Evaluation of public institutions that have stopped typhoon in a teacup… 3 Failed stores including KORAIL

Korea Railroad Corporation (KORAIL), Post Office Logistics Support Group, and Korea Maritime Transportation Safety Authority received the lowest grade E (very poor) in the government’s public institution management evaluation. The Ministry of Strategy and Finance proposed the dismissal of Kim Kyung-seok, chairman of the Korea Maritime Transportation Safety Authority. There was no suggestion of massive dismissal of the ‘Park Ki’, who was appointed at the end of the Moon Jae-in administration’s term.

On the 20th, the Ministry of Strategy and Finance held the 7th Public Institution Steering Committee presided over by Vice Minister Choi Sang-dae to deliberate and decide on the results of last year’s management performance evaluation of 130 public institutions. The evaluation targets were 36 public corporations, 57 quasi-governmental institutions, and 37 small and medium-sized institutions.

As a result of the Public Institutions Steering Committee, there were 3 E-grades, and the second lowest D-grade (poor) was 15. Of these, five including LH (Korea Land and Housing Corporation), Korea Horse Society, Korea Creative Content Agency, National Ecology Center, and Korea Construction Machinery Safety Management Institute received grade D for two consecutive years. If you receive an E grade in the management evaluation or a D grade for two consecutive years, you are subject to a proposal for dismissal of the head of the agency. However, the Public Institutions Steering Committee suggested the dismissal of only one institution out of eight that received E-grade and D-grade for two consecutive years due to the provision that ‘if the tenure of tenure is less than six months, the dismissal is excluded’.

Korea East-West Power received the S (excellence), which did not exist in the previous year. There were 23 cases of A (excellent), 48 cases of B (good), and 40 cases of C (average). Korea Electric Power Corporation (KEPCO) posted the largest loss in history last year, but received a grade C (normal). The Ministry of Strategy and Finance recommended the voluntary return of performance pay to the heads of institutions, auditors, and executive directors of 21 public institutions that recorded net losses last year, including KEPCO and nine subsidiaries.

Proposal to dismiss the chairman of the Korea Maritime Traffic Safety Corporation… LH and horse society ‘D grade’ for 2 years in a row
15 D-grades, 3 E-grades… Failed to receive institutional incentives

In this evaluation of public institutions, places that received a grade of D (poor) or E (very poor) received particularly low scores in social values ​​such as safety and ethical management. As the evaluation criteria of the Moon Jae-in administration were applied, institutions with poor management performance received relatively high ratings. Accordingly, the Ministry of Strategy and Finance decided to increase the weight of evaluation of financial performance from next year’s evaluation.

KORAIL’s E-class falls in safety accident

Korea Railroad Corporation (KORAIL) dropped two steps from C-grade to E-grade a year ago. This is because the Mugunghwa train, which was entering Seoul Station in July of last year, was given the lowest rating in disaster and safety management due to continuous safety accidents such as derailment. The performance of the main railway operation business was also evaluated to be sluggish. The fact that the Post Office Logistics Support Team still had a lot of vehicle safety accidents while running the courier business was a factor in receiving an E grade.

LH (Korea Land and Housing Corporation) received a grade of D for the second year in a row as the impact of the farmland speculation incident continued. It recorded the lowest rating for two consecutive years in ethical management. Grand Korea Leisure, which only partially introduced job salaries, fell one notch to D grade.

If you get a D grade, you will receive a warning from the head of the engine. As a result, three people including LH President Kim Hyun-joon, who had been in office for more than six months last year, received warnings. 18 institutions with a rating of less than or equal to Insufficient will have their current expenses reduced by 0.5 to 1%. In addition to the comprehensive evaluation, if the business management and major business items receive a grade of D or lower, no performance pay is given to all employees. The government also issued warnings to 14 organizations, including Korea Hydro & Nuclear Power, Korea Water Resources Corporation, and Incheon International Airport Corporation, where serious disasters such as fatal accidents occurred, and had them submit improvement plans.

KEPCO ranks C despite record-high deficit

On the other hand, Korea Electric Power Corporation (KEPCO), which posted the largest deficit in history last year, received a grade C. Korea East-West Power, a subsidiary of KEPCO, received an S grade. This is the result of receiving good grades in the areas of shared growth, ethical management, and disaster and safety management. It is the first time in 10 years for a public company to have an S-grade institution, and for the first time in 5 years for all public institutions.

However, it is also pointed out that this is because the distribution of social values ​​has become excessively large. The score for social values ​​such as job creation, social integration, safety and environment, and ethical management was only 7 out of 100 during the Park Geun-hye administration, but increased to 25 during the Moon Jae-in administration. On the other hand, the financial performance index dropped significantly from 14 points to 5 points during this period. The fairness controversy arose as those with higher social values, which were difficult to evaluate objectively, received better evaluations than those with excellent management performance.

Choi Sang-dae, 2nd Vice Minister of the Ministry of Strategy and Finance, said, “This evaluation is based on the management evaluation manual confirmed at the end of 2020, and the management performance for 2021 was evaluated.” . “We will redesign the evaluation index structure so that publicity, efficiency, and profitability can be evaluated in a more balanced way,” he added.

The Ministry of Strategy and Finance decided to form a public-private joint system improvement task force (TF) from next month to discuss reforms for the management evaluation system of public institutions. We plan to lower the proportion of social value in the management evaluation score and increase the proportion of financial performance indicators again. Indices related to each institution’s business are also reviewed at the origin. This is because most of the major business indicators for each institution were set in 2018 and are far from the current situation. The Ministry of Strategy and Finance also plans to use productivity improvement and private innovation support performance as important evaluation criteria due to the adjustment of functions and manpower.

By Kang Jin-gyu/Do Byung-wook, staff reporter josep@hankyung.com