The following is a second personal letter to SCB Group CEO, Peter Sands, from Jon Lee, a management consultant, regarding the current disputes at SC First Bank. The first letter was published on July 27. ― Ed.

Dear Mr. Peter Sands:

I wrote to you two weeks ago in this newspaper column to provide you with some insights to the Korea situation ― namely that the individual performance-based pay system SC First Bank is looking to implement in Korea will be counterproductive and that the bank needs to be more external customer focused rather than in-house competing.

My hope was that this would be sufficient in helping you see the situation in a different perspective and end the ongoing disputes between the SC First management and labor union. As this has not been the case ― and the strike continues now for 45 days ― let me address the two other major issues (poor performers management and early retirement pay) that are in the way of resolution. Again, my hope is that you will see the current deadlock situation in a new light and intervene so that everyone involved directly (employees, management) and indirectly (customers, shareholders) benefit.

Major Issue No. 1:

Poor performers management

SC First management recently stated that based on their analysis “only 10 people” out of some 3,000 would have been significantly disadvantaged through their newly proposed system designed to punish poor performers. That’s 10 out of 3,000 ― even when no such supposedly performance-enforcing system was in place. And supposedly with such system in place, we should expect the number of “poor performers” to drop lower than 10.

So, let me ask you: Assuming the new system actually works, is it worth putting 3,000 people out of job on strike building animosity towards SCB day after day for the company’s ability to punish “10 people”?

It is a mistake to think that if you can punish the so called “poor performers” more harshly that somehow the whole organization will turn around. SC First should be putting its efforts on first finding out why these 10 people are performing “poorly” and help them improve. Who is doing this now in the organization? The boss? The peers? Or, are they just left to the “performance management system” to supposedly manage while everyone else is busy trying to improve their own performance rating for their own advancement?

Major Issue No. 2:

Early retirement pay

SC First shouldn’t be looking to cut people (or more precisely under Korean labor law, to force employees to retire early) ― especially when it is hiring new employees consistently. Each one of your employees when they were initially hired went through a lengthy selection process and was determined to be a good fit to your business with lots of potential. That means, these 10 “problem employees” should be guided and supported to perform better in a more effective way. And this more effective way certainly is not through giving managers tools like Poor Performers Management and Early Retirement Pay.

So, what is a more effective way? It goes back to what I described in my first letter to you: Working as a team to deliver outstanding services to your external customers. Rather than in an individual performance-based environment where everyone is working to surpass each other, you need to create a team performance-based environment where it is in everyone’s interest to have everyone else perform to their maximum. Let the team motivate and support the team members. Let the team decide how best to do their jobs. Let the team work so that no one in the team is left behind. Have SC First focus on the positives, strengths, support systems, and teamwork (rather than driving individual performance, singling out poor performers, and forcing early retirement at no extra pay).

My ultimate advice to you, Mr. Sands, is to trust your employees. Trust them ― being that they are closest to the customers ― that they know best how to deliver outstanding customer services. Trust them that they know what will work and what won’t. And trust them that if provided a right working environment that they will work to build a long lasting successful business.

By Jon Lee

Jon Lee (ChangeAdvisors@gmail.com) advises organizations on M&A, intercultural integration, and people/HR practices. He served as a senior advisor to Standard Chartered Bank during its initial acquisition/integration stages of SC First Bank. ― Ed.