Improving Organisational Performance: Toyota and Ford Motors - Assignment Example

?­­­­­­­­­­­­­­Improving Organisational Performance Table of Contents Table of Contents 2 Introduction 3 Business Case for Performance Management at Toyota 4 Business Case for Performance Management at Ford Motor 6 Difficulties, Challenges and Implications Encountered By the Performance Management in Toyota 9 Difficulties, Challenges and Implications Encountered By the Performance Management in Ford 11 Mitigating the Challenges Faced by Toyota 12 Mitigating the Challenges faced by Ford 13 Limitations of the Proposal 14 Conclusion 16 References 17 Bibliography 22 Introduction In this era of industrialisation, the social and economic advancement of the individuals within a society are closely associated with technological innovativeness. In order to cope up with these modern day challenges, performance management strategy is implemented by most of the recent day organisations with the sole intention to remain competitive. In this regards, performance management is often referred as the systematic procedure, with the help of which an organisation engages all of its employees to attain sustainable enhancement in terms of the efficiency of the firm. This can be possible only with the accomplishment of employee objectives with shared values encompassing that of the organisation at large. It is also known as the process which is utilised in order to enhance the performances of the employees by developing a uniform organisational environment. Performance management not only concentrates on the enhancement of organisational productivity, but also emphasises over a particular department or a process. This process is entirely utilised in organisations in order to enhance the effectiveness and skills of the employees resulting in intensification of both individuals as well as organisational productivity. Other than this, another vital objective of performance management system is to improve the participation rates of employees in the resolution making process resulting in the overall enhancement of organisational flexibility and modernism. Moreover, it also helps in the enhancement of employee relationship resulting in reduction of turnover and conflicts. Thus, performance management also helps in enhancing the brand equity and identity of an organisation among other competitors in the market. The objective of this assignment is to highlight the importance of performance management system in both Toyota Motor Corporation and Ford organisation. Moreover, it also focuses on the key factors of both Toyota and Ford Motor, which are responsible for enhancing the level of performance perceived by the employees. It also highlights the varied challenges faced by these organisations due to the implementation of performance management approach along with suggesting certain resolving techniques. Business Case for Performance Management at Toyota Toyota Motor Corporation (TMC) is a reputed multinational vehicle manufacturing conglomerate in the global scenario. It was developed in the year 1924 by Sakichi Toyoda. The head office of Toyota is situated in Japan. It is a spin-off from the parent organisation and operates in more than 160 countries all round the globe. In addition, it is the leading vehicle manufacturing organisation of Japan comprising of more than 40 percent of the total market share in this segment. Notably, it was able to earn total revenue amounted to ? 18.99 trillion along with a profit margin of ? 408.18 billion within the first quarter of 2011, which certainly enhanced its corporate image and brand port folio amid the market investors. Toyota is one of the market leaders in the global automobile sector. In order to preserve its leading position, it frequently attempts to offer varied types of innovative products to its customers in order to enhance their rate of dependency and loyalty. It would also help in lowering the switching cost of the customers, leading to the reduction of business risks. This can be attained only through team effort and dedication of the employees. The management of Toyota has been observed to offer major concentration over the growth and development of its employees as they are the most vital assets of an organisation. For this reason, the management board always attempts to enhance the technical skills and knowledge of its employees with the implementation of numerous performance appraisal techniques namely basic increment in the salary rates, pension policies, healthcare facilities for the employees, overtime allowances, car reimbursement allowances, holiday tours, and various educational training programmes among others (Toyota, n.d.). Performance appraisal or merit evaluation is referred as the methodical analysis of the performance and attitude of the employees by his/her superior in order to judge the underlining strengths and limitations. It is done by offering an extra premium of 17.5 percent along with a basic salary of ? 18,602 for the employees engaged with the production team in order to enhance their motivation and commitment (Toyota, n.d.). It would further enhance the level of satisfaction of the employees leading to improvement of Toyota’s output. Other than this, Toyota also intends to provide pension facilities for the employees which can be regarded as another important tool to augment the performance of its employees. Numerous health care facilities are also provided to the skilled employees and to their family members in order to satisfy their primary needs and thus increase their enthusiasm level. Moreover, Toyota also offers extra amount to the employees working overtime for the organisation. Toyota also presents attractive car stipends to its employees in order to enhance their loyalty towards the assigned tasks resulting in professional perfection (Market Watch, 2012). In order to enhance team spirit, Toyota offers 25 days of annual leaves to its employees, leading to improvement in operational performances. These types of methods are utilised by the management of the organisation in order to evaluate and augment the level of perseverance amid the employees. In addition, varied types of improvement and training assistance are also offered by the organisation based on the skills of the workers in order to amplify the acquaintances of the employees (Scribd, n.d.). Thus, from the above discussion, it can be affirmed that Toyota offers various types of above mentioned benefits in order to stimulate and encourage the level of gratification perceived by the employees leading to improvement in brand uniqueness and distinctiveness in the market. Business Case for Performance Management at Ford Motor Ford Motor Company is a transnational automobile manufacturing organisation occupying the fifth leading position in the global market. It is an American based conglomerate with its head office located in Dearborn in Michigan. The corporation and its subsidiaries are also engaged in other industries namely financing vehicles, and distribution of its vehicles transversely in six continents among others. Thus, Ford further operates in two important sectors such as automobiles along with financial services (Ford Motor Company, 2012). The automobile segment operates in North and South America, Europe and in Asia pacific Africa. Ford was established in the year 1903 by Henry Ford. In United States of America, it occupied the second largest position in the procedure of developing modern vehicles. It is also ranked as one of the renowned organisation in the list of Fortune 500 companies. Ford include vehicles of its own brand along with varied other reputed brands named ‘Lincoln’, ‘Mercury’ and ‘Volvo’. The company was recorded to earn a net revenue of US$ 136.26 billion and a net income of US$ 20.21 billion in the year 2011 (Ford Motor Company, 2011) as compared to US$ 6.6 billion along with revenue of US$ 120.9 billion in the previous year of 2010 (Ford Motor Company, 2010). The main objective of this organisation is to establish modern products in order to satisfy customer needs and demands resulting in the overall enhancement of consumer constancy and dependency. Moreover, the management of Ford also desires to offer value added products at cost efficient way in order to augment the identity and distinctiveness of the brand among other challengers (Ford Motor Company, 2012). Thus, the chief executive official of Ford, Mr Alan Mulally describes that the company is mainly focused on developing advanced products to enhance their creativity, which can be achievable only through skilled and motivated team of work forces. With this concern, the management of Ford provides more attention over its employees in order to retain its market share in this aggressive situation (Ford Motor Company, 2012). In order to enhance the level of motivation of the employees, the management of Ford adopted a new method of performance appraisal named rank and yank strategy. In this method, excellent to worst ranking systems are utilised to judge the performers of the organisation. After evaluating the defaults of a particular employee, specialised training programmes are also organised by Ford, in order to improve the underlining technical skills within a particular time frame. This helps to augment the team spirit along with dedication, which is highly essential for an organisation to sustainably continue growing. Moreover, it would also help to enhance the competitiveness and commitment of the workers, resulting in establishment of innovative products (Kozlowski, 2012). Other than this, in order to retain the employees, Ford also provides the facility of pension to its work forces in an annuity basis, which helped to augment the enthusiasm and eagerness leading to reduction of turnover amid the employees. In addition, Ford also provides, health care allowances to its employees, in order to increase their level of inspiration towards work (Jobbankusa, n.d.). Along with this, vision-care programmes are also offered to the employees, which is another vital technique utilised to gratify their basic requirements. In addition, Ford intends to grant generous vacation facilities to its skilled workforces along with insurance benefits. Each employee is granted a leave of 15 days in every year along with a vacation of 25 days after completing 20 years with the organisation. Moreover, Ford presents scholarship programmes to its employees as well in order to augment the underlining scientific skills, which is extremely necessary to establish modern products. It would further help in enhancing the level of performance of the workers, which is the prime motive of these performance management catalysts (The New York Times, 2012). Hence, from the discussion, it can be revealed that Ford provides varied types of facilities to its workers in order to enhance their obligation resulting in accomplishment of its vision of remaining as a legacy of excellence. Difficulties, Challenges and Implications Encountered By the Performance Management in Toyota The global automobile industry is observed to be highly competitive, but is undergoing a consolidation stage and is experiencing its repercussions by a significant extent. This is mainly due to the joint venture of varied foreign corporations with international organisations. It resulted in switching over of talents or employees from one organisation to another in order to satisfy their financial desires. For this reason, the renowned multinational automobile industries are forced to offer numerous additional benefits such as pension plan, extra payments for overtime and holiday trips among others to its employees, in order to preserve and stimulate them (Scribd, n.d.). This is mainly done in order to reduce the articulation rate of the employees from Toyota, resulting in improvement of its corporate image. It is highly beneficial as the workers are the most important resources of an organisation. Hence, Toyota provided various facilities to its employees resulting in the overall improvement concerning innovation rate, leading to the enhancement of its annual sales and market share, depicted in the figure below. Global Market Share of Toyota Source: (The Atlantic Monthly Group, 2012) Besides, Toyota had to incur a significant amount of long term debt (i.e. around ? 7.02 trillion) along with huge liabilities amounting to approximately ? 19.30 trillion in the year 2010 due to its additional expenses to serve its employees (Scribd, n.d.). This increased the operating cash flow of the organisation to a significant extent rather than the net income, which is shown in the below diagram. Moreover, it also affected the debt equity ratio resulting in the augmentation of total annual cost and thus created a critical situation for Toyota. Increase of Total Debt of Toyota in Global Markets Source: (Seeking Alpha, 2012) Difficulties, Challenges and Implications Encountered By the Performance Management in Ford Ford is one of the foremost automotive manufacturing organisations of United States. Moreover, Ford is operating in the market of US for long term, which helped the organisation to capture a significant proportion of market share resulting in the enhancement of its brand portfolio in this era of competitiveness among other players of the market. In order to do so, the management of Ford decided to offer high concentration over its employees so that the skilled and talented work forces can be conserved. With this motive, Ford offered various facilities to its employees such as employee retreat plan, health stipends, holiday tours and overtime payments as well which surely enhanced the employees’ enthusiasm and morality, but also increased the debt ratio of the organisation simultaneously. For instance, in the year 2010, the debt incurred by Ford amounted to US$ 33.6 billion with its earned profit amounting to US$ 6.6 billion, which was entirely utilised in overcoming the liabilities of US$ 162.74 billion of the organisation in the year 2010. Hence, due to its high debt ratio, the image of Ford in the market also failed and the operating costs increased to a substantial extent as shown in below figure: Increase of Total Debt of Ford in Global Markets Source: (Ycharts, 2011) Moreover, it also enhanced the net cash debt of Ford, which affected its position in global perspectives. Hence, the total sales of the organisation influenced a serious downfall in the year 2010. In order to recover from this situation, Ford adopted the strategy of offering higher concentration over quality perspectives in order to satisfy its target customers. Other than this, Ford started concentrating on small cars in order to increase its market share and revenues as well. Hence, it can be affirmed with reference to the above facts that the expenditure of extra cost in employees, strongly affected the financial condition of Ford. Mitigating the Challenges Faced by Toyota In this era of globalisation and industrialisation, it is extremely essential to retain the individuality and attributes of an automobile manufacturing organisation. This is because of the fact that this industry is mainly dependent on the introduction of innovative designs and techniques in order to cope up with alternating demands of the customers (Toyota, n.d.). In order to maintain its status, Toyota introduced the strategy of lean manufacturing. It is a practice, which is mainly utilised in order to obtain the constant flow of accurate products at exact time. It was primarily adopted by Toyota Production System (TPS) in order to reduce the amount of financial debt as it facilitates in reduction of labour, inventory as well as money (Leon, n.d.). Moreover, lean manufacturing also helps in the diminution of waste materials due to the utilisation of varied innovative apparatus and technologies. Moreover, due to the introduction of lean manufacturing concept, the cost required to train the workforces is also observed to decline to a certain extent, which proved beneficial for Toyota to convalesce its debts (Becker, n.d.). Other than this, it included multi-operating devices, which resulted in reduction of numerous ground level workers. As a result, it helped in minimising the extra cost incurred on these work forces in order to preserve them within the organisation. It also helped in enhancing the quality of the products resulting in improvement of customer value and loyalty. Moreover, lean manufacturing strategy also helped Toyota by enhancing the rate of production in an efficient and effective way leading to amplification of its personality along with revenue as well (Lee, 2003). Hence, it can be affirmed that lean manufacturing strategy helped Toyota to reduce its amount of debts utilising those in preserving its work forces by a considerable amount. Mitigating the Challenges faced by Ford In order to retain its productivity of providing outstanding products ranging from both small to luxurious brands to its consumers is the only motive of Ford. To accomplish the objective of retaining its brand personality, Ford adopted a strategy of implementing Information Technology (IT) in its production systems. As a result, Ford also introduced the strategy of Computer Aided Design (CAD) system, Computer Aided Engineering Techniques (CAE) along with Computer Aided Manufacturing Procedures (CAM) as well (Nevins & Winner, 1999). These technologies helped Ford to establish various fresh vehicle models which in turn enhanced the market share as well as the inimitability of the brand among other leading market players. Moreover, implementation of these technologies also facilitated the reduction of the financial debts incurred by Ford while extensively focusing on the retention of its valuable employees in the long run. These technologies also facilitated in the overall reduction of defects and wastes taking place due to the involvement of human labours. As a result, it also helped in the reduction of extra costs indulgent of the organisation in order to enhance the contentment level of the employees, in order to amplify their efficiencies. Thus, it helped to enhance the quality of the products which is extremely essential to sustain in this competitive environment. It also helped to augment its output and profitability in the long run (Acornlive, n.d.). Therefore, it can be avowed that introduction of these technologies facilitated in the overall reduction of financial liabilities resulting in the augmentation of customer values and loyalty. Limitations of the Proposal The major limitations of this proposal are that it highlights mainly on the remedies to reduce the financial debts of both the organisations namely Toyota and Ford. Besides, it should have also been focused on varied other types of inventive methods utilised for the enhancement of the skills perceived by the employees in order to augment their level of dedication towards work. It would also increase their level of performance, which is extremely essential to retain in this era of modernisation. It might help the organisations in reducing the level of wastes by increasing the quality of the products, which is extremely essential for the organisations dealing in automobile industry in the present day phenomenon. Moreover, it would help in the enhancement of customers’ confidence by reducing the switching cost, resulting in the amplification of total revenue attained by the organisation as well. As a result, the financial position can also be stabilised resulting in devotion of more concentration over the varied operational departments of the organisations leading to modernisation. Conclusion Convincingly, it can be affirmed that in order to maintain the image of the organisations in this age, it is highly essential to offer value added products to its customers at an efficient cost. This can be possible only by utilising varied types of inventive techniques and strategies, which can augment the level of performance and skills of the employees. This would facilitate in the augmentation of both personal as well as organisational objectives. Moreover, it would also help in the enhancement of the profit margin of the organisations resulting in the encouragement of varied employee benefits as well. In addition, it would also help the organisation to retain its market portfolio and individuality in the market. Thus, the inventive strategies act as a catalyst to enhance the effectiveness of the organisational output along with employee competence. References Acornlive, No Date. Operations Management. Operations Strategy. 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