A group of mid-tier South Korean companies underlined the growing need for the separation of ownership and control for a company’s longevity.

“Time is nigh for Korean companies to study a model succession plan for their longevity, separating ownership and managerial control,” Kolmar Korea founder and chairman Yoon Dong-han said during a forum to discuss how to nurture South Korea’s model mid-tier champions.

The Association of High Potential Enterprises of Korea, a newly created business association of mid-sized companies, launched the CEO-level forum on Wednesday with the Small and Medium Business Administration.

“The most important thing in succession planning is investing in finding the right candidates with leadership skills and training them in a constant manner to succeed corporate value and culture,” the 67-year-old CEO said. 

He was speaking in the context that family-controlled South Korean conglomerates, better known as chaebol, still spend a lot of money to transfer ownership and managerial control to the next generation.

Yoon, who has developed Kolmar into a leading “original design manufacturer” for global cosmetics brands over 25 years since its foundation in 1990, said he launched a succession program for his eldest son, who is in his early 40s, five years ago.

Other CEOs participating in the forum suggested lowering the wealth transfer tax rate, claiming that they now consider selling their company just to afford the tax to transfer ownership.

Besides succession planning and taxation issues, management experts advised companies, both big and small, to pay keen attention to the public’s social expectations, which is also essential for their lifespan.

“Korean society has raised the bar for a good company, asking them to be more socially responsible and to care more about co-growth with society,” Lee Kyung-mook, a professor of Seoul National University, said during the forum. The professor runs the Center for Corporate Longevity.

By Seo Jee-yeon (jyseo@heraldcorp.com)