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Need for Human Resource Development in Toyota Motor Thailand - Case Study Example

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Need for Human Resource Development in Toyota Motor Thailand
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Management Introduction The global automobile industry has encountered huge challenges due to various reasons; one of which is related to human resource. Digitalization, globalization, increasing competition and individualism has changed the structure of the industry, which has forced the employees to work hard at a low wage, so that the company can sustain in long run. Toyota Motor Corporation, the Japanese automobile company, has business philosophies for contributing positively towards development of society (Ecovis, 2014). It follows excellent production system as well as human resource policies that have helped the company to make a worldwide presence. Toyota has created conviction and value for the business by employing different strategies that highlighted its overall performance. The company has expanded drastically to different countries in order to penetrate into more markets. However, the expansion of Japanese companies has not been favored by many as it has not contributed towards the development of the country; instead it has affected the life of individuals. People are not benefited from the expansion as they have to work harder at low salary. Moreover, there are several environmental issues that have made severe effect on human life (Hiroshi, n.d.). It is observed that Toyota expands to those countries where the market has demand for automobiles and at the same time the labor cost is low. Toyota like other multinational companies give emphasis on production cost, which is an important factor for the expansion in short run. However, it can be stated that cost seems less significant as compared to national character, infrastructure and qualification of workers. Thus, it is worth mentioning that nothing is important than productivity to every company. Through productivity, companies expand its marketability in countries where it expands and builds a strong competitive advantage over the rival manufacturers in long run. However, the workers in Thai Toyota failed to increase productivity of the company due to several reasons, which took the shape of severe human resource issues. These issues are discussed in the paper and how it affected the operational effectiveness of Toyota. Other than major human resources in Thailand, the company had to encounter several such problems in other parts of the world. These issues are also highlighted in the paper so as to depict the condition of human resource department in Toyota Motors Corporations. Solution is provided for dealing with these issues with the help of relevant human resource theories (Hiroshi, n.d.). Discussion Need for human resource development in Thailand The economy of Thailand has slowly recovered from the financial crisis but few industries have not encountered full recovery. It can be stated that, Thailand has invested in non-productive sectors that could not contribute to development of the country. The wages in the non-productive sectors were also very high that led to a very risky situation for the industries to sustain in the long run. Researchers have reported that companies have grabbed the opportunity for exporting products and services as the value of Thai baht fell drastically. However, this could not rectify the economic condition. There were discussions regarding economy of Thailand whether it has the ability to compete with its neighboring nations with respect to quality and price. In this competitive environment, Thailand cannot afford to lose on cost or quality terms as it will equal to defeat. Thus, relying extensively on export is not a reliable measure for correcting the situation (Hiroshin, n.d.). Thailand admitted the fact that high wages had handicapped the economy as it made “labour-intensive industrial products” (Hiroshin, n.d.) less competitive than the products that are imported from China, Vietnam or Indonesia. However, there are opportunities for improving the skills of the human resource and manage the situation tactfully. The customers seek for good quality products regardless of the location from where it is available. For manufacturing good quality products, expertise knowledge and appropriate skills are required. Thus, it is necessary for the companies to hire skilled employees and pay them appropriate salary so that it can value their hard work. As a result, the foreigners will also start valuing the products if they are satisfied with the exported items. Human Resource Development (HRD) in Thailand There are several theories related to human resource development which can explain the human resource issues that are taking place in Thailand. Toyota Motor Thailand promotes the human resource development programs through the policy known as localization of the management, which is quite a relevant idea for future. The concept is totally dependent on the Thai employees, who achieve excellence based on their skills and manufacturing process knowledge. These employees have the ability to pass the knowledge to the next generation and this is a never ending process. In order to do so, the abilities of the employees’ needs to be developed and the practical skills are improved; this becomes a major issue for the Thai employees as they are not at all satisfied with the human resource policies and as a result they are reluctant to give their full effort. There are huge arguments pertaining to Thai and Japanese human resource management system regarding which one is more relevant for the development of the skills and abilities of the employees. A lot of time has been wasted behind this argument and this lack of understanding pertaining to each human resource management system have made situation more complex (Bonn, Yoshikawa and Phan, 2004). Major issues in Toyota Thai-oriented Company A systematic review of the organizational structure is performed every year by Toyota Motor Thailand. Each department is examined and redundant parts of the company are dissolved in order to create new ones, which can anticipate the future and function accordingly. Staffs are transferred to different locations of the company so as to support new functions related to human resource. However, there are situations when the Thai officers misused their authority and transferred the efficient workers to different plants of the company. In this way, they neglected their responsibilities. The most significant function of each department is to work efficiently and contribute positively towards the success of the company. Nevertheless, several problems related to human resource occurred in Thai Toyota, which needed solutions. Such problems are addressed henceforth. a) Extensive misuse of authority: This is one of the important issues that are often encountered by Thai managers in Toyota Motors Corporation. The Thai managers who are not entrusted with the authorities find it difficult when they are given the position of exercising power on their subordinates. They have the responsibility to assign tasks to subordinates randomly, without accessing capabilities of employees. This leads to inefficient tasks and the company suffer for the irresponsible nature of the managers. The Thai managers misuse their authority for transferring the employees to different parts of the company plants without any reason. They are even reluctant to confess their mistakes undertaken during the course of delegation of authority. This issue has bought huge difficulty to the Japanese managers of Toyota Motors to manage disputes of the Thai employees against their managers. The employees suffered due to the sudden transfer as their personal life got affected. They raised their voice, which led to recent industrial dispute in Toyota Motors (Adams and Ferreira, 2009). b) Inefficient delegation of authority: The Japanese managers of Toyota pointed out the fact that misuse of authority have originated from delegation of authority. The authorities are not delegated efficiently, which have resulted in misunderstanding between the Thai employees and their managers. This hampers the mutual trust that exists between the employees. The main source of this issue is the Japanese, who are unwilling to delegate their authorities and they continue to perform the duties on their own. As a result, the task is accomplished on time and they encounter work load form the management. However, it is observed that when the Thai managers delegated the authorities to their subordinates, the tasks are not accomplished successfully due to lack of leadership and motivations. The managers are reluctant to encourage their subordinates to do the work efficiently. The main reason behind this unwillingness is the low wage. The Thai managers are not motivated themselves so that they can encourage their subordinates and guide for completing the work successfully (Adams and Ferreira, 2009). c) Communication gap: This is a trivial problem in every organization at present. If these problems do not appear it is rather a strange situation. Communication gap is bound to happen when people from different countries assemble to work together. The communication gap between the Thai managers and their employees are visible in Thai Toyota. The managers are reluctant to communicate tasks to the subordinates clearly, which create a sense of misunderstanding. This in turn, affects the relationship between the managers and employees. As the communication gap increases, the employees find it difficult to work efficiently and deliver their full effort. This situation has crippled the human resource policies of Toyota and has questioned the power of the managers (Noe, 2002; Bonn, Yoshikawa and Phan, 2004). d) Low wage of the employees: Toyota extends its business to those regions where cheap labors are available. However, work load is significantly high compared to the salary structure of the employees. The worker’s union have protested against the low wage structure but they are unheard by the management as they focus on low cost of production. This situation has lead to severe consequences for Thai Toyota. The company has to shift its production plans to Indonesia from Thailand. This major decision is taken to cater the needs of the customers and provide them with high quality cars, which are manufactured by skilled and experienced workers (Bonn, Yoshikawa and Phan, 2004). e) Cultural difference: It is bound to take place in everyday life as one move from one place to another. In this scenario, it is observed that Japanese employees may encounter problem in Thailand as they follow different culture and have separate bent of mind. The Japanese employees are impatient, whereas, the Thai managers are relaxed. This type of cultural difference has originated from the country history. They remain unaware of the difference as this can create friction in different fields of works. Neither of the differences is ignorable nor can the attitudes be judged as wrong or right. The Japanese people are proud about their “land of golden ears of rice” (Hiroshi, n.d.). Nevertheless, the Thai people are proud regarding the beauty of their country as it is called the “the land of milk and honey” (Hiroshi, n.d.). The cultural difference between Japan and Thailand has significantly affected the operation of Toyota Thai Motors. Thai culture could not be adopted by the Japanese employees when they joined the Thai group. The Thai mangers are reluctant to complete a task on scheduled time, whereas, the Japanese employees are punctual in accomplishing a certain task. The Thai employees and managers lack in strict attitude towards time and thus, misses the deadlines that are set for certain work. This type of situation is encountered in Toyota Thai when the Japanese employees are appointed to visit the Thai workshops and manufacturing units. This cultural difference eventually decreases the organizational efficiency as productivity declines. Apart from the above mentioned human resource issues in Thailand, the company have encountered several other issues too that have challenged its operation worldwide. The issues are as detailed below: a) Rewards and recognition: The purpose of reward process in any organization is to encourage its employees to give their maximum effort in performing their jobs, which will increase productivity. It is essential for rewarding those employees, who successfully taken action towards any negative information. However, Toyota Motors had to undertake huge cost cutting as sales declined. This has prevented to the growth of capabilities of employees and they are de-motivated to work harder. The lean cost cutting produced error –free results and management failed to reward the employees as they found it more suitable to earn profit than to award them (Bonn, Yoshikawa and Phan, 2004; Flint and D. Flint, 2011; Jackling and Johl, 2009; Roberson and Park, 2007). b) Hiring of employees: Toyota Motors has failed to select talented and deserving candidates from the recruitment and selection process; though the purpose of hiring is to choose individuals with high levels of capabilities and skills, which is required for managing complex situations. The poorly designed selection and recruitment of Toyota failed to recognize the deserving candidates and instead hire individuals, who do not have enough experience in fields of construction techniques. The candidates who are chosen by the management failed to understand the rules and policies of the company (Bonn, 2004; Cannella, Park and Lee, 2008). c) Training and development programs: Training and development programs ensure that the employees possess right capabilities and skills to identify and manage complex situations, which can be encountered by the company in future. Toyota is famous for employing Four step cycle (Plan/Do/ Check/Act). However, the last two steps needs to be concentrated upon by the managers of Toyota. In manufacturing units of Toyota, safety is a vital issue and everybody should have trained regarding the symptoms of group think. Thus, it can be stated that the training and development programs of Toyota are not effective enough to convince the new employees as well as the existing ones to act positively towards any negative information in the company (Bonn, 2004; Cannella, Park and Lee, 2008). d) Performance management process: This process is employed in a company in order to evaluate the performance of the employees and appraise them accordingly. Performance management process also helps in identifying any problem within a group of workers before it goes severe. It also assists in rectifying any situation that could affect the organizational productivity. Toyota failed to implement the performance measurement factors for measuring the responsiveness of the negative information that are available to the company. The performance appraisal programs of Toyota are designed and monitored poorly, as a result, the employees failed to understand the group thinks errors. The managers were not informed about their mistakes through the performance appraisal metrics. The performance alerts are significant in a company as it raises an alarm that the performance should be improved. The employees and managers could not understand their mistake as performance appraisal techniques failed to evaluate their performance (Bear, Rahman and Post, 2010). e) Leadership succession and development: This process helps in ensuring that the company has efficient leaders with right skills and capabilities to take appropriate decisions. In case of Toyota, it is observed that promotion process and leadership development failed to promote and create the leaders, who have the capability to encounter and mitigate the challenges. The leadership process of Toyota was outdated and thus developed leaders with outdated competencies. These leaders do not have the capacity to operate in a dynamic automotive industry (Bear, Rahman and Post, 2010). f) Corporate culture: Corporate culture plays an important role in driving behavior of the employees so that they can adhere to core values of the company. It is hard to blame the well defined and repudiated Six Sigma process of Toyota Motors, thus, it is important to identify whether the employees are following the corporate culture and adding value the manufacturing process (J. Flint and D. Flint, 2011; Jackling and Johl, 2009; Roberson and Park, 2007). g) Risk assessment: Majority of companies’ HR departments do not have efficient risk assessment team. The main aim of the team is to identify risks that are caused by an average performance of weak employees. The risks related to the performance needs to be calculated as it reduces the productivity of the company. The human resource department of Toyota should have worked hard with the risk assessment team in order to ensure that employees are capable enough to contribute positively in the long run. The errors in the human resource departments affected the revenue of Toyota as the employees failed to perform well and give their full effort. There is a high rate of hiring failures that affected operation of the company. There has been increased turnover rate among the efficient employees of the company as they are not satisfied with the human resource policies. The company suffered for employing inefficient managers, which added up to its cost (Flint and D. Flint, 2011; Jackling and Johl, 2009; Roberson and Park, 2007). h) Retention: Retention programs are significant as it identifies the key performers, who have contributed positively towards the success of company. This employees look forward to work for accomplishing the goals of the company. However, in case of Toyota, the retention program failed to retain efficient workers as a result of whistle blowing. As the whistle blowers are successful to create negative impression regarding the efficient employees. These employees became frustrated and experienced constant pressure from the management. Thus, they were forced to leave Toyota out of frustration (Nguyen and Faff, 2007). The selection criteria of Toyota Australia were questioned by legal experts. The criteria were to make the underperforming staff redundant and in this way, they sacked 350 workers, who cannot even withstand the legal issues despite of uprising caused by the trade union members. During April, 2012, Toyota reported that 350 staffs were sacked based on the selection criteria, which have rating scales (1 to 5) (Waters, 2012; Carter, Simkins and Simpson, 2003). The workers were informed in a very dramatic way. They were summoned to a wedding near Toyota Melbourne plant and informed about their fate. The news and media reported that the employees of the manufacturing were rated based on the selection criteria, which was initially agreed by the trade union. The selection process assessed the employees based on a number of factors like skills, behaviors and knowledge. This type of selection process was applied to about 3350 employees of manufacturing plants of Toyota that are operating worldwide (Waters, 2012; McIntyre, Murphy and Mitchell, 2007). Australian Manufacturing Workers Union (AMWU) claimed that Toyota demanded for the voluntary redundancy package. The selection criteria were agreed by the trade union as part of negotiations process but they could not imagine that the company would sack 350 workers at a go. They were of the opinion that the company took the step in order to suppress the sham process that was designed to develop illusion of transparency. Few members of the union choose to leave the company on voluntary basis (Waters, 2012; Carter, Simkins and Simpson, 2003; Fields and Keys, 2003; Nguyen and Faff, 2007). Human resource theories The human resource theories, which will help Toyota to deal with the present situation, are detailed in this section of the paper. Theory of Leadership The human resource department of Toyota has encountered challenges due to misuse of authority, inefficient delegation of authority and communication gap. These problems can be eliminated by efficient leadership styles of the managers. Leadership is defined as a process, which can influence the behaviors of others for accomplishing the objectives of the company in a coherent or cohesive way. The leaders in this case are the managers of Toyota who had the responsibility of controlling and leading team of workers in the manufacturing plant. The leaders have the ability to inspire the workers to give their full effort (Sampson, 2007; Rose, 2007; Guest, 1997). They have the capability to influence the workers to follow the values, beliefs and ethics of the company. This way they encourage the employees to achieve the goals that are set for the development of the company as well as their career. Good leaders are needed by every organization and such leaders lacked behind in Toyota. Thus, the managers of Toyota should follow democratic style of leadership so that they can take the opinion of the employees regarding any issues or completion of a particular task. The managers should have the ability to lead the employees of Toyota efficiently thus, avoiding communication gap. In this way, misuse of authority can be eliminated as the leaders will have to treat all the employees equally and the former will take the opinion of the latter (Erhardt, Werbel and Shrader, 2003). The leaders should motivate the employees so that they are encouraged to do their work efficiently. Delegation of authority plays a vital role in a company as it brings a lot of challenges to the managers. If the authorities are not delegated efficiently then the tasks assigned to the employees, remain incomplete. Thus, the leaders should distribute the tasks efficiently along with the authority to complete. Such a process was not followed in case of Thai Toyota. The managers in Thai Toyota misused their authority by transferring efficient workers to different plants. They were even incapable of delegating their authorities efficiently to the workers of the Thai manufacturing plant. As a result, the company in Thailand encountered a lot of human resource issues. Hence, it can be stated that the managers of Thai Toyota should possess the leadership skills so as to avoid miscommunication with their subordinates, misuse of authorities and inefficient delegation of authority (Campbell and Mínguez-Vera, 2008; Erhardt, Werbel and Shrader, 2003). Theory of Wage There are many theories of wage among which Behavioral theory is relevant in this particular case in Thai Toyota. This type of wage theory highlights the fact that wages are determined according to status and size of a company. Toyota is a well known and repudiated company and the sales revenue is high. In such a case, Toyota should determine wage based on the good will of the company. However, it is observed that Toyota expanded to those counties where the labor cost is low and thus, the wage of the workers is low (Create Commons, 2014). Toyota determined its wage structure according to the marginal productivity theory. The theory depends on the supply and demand of labor in a particular country. The workers are paid according to the economical worth. Thus, in Thailand the per hour wage of the workers are less as compared to other countries. This is the reason why Toyota has expanded its operation in Thailand to grab the opportunity of hiring cheap labors. Nevertheless, it is observed that the workers are not at all satisfied with the wage structure and the trade unions of Toyota have protested against the decision of the management. The situation in Toyota Australia was severe when 350 workers were sacked as the company could not pay the appropriate salary. Thus, it can be stated that, Toyota can adopt behavioral theory of wage to determine the wage structure of the workers (Herath and Rao, 2009; Erhardt, Werbel and Shrader, 2003). Training and Development Training and development programs form an essential part of human resource management. Companies conduct these programs in order to develop the skills of the employees and motivate to perform their work efficiently. The training and development programs help in determining the right type of skills in the employees. These programs help the employees to understand whether any improvement is required in their daily scheduled works. The training programs also helps in determining the leadership skills of the individuals and this assists the management to understand who can lead the team efficiently. Thai Toyota should conduct extensive training and development programs for nurturing the skills of the employees and make them aware of the values and principle of Toyota. Through the programs, the managers will understand the real meaning of exercising power on subordinates. The managers need to attend extensive training programs in order to acquire the leadership skills that are relevant for the designation. Thus, it can be stated that Thai Toyota should organize training programs at an interval of time so that the employees and managers get the opportunity to increase their knowledge and skills that are required for the completion of the job (Miller and Triana, 2009; Sampson, 2007). Motivation theories Motivation theories give emphasis on the techniques through which the employees are encouraged to perform efficiently in the company. The employees are motivated so that they do not lose confidence in their job and gain trust for the company. Toyota should follow Maslow’s Hierarchy of Needs in order to encourage the employees. Maslow has studied regarding the exact needs for motivating a person. He figured out five basic needs; these needs are to be satisfied at every stage before moving into the next stage. Maslow deduced that, needs of every individual vary according to their personal way of life. These needs are required to be fulfilled in order to get inspired towards life. Hence, individuals should recognize the motivational factors in their life so that they can fulfill their needs. The employees of Toyota need to be motivated so that they can recognize their motivational factor at work. The managers have the responsibility to motivate the employees to perform their work efficiently (Rose, 2007; Guest, 1997). Conclusion and recommendation Human resource management plays an important role in managing the most important resource of the company. The human resource department of every company has the responsibility to look into the issues encountered by the employees and make solutions to rectify them. Often it is observed that the employees are not satisfied with the human resource policies followed by the company as a result the attrition rate increases drastically affecting the productivity of the company. However, the productivity of company also decreases when the employee’s starts to underperform as they loses their confidence in doing a particular work. Factors such as salary structure play an important role in de-motivating an employee. If the salary of the employees is not adequate enough to support the quality of the job, the employees feel frustrated and they tend to leave job. Such situations are encountered by the automobile giant, Toyota Motors Limited few years back. The company experienced a number of human resource related issues that were significant for their financial and operational crunch; the productivity of the employees worsened, as a result the sales of the company in Australia decreased drastically. Hence, the company decided to cease its manufacturing unit in Australia. Several issues are encountered by Thai Toyota too when the workers revolted against the low wage structure. The employees were not motivated to perform their work efficiently as they lost confidence and trust on the company. The situation can be rectified if the company followed human resource theories such as leadership, motivation and wage determination. This will help them to identify the exact problems encountered by the employees. The managers or the leaders have the responsibility to rectify the situation and motivate the employees to do their task efficiently. The wage determination theory of human resource managements helps in ascertaining the pay structure of the employee which will satisfy them and encourage them to give their full effort in their work. However, it is important for the managers of Toyota to become a good leader and eliminate the tendency of misusing their power as it leads to conflict in the company; this reduces the productivity of the workers. The leaders should be competent enough to lead the team and direct the employees efficiently so that they are satisfied with the job and salary structure. Reference List Adams, R. B. and Ferreira, D., 2009. Women in the boardroom and their impact on governance and performance. Journal of financial economics, 94(2), pp. 291-309. Bear, S., Rahman, N. and Post, C., 2010. The impact of board diversity and gender composition on corporate social responsibility and firm reputation. Journal of Business Ethics, 97(2), pp. 207-221. Bhattacharya, S., 2011. Maruti says human resources biggest block to car industry. [online] Available on: < http://www.dnaindia.com/money/report-maruti-says-human-resources-biggest-block-to-car-industry-1576381 > [Accessed 16 October 2014]. Bonn, I., 2004. 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E., 1997. Human resource management and performance: a review and research agenda. International Journal Of Human Resource Management, 8(3), pp. 263-276. Herath, T. and Rao, H. R., 2009. Protection motivation and deterrence: a framework for security policy compliance in organizations. European Journal of Information Systems, 18(2), pp. 106-125. Hiroshi, I., no date. Toyota Overseas Management. [online] Available on: < http://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CBwQFjAA&url=http%3A%2F%2Fwww.postbooksonline.com%2Fmedia%2Fpdf_files%2Fpost_book_254.pdf&ei=B2g_VMX1FsHbuQTcs4KoAQ&usg=AFQjCNHFQtq8zGw0w5UVqXjUJyNAjz3IhQ&bvm=bv.77648437,d.c2E > [Accessed 16 October 2014]. Jackling, B. and Johl, S., 2009. Board structure and firm performance: Evidence from Indias top companies. Corporate Governance: An International Review, 17(4), pp. 492-509. McIntyre, M. L., Murphy, S. A. and Mitchell, P., 2007. The top team: examining board composition and firm performance. Corporate Governance, 7(5), pp. 547-561. Miller, T. and Triana, M., 2009. Demographic diversity in the boardroom: Mediators of the board diversity–firm performance relationship. Journal of Management studies, 46(5), pp. 755-786. Nguyen, H. and Faff, R., 2007. Impact of board size and board diversity on firm value: Australian evidence. Corporate ownership and control, 4(2), pp. 24-32. Noe, R. A., 2002. Employee training and development. Boston: McGraw-Hill/Irwin. Roberson, Q. M. and Park, H. J., 2007. Examining the Link Between Diversity and Firm Performance The Effects of Diversity Reputation and Leader Racial Diversity. Group & Organization Management, 32(5), pp. 548-568. Rose, C., 2007. Does female board representation influence firm performance? The Danish evidence. Corporate Governance: An International Review, 15(2), pp. 404-413. Sampson, R. C., 2007. R&D alliances and firm performance: the impact of technological diversity and alliance organization on innovation. Academy of Management Journal, 50(2), pp. 364-386. Waters, C., 2012. Toyota’s controversial HR strategy tipped to withstand challenges. [online] Available on: < http://www.smartcompany.com.au/leadership/management/36719-toyotas-controversial-redundancy-strategy-likely-to-withstand-legal-challenges-experts.html# > [Accessed 16 October 2014]. Read More
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