Unicorn Companies Struggling to Retain Employees | Be Korea-savvy

Unicorn Companies Struggling to Retain Employees

Coupang Inc.'s headquarters in Jamsil, eastern Seoul. (image: Coupang)

Coupang Inc.’s headquarters in Jamsil, eastern Seoul. (image: Coupang)

SEOUL, March 23 (Korea Bizwire)The employment effect of unicorn companies and prospective unicorn companies with a value of more than 1 trillion won (US$781 million), which the government has committed to supporting, has been slowing down.

While the number of employees recruited is increasing, some point out that the number of employees who leave these companies is also increasing.

According to industry tracker CEO Score, the average employment rate and resignation rate of 21 companies that disclose employment and performance among 38 unicorn companies and prospective unicorn companies were 6 percent and 4.3 percent, respectively, last year.

The average annual employment rate was 6.6 percent in 2017, compared to 6 percent in 2018 and last year.

On the other hand, the resignation rate continued to rise from 4 percent in 2017 to 4.2 percent in 2018 and 4.3 percent in 2019, with real employment slowing down.

The company with the highest resignation rate was OTD Corporation, a gourmet restaurant platform provider which averaged 14.1 percent annually.

Both Yello Mobile, one of South Korea’s first official unicorn startups, and Wemakeprice Inc., a local open market operator, recorded a resignation rate of more than 10 percent, at 11.3 percent and 10.9 percent, respectively.

In addition, the four companies had a higher resignation rate than employment rate.

Of the 11 unicorn companies, e-commerce giant Coupang Inc. was one and only company that hired more than 1,000 employees.

The performance of unicorns and prospective unicorn companies also did not improve. Their sales reached 8.5 trillion won as of 2019, up 75.7 percent, or 3.7 trillion won, from 4.9 trillion won the previous year.

However, average operating losses increased from 586.3 billion won to 634.2 billion won, while net losses increased from 767.3 billion won to 954.1 billion won.

Of the 21 companies, nine posted operating profits, far less than half, and only six of them posted an increase from the previous year. Coupang saw the biggest loss at almost 2 trillion won.

The increase in advertising costs has had a significant impact on these companies. As of 2018, the 21 companies spent 437.4 billion won on advertising, up 118.6 percent, or 237.3 billion won from a year earlier.

The share of advertising costs as a percentage of sales rose by 1 percentage point from 4.1 percent in 2017 to 5.1 percent in 2018.

D. M. Park (dmpark@koreabizwire.com)

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