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LGE WAY. - Creating GCGP Through Challenge and Innovation -.

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Lge way

LGE WAY

- Creating GCGP Through Challenge and Innovation -


Lge way

“…For LG to achieve continued high performance in spite of environmental changes, we need to be strongly determined and set challenging stretch goals. Then, our continued execution of high caliber innovation will lead us to become a widely recognized global company.”

(Chairman Bon-Moo Koo’s speech at the annual Executive Conference, Nov. 11, 2003)

“ Now is the time for us to clearly define our own ‘LG WAY’ and push forward to become ‘No. 1 LG…’ ”

(LGE Vice Chairman & CEO’s executive lecture at the annual LG HR Conference, Oct. 2, 2003)


Lge way

  • LGE WAY

1. Background

We must maintain a strong focus and build upon our past performance, while accelerating the realization of ‘No. 1 LG.’

Stretch goals

6σ management

No. 1 LG

Management

LGE WAY

Leadership

Strong field management

Innovation

Faster and stronger innovation

Next level innovation

“Creating GCGP through challenge

and Innovation”

  • Top-to-bottom alignment

  • Performance-based culture

  • Strengthen execution

Corporate

culture

  • Strengthen LG identity

  • Share common language

  • Good to great company

‘Stronger and more Dynamic LG’

Great Company Great People

No. 1 LG, No. 1 People

1/11


Lge way

  • LGE WAY

2. Positioning

The ‘LGE Way’ is the foundation for building ‘No. 1 LG’

No. 1 LG

Management

Philosophy

Creating Value for Customers

Management Based on Esteem for Human Dignity

Global Top 3 by 2010

(Global top 3 among electronics and telecommunications companies)

Vision

  • Achieve ‘No. 1 LG’ in critical/core businesses

  • Actively develop new prospective businesses

  • Strengthen profit-driven operations

Strategic

Initiatives

LGE WAY

The values, mentality and behavior that all employees must share, and the management style that will lead us to a ‘No. 1 LG’

Great Company Great People

2/11

No. 1 LG, No. 1 People


Lge way

  • LGE WAY

3. Conceptual Framework

LGE WAY is GCGP

“ A great company makes great people.

And great people make a great company ”

GC

(Great Company)

GP

(Great People)

A company that creates continued outstanding performance through ceaseless challenge and innovation

People who create outstanding performance by setting and achieving challenging stretch goals with a strong spirit for winning

Management

People

Culture

“ No One Can Remain No. 1 Forever ”

※ GCGP : Great Company Great People

Great Company Great People

No. 1 LG, No. 1 People

3/11


Lge way

  • LGE WAY

3.1 Scope

‘LGE WAY’ consists of two main axes (GC and GP), three components and five elements. Each of these parts are aligned with each other.

Growth

Strategy

Management

Management

Style

GC

Leadership

GCGP

People

Personnel

GP

Winning

Culture

Culture

No. 1 LG, No. 1 People

Great Company Great People

4/11


Lge way

  • LGE WAY

4.Components

Components

Concept

Key Words

Growth strategy must be continuously developed to achieve ‘No. 1 LG’

  • Fast Innovation

  • Fast Growth

Growth

Strategy

Management

  • Value creating Labor-

  • management relations

  • 6σ Management

  • Early Innovation Management

  • Knowledge Management

LG management practices and style that need to be consistently refined and applied

Management

Style

Field-oriented

Management

Leadership style that LG managers and leaders must possess

  • Lead by example

  • Coaching

  • Empowerment

Leadership

Trust Leadership

People

The model traits that LG seeks

in its personnel

(Strong people who fit the

LG Culture)

  • Determination

  • Strong execution

  • Expert competency

Personnel

Right People

Strong, winning corporate culture that leads to the achievement of ‘No. 1 LG’

  • No Excuses

  • ‘We’ not ‘I’

  • Fun Workplace

Culture

Corporate

Culture

Winning Company

Great Company Great People

No. 1 LG, No. 1 People

5/11


Lge way

  • LGE WAY

4.1 Growth Strategy

Continuously maintain and expand growth to achieve ‘No. 1 LG’

Key Words

Concept

Secure a competitive advantage of more than 30% over our competitors by innovating and achieving challenging stretch goals

  • 30% More (Volume & Value)

  • => Increase sales, market share and real value

  • 30% Faster (Speed)

  • => Speed up new product development,

  • product shipping and decisionmaking

  • 3-Year Advance (Competency)

  • => Secure superiority in core competencies

  • such as cost innovation and technology

Fast Innovation

Innovation Philosophy

Growth Strategy

“ 5% may be impossible,

but 30% is possible ”

  • Growth rate of quantities sold

  • < Growth rate of per-item value

Increase not only profit, but the size of the market through premium products

  • Be a Market Driving Company

  • =>Each year, develop and launch new product

  • categories

  • (e.g., Fully automated laundry machine -> TROMM)

Fast Growth

Orchard Paradigm

1 Box

20 apples

50,000 won

1 Box

50 apples

20,000 won

  • Gradually break limits that restrict growth

  • Commodity products => Premium products

(Growth limited)

Great Company Great People

No. 1 LG, No. 1 People

6/11


Lge way

  • LGE WAY

4.2 Management Style

Continuous maintenance and development consistent with LGE’s business practices and management style

Management Style

Top ManagementPhilosophy

*

▣ “ …Our No. 1 labor-management relations have helped LGE overcome the recent financial crisis and saved us...”

Value Creating Labor-Management

▣ “ Our labor-management relations will provide a firm foundation to achieve No. 1 LG.”

  • No. 1 Labor-management relations

  • Labor and management are one

  • : One consolidated entity to achieve even greater

  • performance

  • Mutual trust and respect

▣ “ … field-oriented management is required. Decisions should be made and direction should be given on site where an issue is raised. This will prevent us from repeating work…”

Field-oriented Management

6σ Management

▣ “ … visit field sites as frequently as possible in order to motivate personnel and monitor the market … ”

  • ‘6σ is our company’s common language’

  • Location inspections and immediate

  • decision making

  • 6σ Communication based on facts and figures

▣ “ ..6σ is an essential innovation tool for the 21st century..…”

▣ “ If 100 PPM is about cutting down weeds, 6σ is about uprooting them….”

Early Innovation Management

▣ “…Focus on the innovation activity of setting business targets 3 years in advance and then making preparations early to meet those targets…”

  • Lead innovation to be first to secure

  • differentiated competitive strengths

  • : Set three year targets and prepare to achieve

  • : Prepare in advance for 70% of next year’s

  • performance targets and goals

  • -> Preparation during the preceding year

  • by doing TDRs in advance

▣ “… adopt Early Innovation Management throughout the company…”

▣ “ …Knowledge becomes valuable only when it is applied… ”

Knowledge Management

▣ “ Resources are limited, but wisdom is infinite...”

  • Front-line knowledge generated from TDR

  • activities must be shared quickly

*Quoted from speeches of Group Chairman/former LGE Chairman/ LGE Vice Chairman

  • Using TSC and CoP

No. 1 LG, No. 1 People

* TSC (Technology Specialist Council)

Great Company Great People

7/11


Lge way

  • LGE WAY

4.3 Leadership

Leadership style that LG managers and leaders must possess

Key words

Top Management Philosophy

Concept

Trust

Leadership

▣ “…Management, that follows the ‘Right Path’ without compromising, builds the driving force that enables the company to win and maintain first place position …”

▣ “…Leaders should lead by example and accept the responsibility for all risk…”

Lead by Example

  • Loyalty & ownership

  • Proactive innovation (Risk-taking)

  • Execute “right path” Management

  • (Uncompromising integrity)

“Strong leadership based on mutual trust ”

▣ “…Don’t deliver unclear messages. Give exact and specific direction. This will build trust.”

▣ “…Distorting management or quality data is worse than stealing funds from the company.”

▣ “…Leaders learn for the purpose of imparting knowledge to others. Study frequently and coach your members”

Coaching

  • Open communication

  • (Exact and specific directions /

  • Report facts)

  • Study in order to coach and develop

  • others (‘Leaders must learn and

  • impart toothers’)

▣ “…If you trust others,

trust them to the end … ”

▣ “…You must have confidence in yourself...and empower. Trust and delegate…”

Empowerment

  • Trust employees

  • Delegate authority and accountability

  • Monitor and give timely feedback

Great Company Great People

No. 1 LG, No. 1 People

8/11


Lge way

  • LGE WAY

4.4 Personnel

Model traits that LG seeks in our personnel (Competent people who fit in the LG Culture)

Key words

Top Mgt Philosophy

Concept

Right People

▣ “ … We want the right people who have a persistent spirit for winning and fear no obstacles at all. … ”

▣ “ … We prefer strong and steady people…: those who put execution first rather than relying on manipulative tricks … ”

Determination

  • Passionate

  • Tenacious winning spirit

  • Resolute

“People with a strong spirit for winning, who create outstanding performance by setting and achieving challenging stretch goals”

Strong Execution

▣ “ … ‘ Taking one action is more valuable than saying ten words’.. ‘Strong execution’ is what is needed… ”

  • Rice ball mentality

  • Act before speaking

  • : Act-Learn-Choose

  • Risk-taking

EVP

▣ “ …Things should be expressed simply and in a compact way; and work should be done simply and smart … ”

Expert Competency

▣ “Become people with high market value who, if leave the company, will be aggressively recruited by other companies for the next 5-10 years.”

  • Global business perspective

  • Expertise/know-how

  • Smart working style

Great Company Great People

No. 1 LG, No. 1 People

9/11


Lge way

  • LGE WAY

4.5 Culture

Strong, winning corporate culture that leads to the achievement of ‘No. 1 LG’

Key words

Top Management Philosophy

Concept

▣ “ ‘No. 1 LG ” means to push ahead without yielding, achieve high performance, and beat the competition…”

Winning

Company

No Excuses

▣ “ … We would rather die than lose. Never die in battle with competitors … ”

  • Willing adoption and participation

  • of company policies

[It’s Better to die than to lose]

“An organization with a strong winning spirit and the ability to execute according to that winning spirit”

  • Alternatives first, not excuses; find

  • a way (Before you say NO, create win-

  • win alternatives)

▣ “…remove any part of our culture that allows excuses…Present an alternative before saying ‘No’…”

  • Set & achieve challenging stretch goals

▣ “ …The group should address issues together. We cannot afford individual experiments for success.”

‘We’ not ‘I’

  • We must be one

  • We must work as true team players

  • We must be focused and dedicated

  • to the same pursuit (Internal Alignment)

▣ “ …Usually people say, ‘I did it.’ we need to say, ‘We did it.’ From now on let us use “We”... ”

▣ “ … feeling that you are growing as the company grows…that you can be excited about your work...”

Fun Workplace

▣ “…We should feel a sense of fulfillment and fun from the work we do, not the kind of ‘Fun just for fun’s sake”

  • Sense of fulfillment and fun

  • from work

  • Work/Life Balance

  • Respect creativity and autonomy

▣ “GC → GP → Great family (theory of faithful and loyal families)”

Great Company Great People

10/11

No. 1 LG, No. 1 People


Lge way

  • LGE WAY

5. Action Plan

In joint effort with the Innovation, HR, and Planning Groups roll out the LGE WAY in 3-stages

Moving

(Promote substantial change)

Refreezing

(Firmly establish)

Unfreezing

(Share/Disseminate)

  • LG Innovation Training

  • School

  • → Rearm personnel with an

  • advanced innovation philosophy

  • Train all employees in the ‘LGE WAY’

  • → Two-day Melt-In program

  • to be completed in the

  • 1st half of the year

  • Cultivate change agents (Dec.)

  • → Executive Melt-In (Jan. 2004)

  • → Melt-In for each level (Jan. 2004)

  • Programs to facilitate

  • innovation

  • → Continual application of innovation tools to make them habitual

  • Concept definition

  • (Kick-off on Oct. 23)

  • Reported to the CEO (Nov. 11)

  • Reported in Top Management

  • Meetings (Nov. 13)

  • Announced at the new year’s

  • ceremony (Jan. 5, 2004)

  • Direct communication

  • from the CEO

  • → Cascaded sharing/dissemination

  • Change Management

  • → Address opposition and complaints

  • Improve cultural innovation

  • organization at the company level

  • → Obtained strong executional drive

  • Develop and adopt the ‘Culture Model’

  • → Regular evaluation/feedback

  • (linked to executive evaluation)

  • Develop ‘Trust Leadership Index’

  • → Evaluation tool for leader selection / development / evaluation

  • ‘Right People Index’

  • → Use as recruitment / development /

  • evaluation tool

  • ‘Right People’ Conference

  • → Together with ‘LG People Award’

  • Find and share successful change cases

  • → On/Off Line sharing

  • Regular monitoring/evaluation/feedback

  • → Tied to organizational ability to review / evaluation

Strong Top- Down

Roll-out

Field - oriented Execution

System Alignment

Great Company Great People

11/11

No. 1 LG, No. 1 People


Lge way

Appendix 1. GCGP Structure

‘LGE WAY is GCGP’

(Jan. 1, 2004 )


Lge way

Attachment 2. LGㄸ Vision

Vision : Global Top 3 by 2010

’03

’07

’10

SONY(646)

SS

SS

Matsushita

1,000억$

이상

Matsushita

Matsushita(645)

LG

SONY

SONY

SS

(547)

Toshiba

(481)

LG

(800)

NEC(423)

Toshiba

Toshiba

- Philips (398)

- NOKIA (333)

NEC

NEC

LG(Top8)(320)

NOKIA

NOKIA


Lge way

Appendix 2. Core Competencies

Core Competencies

(Jan. 1, 2004)

Product Leadership (Superior products)

Ability to develop unique premium products by developing new specialized technologies

  • Two or more unique technologies per item

  • Premium products to account for 30% or more of total revenue

Market Leadership (Dominant market share)

Ability to create a ‘No. 1 LG brand’ in the global market with overwhelming market dominance

  • Increase the amount of No. 1 products in the Global market

  • Achieve more than 10% operating margins

People Leadership (Superior HR)

Competencies that create outstanding performance through continuous innovation

  • Firmly establish the innovation philosophy

  • Set and achieve challenging stretch goals

  • Create outstanding performance


Lge way

Appendix 4.

Use the following to generate passion for greatness and focus the determination of employees to realize the ‘Global Top 3’ vision

Slogan

Song

Cheer

  • GCGP Cheer

  • Great! / Company!

  • Great! / People!

  • Great ! / LG

  • (Repeated 3 times)!!!

  • Top 3 Cheer

  • Global Top 3 !

  • Who can do it?

  • Global Top 3 !

  • We can do it

  • (Repeated 3 times)!!!

  • LGE WAY is GCGP

  • -> Share image/concept of

  • the ‘LGE WAY’

  • We can do it – ‘Global Top 3’

  • -> Passion for greatness and a determination to achieve our vision

  • ‘Top 3’ Song


Lge way

LG Electronics

Fast Innovation

It is difficult to achieve our vision with our current thinking or goals. The key initiative in achieving the vision is to secure a 30% greater advantage over our competitors

From

To

Threats

Opportunities

Leading

players

Leading

players

  • Unstable world economy

  • - Rapid pursuit by late comers

  • Stronger competitive

  • mentality by leading players

  • Global Economic recovery

  • Strengthening critical, and

  • core businesses

  • Strong drive for innovation

LGE

Narrow the Gap

LGE

FAST INNOVATION

LGE

Expand the Gap

Challenges

  • Become a major global player

  • Secure competitive advantage through

  • aggressive and quick management

  • - Achieve vision (Global Top 3 by 2010)

Late comers

Late comers

Maintain a gap of more than 3 years over late comers, making it impossible for them to catch up

Achieve 30% higher competitive advantage over leading competitors through high caliber innovation

Great Company Great People

1/1


Lge way

LG Electronics

“5% may be impossible but 30% is possible”

“5% may be impossible but 30% is possible”

  • 30% More (Volume & Value)

  • 30% Faster (Speed)

  • 3-Year Advance (Competency)

Express

Delivery

  • Secure a competitive advantage

    of more than 30% over our

    competitors by achieving

    stretch goals

  • Secure 3 times the superiority of the core competencies within 3 years

Quick

Delivery

Great Company Great People

1/1


Lge way

LG Electronics

Fast Growth

Orchard Paradigm

“Improve fruit breeds to produce

High-profit fruits ”

Basic Concept

Cultivation process

Business implication

R&D and Innovation

Prepare the Soil

Business restructuring

Prune

growth rate

of quantities

sold

Growth rate

value

per-item

DMS, 6σ, etc.

Thin / Pesticide

Premium products

Harvest / Sell

1 Box

50 Apples

20,000 won

1 Box

20 Apples

50,000 won

Great Company Great People

1/1


Lge way

LG Electronics

Early Innovation

Lead competitors in innovation. Be the first to obtain differentiated competitive power.

Management Process

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

▲ Review mid-/long-term goals

- Business/technology strategy

- Global management strategy

▲ Set business

targets for the

next year

▲ Finalize

business

plans

▲ Develop action plans

to execute the

innovation activities

Invest in advance to achieve next year’s targets

Set 3 year business targets and prepare in advance to execute these innovation activities

TDR

TDR

TDR activity

Great Company Great People

1/1


Lge way

Routine business activity

LG Electronics

TDR

TDR activities maximize value creation while minimizing loss

TDR Operating System

TDR Objective

Vision

To achieve No. 1 LG…

Before the

innovation

+

Big Y

Create value

After the

innovation

Melt-In

TDR

TDR

Little y3

Little y2

Little y1

0

TDR1

TDR2

TDR3

Knowledge

management

Consensus

Participation by all

TDR

TDR

  • TDR action plan presentations (once annually)

  • Top management’s on-site 6σ meeting and

  • 6σ champion review (monthly)

  • Best TDR Convention (once every 6 months)

Decrease loss

-

Loss

Great Company Great People

1/1


Lge way

LG Electronics

Resources are Limited but Wisdom is Infinite

Where is the reason to do

“Knowledge Management’ ?

I’m measuring comfortably

with triangulation.

  • Competing by manpower in the 20th century, but by wisdom in the 21st

  • Knowledge becomes valuable only when it is applied ‥‥

  • Leaders learn for the purpose of imparting knowledge to members.

  • Study frequently and coach your members.

Great Company Great People

1/1


Lge way

LG Electronics

Finish It at One Time!

Basic Concept

RPS (Rice Ball Production System)

Formal Line

Outsourcing

Separate

New Tech

?

x

x

x

x

Module

x

x

Rice-Ball Ideology

“Finish at one time!”

RPS Line

Innovation

Process Reengineering

1/2 Process

!

6

s

Rice Ball

Great Company Great People

1/1


Lge way

LG Electronics

Applying what you know is streength!

It is Execution that gets results, not knowledge.

Gap

We must increase execution to reduce the ‘Knowing –Doing Gap’

Knowing is not strength, getting results through execution is

Great Company Great People

1/1


Lge way

LG Electronics

Fast Execution

2005 Mgt Motto

“ Now we must produce results through Fast Execution “ (CEO)

“ Knowing is not strength, doing is…” (CEO)

Fast Execution = Strong, Quick Execution

30% Faster Speed

30% More Performance

30% Lower Cost

Great Company Great People

1/1


Lge way

Will we just say ‘NO” and be stagnant or

Challenge with an alternative suggestion ?

LG Electronics

No Excuses

2005 Mgt Motto

  • Never Say “NO”! Make a “Suggestion”!

  • Paradigm Shift

Great Company Great People

1/1


Lge way

LG Electronics

‘We’ not ‘I’

2005 Mgt Motto

‘We’ not I’

“Strong Teamwork Achieves the Goal”

”Okay”

Great Company Great People

1/1


Lge way

LG Electronics

  • CEO Field Mgt.

  • Direct Communication

  • - 사업장 및 연구소/ 해외 수시 방문

  • TDR 순회

  • - Stretch Goal 제시/ 코칭/격려

’ 70%는 현장에서

30%는 사무실에서

근무하겠다 ’

  • 주말 영업현장 방문

  • - 판매현황 점검 및 판매원 격려

  • 임원 Melt-In(1월/350명)

  • - Commitment : 경영층의 역할 강조

Great Company Great People

1/1


Lge way

LG Electronics

  • Field Activity

  • ‘LGE WAY’ Buy-In(All-Employee Training)

  • - All employees in Company

  • Change Agent Training

  • - Change & Innovation Activity Agents

  • Cascade Approach

  • Leader Melt-In

  • - Company/Division/Subsidiary

  • Stronger Visual Identity

  • Field-based Execution

  • Strengthen Execution

Great Company Great People

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Lge way

LG Electronics

The Image that LGE Wants…

*

LGE EVP

“Great Company Great People”

Slogan

Global 인재와 기술

전문가로 빠른 성장

기회가 열려 있는 회사

강한 승부 근성으로,

끊임 없이 도전하고

성취해 내는

Right People들이

우대 받는 회사

성과에 대해 확실히

보상해 주는 회사

‘Great Opportunity’

‘Great Spirit’

‘Great Reward’

EVP

Statements

* EVP ( Employee Value Proposition) ? 회사의 핵심 가치, 내외부 인재들이 중시하는 가치,

경쟁사 대비 강점 등을 고려하여 설정

Great Company Great People

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Lge way

LG Electronics

<첨부 1> 글로벌 인재로의 성장 기회 관련 사례 FSE 제도

해외 파견 근무(FSE 제도)

해외 파견 근무 제도 현황

여성 인력들의 해외 파견 근무 성공 사례

  • 국내 기업 중 해외 파견 근무 기회가 가장 많은 회사

    • 2004년 12월말 현재 약 1,150명이 해외 파견 근무 중( B전자 약 900명)

    • 매년 약 200명 해외 파견

    • 대리급 이상 모든 구성원들 대상

Great Company Great People

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Lge way

LG Electronics

<첨부 2> 기술 전문가로의 성장 기회 사례 세계에서 인정 받는 기술력

‘CES 2005’에서의 LG전자 활약

2년 연속 최다 혁신상 수상

유명 CEO Keynote에 주목 받은 LGE의 기술

  • Intel의 배럿 회장, LG전자의 15인치 Wireless LCDTV 시연

수상

주요 제품

17인치 LCD 모니터

DVR 탐재 60인치 PDP TV

55인치 LCD TV

62인치 DLP 프로젝션 TV

TV 냉장고

저소음 DLP 프로젝터

메가픽셀 카메라폰

슬라이드 다운 휴대전화기

* CES(Consumer Electronics Show) : 세계 최대 가전 제품 박람회

Great Company Great People

2/5


Lge way

LG Electronics

<첨부 3> 기술 전문가로의 성장 기회 사례 R&D 인재의 임원 승진 기회

사업부장 이상 임원의 직군 분포*

(2005년 ??명 대상, 명, %)

신규 임원 직군 분포

(2005년 신규 임원 ??명 대상, 명, %)

(??)

(??)

100

63

100

38

36

32

5

21

5

전체

R&D

마케팅

Support

전체

R&D

마케팅

생산

Support

Great Company Great People

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Lge way

LG Electronics

<첨부 4> Right People 사례 CDMA연구소 개발1실 임주응 책임

Right People : 임주응 책임

“모두가 열심히 매달려 카메라폰 VX-6000 개발 3개월 단축”

“ 할 수 있다는 강한 의지와 자신감으로 …”

Passion for Winning

(독한)

“남보다 발빠르게 출시해 6개월만에 북미 CDMA 시장 1위로 올라서는 쾌거 달성”

“단기간에 제품을 개발해야 하는 만큼 팀원들과의 팀웍이 가장 중요했고, 충분한 보상으로 팀원들을 격려”

Proactive Execution

(실행력이 강한)

지난해 북미 시장을 휩쓸며 선풍적인 LG바람을 불러 일으킨 주인공,

발탁 승진과 파격적인 인센티브 수혜

“북미 지역만 7년 가까이 책임지고 있는 베테랑”

“개발자는 제품의 품질 뿐만 아니라 시장 현황에도 철저하게 대응”

Professional Mastery

(전문 역량을 갖춘)

Great Company Great People

4/5


Lge way

LG Electronics

<첨부 5> 성과에 따른 파격적 보상 관련 사례

허치슨 프로젝트 성공 스토리

성과

  • 허치슨社에 300만대의 3G 단말기 계약/공급

  • 허치슨 프로젝트 팀에 총 30억원 지급

  • 특히 프로젝트를 이끈 리더급 주역들에게 개인별로 1억원씩 지급

금전적

보상

Great Company Great People

5/5


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