Introduction
Toyota Motors is an established company known for two supreme values: kaizen and respect for people. Our company prides itself for being one of the market leaders in every aspect of the business. Thus, it is only right that the Human Resources side of the company is continually developed to uphold these values which embody the Toyota Way.
There are three activities in Human Resources Management which were affected by recent changes and influenced the organisation in a positive way. The first is the implementation of a wider diversity management initiative which have gained Toyota recognition in the community and strengthened its thrust as a believer of diversity being a tool of generating more creativity and productivity in the workplace. The next one is in the scope of stress management as there is a newly established Associate Support and Assistance program which offers counselling and anger management services to employees including stress management to alleviate any work-related issue that an employee might have. The last sphere concerns performance management as new educational and training facilities were established to guide employee performance and improvement as they work in Toyota.
Discussion
Performance Appraisal
Performance appraisal is a process of assessing whether organizational objectives are met. It would evaluate how the employee’s performance has fared to satisfy the organization (Debrah, et al., 2003). Evaluation seeks to monitor and improve effectiveness by giving the employee feedback on his/her performance. This process should be carried out at regular intervals and should follow specific protocols to maintain objectivity in the evaluation process.
The company should have a clear set of evaluation or assessment tools that will be used in all levels of the organization. The process should either be carried out as an individual consultation or a face-to-face evaluation. Lastly, a standard review mechanism conducted by a third party should be commissioned for the reassurance of fair play and objectivity in the evaluation (Spencer, 2004).
This concept has its strengths as defined by Caruth & Handlogten, 1997) for it helps the manager to be able to identify individual present performance along with the employee’s future potential. Evaluation also assesses the weaknesses and the accompanying disciplinary actions. The third strength is that it can determine which training aspect should be developed for the particular employee. It also increases the communication line between the employer and the employee because of the feedback and evaluation process.
According to Spencer (2004), evaluation is also a way for the organization to assess the role of the manager as well for evaluation and supervision are interdependent because evaluation is a tool for measuring supervision. Moreover, another advantage is that evaluation aims to establish trust among the entire organization because objectivity and fair play are called into this task. Lastly, the evaluation process is a good way of providing employee satisfaction and maturation which will improve the performance in the future.
The Case of Toyota
Toyota tries to preserve its home-grown economic model such as the values it practices in its business practices to be able to retain their competitive advantage. Indeed, it is a hard task for the company to preserve its locally conceptualized model while maintaining linkages with the global economy. However, because critical success factors are established as key aspects needed by a company, this has become easier in dealing with the issue of globalization.
Although the core values which have distinguished the management of Toyota is still retained, the company has stepped out to shine for the rest of the world. The latest developments in the company proved that it is stronger than ever, emerging victorious from otherwise discouraging situations such as the adverse effect of the strong yen. The company had a strong financial performance with increased net earnings of $10.2 billion and increase global sales by 9.9 percent. This has narrowed the gap with General Motors and tied with Ford which gives credence to predictions that the company will take over as the world’s largest automaker by 2015 (Aritake, 2004).
For the company to realise this dream, there are some changes that were initiated to become a better company in all aspects of business. A new organisational structure was introduced which places the strength of human resources and development more to the forefront. There was also a more intensive diverse management program especially in Toyota Motor, USA. Moreover, the company has also established a wider coverage of its employee services in the name of stress management and anger management seminars. All of these changes will be discussed in the succeeding chapters as well as individual contributions.
Strategic Integration
Even though there are strategic choice models that are available to base the company’s strategy in, it was deemed appropriate to incorporate the new system of Toyota with the traditional management model which focuses on increasing competitive advantage through development of human resources (Kotelnikov, 2005). According to the model, the traditional ways of management focus on imposing strategies on the workforce without considering potential contribution which results to an underutilization of human resources while the new model focus on three key business enablers: people, knowledge and coherence (Kotelnikov, 2005). Developing these three aspects together would also influence the financial performance of the company. Pasternack and Viscio (cited in Kotelnikov, 2005) reiterate that management has to ensure that the three are working well for the developments to be maximised (Kotelnikov, 2005). Figure 1 illustrates the comparison between the old and the new management models. The new Toyota system can be integrated with the new management model because it develops human resources and synthesizes processes to make a coherent and unified operation which fortifies competitive advantage and financial performance. The seamless structure shows that the company’s latest move to reorganisation is not just a strategy to maximise profit but also to improve the organisation’s foundation of quality improvement and technological advancement without sacrificing their human resources’ capabilities and benefits.
The Annual Report for 2004 has introduced the new management system which concentrates on making operations and decision making faster and easier globally. (‘Annual Report’, Toyota, 2005). Figure 2 describes the new corporate structure in Toyota and the linkages. The organisation also has a set of established in-house committees and councils which monitor all aspects of management and corporate activities using the perspective of several of the company’s stakeholders. This would ascertain the transparency of the organisation and the fulfilment of their social obligations. The new system was introduced in June 2003 and it includes a streamlined Board of Directors and a new position of non-board managing officer. There would be 27 directors at the senior managing director level or above who would serve one-year terms while the non-board managing officers would be 44 in all and will serve a term of one year (‘Annual Report’, Toyota, 2005). The unique quality of this system is that the managing directors would not solely focus on management because they would also act as the link between management and on-site operations. The result is a less-vertical decision making because the managing directors and officers will have the complete responsibility for the operations performed by their divisions. In addition as the highest authority, they would participate in companywide management processes as well as ensure that their “division-level decision making is firmly rooted in operational conditions on the ground” (‘Annual Report’, Toyota, 2005). This helps the company maintain the emphasis on developments of onsite operations and the close coordination of decision making with actual operations. Thus, communication between management and employees is easier and the important management decisions can readily be incorporated in operations.
As for the business strategy Toyota has launched a proactive response of marketing its products to respond to society’s environmental needs without sacrificing its consumer’s satisfaction through the Maxi-mize and Zero-nize concepts shown in Figure 3. The company aims to “Maxi-mize” the sense of well-being of its consumers through enjoyable and comfortable products as well as strive to “Zero-nize” the negative effects of the car society which includes environmental problems, traffic accidents and congestion (‘Annual Report’, Toyota, 2005). This initiative started with the Prius, which became widely successful financially and commended in the automotive world. Another business strategy is cost reduction through the project, “Construction of Cost Competitiveness in the 21st Century” (CCC21) which is an all-round cost reduction program launched in 2001 (‘Annual Report’, Toyota, 2005). (See Figure 4) The 3Cs also stand for the founding elements of Toyota: Creativity, Challenge and Courage. This was started because of increasingly intense competition wherein Toyota found it necessary to improve quality or kaizen while reducing cost of the parts needed to build a product with even higher added value. It seeks to work with suppliers as partners in order to reduce the cost of parts and it also integrated four areas: design, production engineering, procurement and component supply. Doing this would achieve higher quality at a lower cost. The cost improvement started with an estimated ¥100 billion a year to approximately ¥230 billion in 2004 (‘Annual Report’, Toyota, 2005). In addition, the benefits achieved is not limited to enhanced profit-ability alone but also increases the value and competitiveness of products as well as development of its human resources because Toyota steadily feeds cost improvements back into the products and employees to raise both their values.
Lastly, in its human resources strategy, Toyota prides itself as not only having kaizen but also respect towards people as these are considered the “two main pillars of the Toyota Way”. When operations were only in Japan, this was an unspoken understanding but as the company expanded into a global operation to include multi-racial employees, the company set the Toyota Way 2001 which is in a new stage of evolution because it seeks to better incorporate diverse cultures and values among the staff of Toyota. Figure 5 shows the growth of the number of employees of the company. On the other hand, the company seeks to enhance its organisation and efficiency of plants through the establishment of the Global Production Center within the Motomachi plant, Toyota City. The centre currently trains 2,400 employees over a three-year period on an original curriculum (‘Annual Report’, Toyota, 2005). According to Cho, the centre aspires to develop “tough, multi-skilled global human resources” (Cho, 2004). Moreover, the centre provides employees with wide-ranging knowledge and skills that will enable them to pass down professional know-how to managers and subordinates at local production sites as well as achieve self-reliance and competitiveness.
The discussed, most recent strategies of the company are integrated in such a way that the operations itself is optimised which necessitates the other aspects such as business strategies and human resource strategies to follow suit. The new management model and the new organisational structure which the company has implemented are incorporated in such a way that knowledge and quality is passed from one employee to another to achieve the most advantageous results as possible.
Stress Management
Stress can be found in all aspects of the workplace and can affect performance. As the relationship between stress and performance is complex, several tried to quantify how stress affects an employee and his/her work performance. However, the rising cost of overstressed employees prompted investigation of the relationship as the Occupational Safety and Health Act of 1970 and other state laws hold employed liable for “all diseases arising out of and in the course of many employment” which means that it includes stress-related sicknesses (‘Analysis of workers’ compensation laws, 1985). It can result in physical, psychological and behavioural responses. Companies are reported to spend between $100 and $300 billion per year in stress-related costs because of events such as absenteeism, accidents, health care expenses and lower productivity (Wang et al, 1987). Thus, employers cannot ignore the stress of their employees. Thus, management should find ways to reduce it.
A lot of experts have claimed and explained that any form of stress management should contribute to the goals of both the organisation and the employee concerned and they have included the elements which a stress management program must have to be successful. The first is to identify the major stressors in the workplace and assess the ones they can control. The second is to help employees identify individual sources of stress. The next step is to develop goals which should be clear and specific. The fourth step is that there should be support from top management. The fifth is to effectively communicate the benefits of stress management for them to be encouraged to lead healthier lives and thus, reduce stress. The sixth step is assist employees to identify their own stressors and tolerance levels which will be helpful in the actual stress lowering activity. Connected is the seventh step which is to ensure that employees learn how to recognise symptoms of excessive and dysfunctional stress. The eighth step is to develop individualised programs which would meet the needs of employees. To properly follow-through the program, there should be continuous communication with employees and a progressive promotion of a positive perspective on life.
According to Gounet, as other car manufacturers are enduring losses, Toyota stood out because it has developed a unique way of operations and organisation which ensures better profitability and resource maximisation (Gounet, 1998). He named stress management as one of the fundamental characteristics of the system. Under Toyota, the pressure is exerted from within the team through three different ways. The first source of stress is the virtual absence of stock parts which the workers have to cope with because it is not easy to change the assembly line to suit the situation. The second source is that management does not provide enough resources to teams so the members work to minimise dead time. The last source of stress is the group pressure because if one member of the team is not up to par, the whole group is penalised.
However, this situation has changed as there is a new report which speaks of the newly established Associate Support and Assistance Program. It is devoted to resolve personal and work-related issues which ensure confidentiality and trust. Employees are given assistance and counselling services which the company pays for. There is also a service wherein Toyota employees can avail of anger management services where an outside company which Toyota contracts with will design one-on-one training program for employees and managers.
This is an improvement for Toyota because as its sector is a very dynamic and demanding one, workers are more prone to stress. Thus, having programs which help employees deal with stress is considered a good investment for the company because the money that will be saved from stress-related illnesses would still be higher than the money invested in such programs. Also, the workplace would have better atmosphere as people know how to deal with the pressures of the job and other work-related issues.
Performance Management
Toyota appraises its employees three times a year: once for promotion and wage increases and twice for bonus payments where there is a detailed evaluation standard followed (Kono, 2001). To improve employee performance, intensive training of management and production personnel is enhanced. The company wants to develop personnel capable of functioning in international business environments which prompted the establishment of the Toyota Institute, spearheaded by Toyota President, Fujio Cho (Kono, 2001). Moreover, the Global Knowledge Center at the University of Toyota which is an educational facility of the company in the US was established to promote the Toyota Way in sales and marketing. In addition, there are like establishments such as the Toyota Academy in Europe, Thailand and South Africa which aim to develop Toyota employees (Cho, F 2004). With the new education facilities Toyota has established, more and more employees are equipped with the skills they need to cope with the demands of their jobs in the company.
Measures of Effective Implementation of HRM Initiatives
Last year, the company increased sales by 9.9% which it has attributed to the quality of its products that have been achieved by maintaining the operating procedures of employees globally (Wigham, 2004). Toyota asserts that its staff guided by a shared set of beliefs, values and business processes underpinned by the Toyota Way explained in the previous chapters. In the article, Sarah Fisher who is the UK HR director emphasised the importance of its workforce and the Toyota Way in evaluating whether their current initiatives are working. Aside from increase in sales and profitability, if the employees have the basic understanding and capability of applying it in their work, then the strategies have worked since all HR initiatives are underpinned in the Toyota Way.
Each member of the staff undergoes through a briefing of the Toyota Way so each one knows what the company values and what attitudes are expected of them. Thus, any HR initiative whether they fall into career management or performance management, would reflect kaizen and respect for people which if followed, would spell success for the organisation. The financial measurements as well as improvements in operations and productivity are also observed to see if the initiatives are appropriate for the company.
References:
‘Analysis of workers’ compensation laws 1985, US Chamber of Commerce. Washington, D.C.
‘Annual Report’, Toyota, viewed 24 August, 2005, <www.toyota.co.jp>.
Aritake, T 2004, ‘Might Toyota’s growing pains: the Japanese juggernaut must confront internal challenges’, The Chief Executive, August-September 2004, <http://www.findarticles.com>.
Caruth, DL & Handlogten, GD 1997, ‘Staffing the contemporary organization’, In Riley, D (ed.), PDAS 313: Fundamentals of staff development resource book 2, University of New England, Armindale.
Cho, F 2004, ‘Toyota Motor Corporation: Information meeting in New York’, Toyota, viewed 24 August, 2005, <www.irwebcasting.com>.
Debrah, YA et al., 2003, Managing human resources in Africa, Routledge, New York.
Gounet, T 1998, ‘The Toyota way of increasing exploitation in the car industry’, Workers’ Party of Belgium, <http://www.wpb.be/>.
Kono, T 2001, Trends in Japanese management: Continuing strengths, current problems and changing priorities, Palgrave, New York.
Kotelnikov, V 2005, ‘New management model’, 1000 Ventures, viewed 24 August, 2005, <http://www.1000ventures.com>.
Spencer, JD 2004, ‘Fundamentals of staff development’, in Bhindi, N & Davies, C (eds.), PDAS 313: Fundamentals of staff development resource book 1, University of New England, Armindale.
Wang, P, Springer, K, Schmitz, T & Bruno, M 1987, ‘A cure for stress?’ Newsweek, October 12, pp. 64-65.
Wigham, R 2004, ‘Auto-motivation’, Personnel Today, 22 June, 2004, viewed 25 August, 2005, <http://www.personneltoday.com/>.
Appendices:
Appendix A
Figure 1
| New Management Model versus Traditional One | |
| Traditional Model | New Model |
| Managing Assets | Managing Resources and Capabilities |
| Built around assets | Built around capabilities |
| Focus on managing numbers | Focus on creating value |
| Hierarchical | Networked |
| Independent parts | Interdependent parts |
| Reactive | Responsive |
| Command and control | Empowered employees |
| Rationality and analysis | Intuition and analysis |
| Risk-averse blame culture | Encouraging radical ideas and risk-taking |
Taken from: Kotelnikov, V 2005, ‘New management model’, 1000 Ventures, viewed 24 August, 2005, <http://www.1000ventures.com>.
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