Hyundai Oilbank President Kwon Oh-gap (photo: Hyundai Oilbank)

Hyundai Oilbank President Kwon Oh-kap addressed all of the company’s employees in a letter on the occasion of its 50th anniversary. In the letter, Kwon said, “If a team’s coach and players lose confidence in one organizational strength, that team will never win a game. If they try to depend on their past reputation and don’t change, there will only be failures. A business firm is no different.”

The letter sounds like it could have been written right after the Brazilian soccer team was crushed at the hands of the German national team, but it wasn’t. The letter appeared on the company’s website at the end of June.

The German team stood up, right in the center of the soccer world, although they had once been compared to a rusty tank, following their victories in the semi-final and the final against the Argentine eleven. 

The German team did not have a superstar like Lionel Messi, but they had strong organizational power, which is similar to how the oil industry in Korea looks at Hyundai Oilbank these months. The oil company is the smallest among the four oil refiners in Korea in terms of refining capacity and the number of gas stations, but the oil refinery has been leading all other rivals in operating profit for three years in a row. Hyundai Oilbank is the only oil refiner in Korea with 100 billion won in operating profit in the first quarter this year.

The oil refiner also has been selected as the thriftiest oil supplier for the past three years in a row, taking over the second spot in terms of scale in the domestic oil market. The oil refiner doesn’t have anything in particular looking from the outside, but as you dig deeper into its operation, you will soon find out that it’s the organizational power that has been driving the company at its core.

The person who builds the organizational power at a business firm is the CEO, while the one who builds the team power is the coach.

Hyundai Oilbank dates back to 1964 for its birth and in 1993, Hyundai Group took over the company from where it got its current name. In 2001, the management rights for the company went over to IPIC, an Abu Dhabi International Oil Company. Hyundai Heavy Industries became a majority stakeholder of the oil company in 2010.

President Kwon took over the helm of the company that August and faced a huge task of rebuilding the oil refiner from the bottom up as its morale sank amid a loosening governance system with so many changes in top management.

Kwon said he told the employees that he will trust them, he will not lie to them, and personnel matters will be fair and transparent. Every employee at the oil refinery was like a teacher to him as he was new in the business and tried to learn fast, the CEO recalled.

Kwon, a foreign language major in college, worked for around 30 years for Hyundai Heavy Industries before coming over to Hyundai Oilbank as the CEO. Nearly everyone at the oil refinery had majored in chemical engineering, not the humanities, and furthermore, he came from a non-oil company to head an oil company, which is very rare in Korea.

In around four years time, he led the oil refiner to the top in the business with the best performance record, which should be a subject for study, industry sources said.

On his running the company as the CEO, he said he asks the employees to answer his questions or explain things in very simply worded way. They should be able to size up matters in an easy way, since the core task for management is to produce profit and the CEO should make the most appropriate judgments and decisions for the sake of the company’s ultimate objectives.

Hyundai Oilbank is the only oil refinery that uses high-tech heat supply installation, FBC, which needs petroleum coke as fuel, which is around 50 percent cheaper than low-sulfur used by other oil refiners in the country.

Kwon called for lower costs as soon as he began to run the company and the answer was FBC, so the oil refiner diversified its crude oil import sources to include North Sea and South American crude oil and oil from other regions.

In 2009, the Fair Trade Commission charged a penalty for all oil refiners and LPG importers for collusion in importing the gas product in billions of won, but the refiners appealed the case to the higher court and the court denied the appeals of all oil refiners except Hyundai Oilbank.

The industry sources said Hyundai Oilbank moved fast with justified reasons for their moves. They pointed to Kwon’s experiences in various legal matters as the head of Hyundai Heavy Industries legal affairs office for four years. At the time, he led the legal affairs office so well that it won just about all of the cases they got involved with.

Kwon used to say that while he was the CEO he should be able to set up five affiliates, as it means the expansion of the business territory, giving more room for promotions for the employees.