierarchy and age-based time limitation for work. Some employees’ salaries jumped, according to their ability,” a Daewoong official said, requesting to be unnamed. “The management’s intention must not have been delivered fully to the employees because they cannot explain every detail to every individual.”
The official added that workers whose positions have become vague must feel unfair, as the company is still adapting to the new management system.
“The company had to do everything it could to raise earnings while the drug prices and sales were going down,” he said.
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