11st Faces Backlash After Employee Death Amid Restructuring Efforts

11st, under the leadership of CEO Park Hyun-soo, has faced significant backlash following the death of an employee during its restructuring process. While the company has reduced its losses through repeated voluntary retirements and workforce reallocations, internal dissent regarding the restructuring procedures and management practices has intensified, putting Park's leadership to the test.

According to the retail industry on July 30, 11st has implemented voluntary retirement programs for four consecutive years from 2023 to this year as part of its workforce efficiency efforts. Since Park took office in April 2022, there have been four rounds of voluntary retirements within just over a year. As of June 23, the company has been offering a voluntary retirement program and special leave system, with applications accepted until September. Some managerial positions are reportedly included in this month's voluntary retirement plan.

Park, a finance and management expert who joined 11st as the head of management in 2018 while at SK Planet, has focused on improving profitability rather than expanding the company's size since taking over as CEO. His strategy has emphasized cost reduction, workforce cuts, and organizational efficiency.

Financial results have shown some improvement. In the first quarter of this year, 11st reported sales of 93.1 billion won, an 18% decrease from the same period last year, but its net loss was reduced to 7.8 billion won.

The controversy arose during the restructuring process when an employee assigned to a newly created integrated support task force (TF) died. This incident has sparked debates over the appropriateness of the personnel standards and procedures used.

The deceased employee reportedly expressed feelings of injustice in an email sent to Park and HR executives, stating that while they understood the company's difficult management situation, they had not received adequate explanations for being selected for the TF despite having received excellent performance evaluations in recent years.

After confirming the employee's death, Park visited the funeral home with HR representatives, but the family declined to accept condolences from 11st employees, leading to his departure.

Internally, there is growing dissent regarding the lack of transparency surrounding the background, principles, and criteria for selecting individuals for the restructuring. Employees claim they were informed of decisions that had effectively already been made without satisfactory explanations.

In response, the family sent a formal letter to 11st on July 27, requesting information about the existence of the integrated support TF, the criteria and procedures for selecting its members, and the deceased's work and evaluation history. The family stated, "There was a lack of sufficient meetings or inquiry procedures for members to understand, and the way decisions were communicated felt more like notifications of finalized matters." They added that the deceased had inquired about the reasons for the personnel change even while on leave, but the outcome remained unchanged.

However, 11st maintains that it adequately explained the purpose of the restructuring and the appointment procedures in advance. A company representative stated, "We will continue to provide maximum support and effort," while also noting that the purpose of the restructuring was explained during town hall meetings and that the appointments were communicated through not only emails but also briefings and discussions.