Learning Log: Current HRM Issue in Toyota Motor Corporation - Case Study Example

Learning log: Current HRM issue in Toyota Motor Corporation Table of Contents HRM issue in Toyota 3 Influences on this issue and its impact on the organization 4 Approach taken by the organizational managers 5 Learning Log 7 What did I learn from this? 7 What will I do differently next time? 7 What will I do differently next time? 8 What further support or resources do I need next time? 8 HRM issue in Toyota As far as recent human resource management issues are concerned, the one faced by Toyota Motor Corporation is being discussed the most by academic research scholars and organizational leaders. The evaluation of these issues will prove to be instrumental for both academic scholars, who are seeking to develop effective HRM strategies as well as organizational managers, who are attempting to modulate their own HRM models on the basis of their knowledge on models employed by several organizations (Sullivan, 2012). The issue that recently cropped up in the internal environment of Toyota is the mechanical failures that have been noted in eight of its most commercially successful vehicle models. Following this revelation the corporation had to call back nearly 9 million of units from its customers which resulted in a tremendous loss of revenue. Alongside that poor management of this issue in front of the public tarnished the automobile manufacturer’s reputation following which the company’s sales dropped at a record low point (Sullivan, 2012). The mechanical faults that have afflicted the Toyota’s models cannot be attributed to the fact that that faulty onboard computers or accelerator pedals. In fact people who have previously studied manufacturing failures, they have often commented that breaking point of the service or the product is seldom the root cause behind the failures. More often than not human errors and inappropriate management have been sighted as the major causes. A similar situation can be noticed in case of the Titanic catastrophe where the major cause behind the ship’s collapse was the collision between the hull and the iceberg. In this case, although the flaw present in the design of the hull was a major contributor of the catastrophe, the root cause of this accident was human error in judgment. This is precisely because, the sailors decided to travel at a higher speed even though the weather conditions were deteriorating and they also ignored warning regarding the movement of an iceberg (Sullivan, 2012). The underlying rationale behind the presentation of this example is to draw similarity regarded what happened in Toyota Motor Corporation. In any given circumstance where an employee has failed to deliver the expected performance, it becomes the responsibility of the performance evaluator to assess whether human error could have been made by aspects which beyond the control of the employees (Sullivan, 2012). These aspects include actions and strategies adopted by senior managers, inadequate flow of information and job training, inappropriate inputs within processes and reward that stimulates actions which are not aligned with the desired objectives (Bjorkman and Stahl, 2010). Ergo, if one believes in accountability then it can be accepted that human error could be attributed to inappropriate human resource management strategies which involves, acquiring, inspiring, managing and motivating the workforce (Becker, Huselid and Ulrich, 2009). This has been the case of Toyota Motor Corporation. The following sections will involve an elaborate explanation to what influenced such human resource management issues and what approaches have been adopted by the organization so as to deal with such issues. Influences on this issue and its impact on the organization According to reports the major reason behind the mechanical failures in the cars manufactured by the Toyota is the negligence of the senior management. Information sources have revealed that the mechanical faults were known to the senior officials even before corrective actions were taken. Interior sources belonging to the company highlighted the fact that even though the managers were aware of the mechanical faults which were present in the automobile models they chose to not disclose the fact thereby distorting the scope of the problem. A part of this action was influenced from the fact that the management of Toyota Motor Corporation motivated its employees with employee reward and recognition scheme that involved huge compensation and bonus packages provided the sales of their automobile vehicles increases at a consistent pace (Banfield and Kay, 2012 ). This aspect of the human resource management strategy employed by the organizational manager is completely aligned with the equity theory of developed by John Stacey Adams (Education Portal, 2015). The theory sets forth that an employee will always put the level of effort that he/she thinks is equivalent to the reward that is being offered by the organizational managers (Arthur, 2012). This theory corresponds to a simple formula of input versus output where the input factors are enthusiasm and effort, abilities and skills, adaptability and flexibility, loyalty and commitment towards the organization. The output factors include financial benefits, recognition and praise, autonomy and additional responsibility, job security and career advancement (Armstrong, 2012). Therefore, an employee will always provide the optimal level of inputs if the outputs are guaranteed. This has been the case at Toyota Motor Corporation. Implementation of inappropriate leadership styles in the HRM dimension led the employees to adopt unfair means in order to give their optimal effort in exchange for the rewards and recognition that are being offered by the company (Armstrong, 2008). Inadequate training and development can also be sighted as another reason behind this HRM debacle in the company. This HRM issue in Toyota Motor Corporation revealed that even though an employee has the right amount of motivation and commitment that influences the individual to give the best effort and work towards achieving the desired organizational objective, the side effects of such uncontrolled employee reward and recognition strategy cannot be neglected (Albrecht, 2010). Given the fact that employees were blindfolded with the reward that they were expecting as the performance of the company enhances, they started overlooking the faults that were present in the automobile models (Barber, 2008). This was an impact that was never intended by the organizational managers. Another weakling that can be identified within the HRM strategies in Toyota Motor Corporation is that the organization objectives and goals were not conveyed distinctively to the employees. They did not adhere much to the ethical business standards set within the working culture of the company as the same was not communicated to them through proper training and development (Armstrong, 2008). This resulted in the distribution and sales of automobiles with mechanical failures. Therefore following the revelation of the mechanical defects Toyota Motor Corporation had to immediately call back all the vehicles reported with such defects. Given the fact that Toyota Motor Corporation is regarded as a pioneer of automobile design and quality, the company’s reputation was tarnished severely in front of the customers and the competitors in the automobile sector. In the contemporary business environment brand image and loyalty are regarded as two of the most important determinants of organizational success (Banfield and Kay, 2012). Toyota Motor Corporation suffered a massive blow in both these aspects thereby generating record low sales. Approach taken by the organizational managers The HRM issues that cropped up in Toyota Motor Corporation highlights the importance of application of appropriate leadership quality whereby managers will be majorly responsible for supervising each and every organizational operation with utmost integrity. After calling back all automobile models, Toyota’s managers decided to make certain changes in the HRM strategies. They planned to regulate the employee reward and recognition scheme in order to make sure that such plans do not lure employees into adopting unfair means. This is an extremely important part of employee performance management which in turn will help the managers to infuse the right sense of motivation among the employees (Barber, 2008). The mangers also employed team leadership style where they were emphasizing equivalently on the welfare of their employees as well as the productivity of the organization (Biles and Holmberg, 2007). They were also required to convey the organizational objectives and goals with absolute clarity to the employees in order to make sure that each and every one of them had a detailed idea about their responsibility (Becker, Huselid and Ulrich, 2009). In that way they were also be able to ensure that there is no miscommunication between the board members, senior managers, middle managers and the executives (Bjorkman and Stahl, 2010). The managers believed in providing adequate scope of self development to the employees in order to make sure that their motivation and commitment towards their work and the organization as a whole is channelized in the right direction thereby preventing them from indulging in wrongful practices (Bogardus, 2009). Learning Log What did I learn from this? The primary focus of the report was on the influence of unethical practices on the business management and the overall business performance of a firm. The case was based on Toyota’s mismanagement of their human resources and the negative impact of reward structure on employee motives and employee work culture. With the help of this case, I came to realise the importance of managing the reward structure within the work place for ensuring quality outcome from the workforce. Toyota’s exclusive reward structure allowed the employees to distract from the organisational objectives of quality and follow their personal interests by overlooking the faults in their products. This helped them achieve momentary surge in the sales but the final outcome was devastating for the organisation in terms of revenue, brand equity and internal management. My basic thought related to this experience was the straight connection of equity theory with the employees and reward process of Toyota. What will I do differently next time? The learning aspects gathered from this study if viewed in simple terms reflect the necessity of understanding the positive negative attributes of human resource management models in order to reduce the operational risks. For instance, I noticed that Toyota as an employer tries to enhance employee job satisfaction by designing lucrative reward structure but this concept backfired when their employees were only focusing on increasing their take home amount and not on their fundamental roles and responsibilities. Another aspect which i observed from the case study was the role of quality checking department of Toyota. Although this can be controversial but the question remains how the malfunctioning products did pass the quality monitoring team of the company. This also highlights improper performance management aspects on the part of Toyota. Coming back to the point of reward management, I observed that reward structure of the company was lucrative but not realistic which promoted the employees to go beyond the ethical boundaries and achieve their rewards. From this I gathered that the rewards and the target setting of the employees were not aligned. The employees somehow were not confident that they could achieve the given target by following the expected work process and thus involved in undesirable acts. The key learning points were to assess the relationship between the rewards and the target development for the employees, the negative aspects of the human resource management models being implemented and importance of an appropriate performance management style for recognising the risks in the services and products of an organisation. What will I do differently next time? In order to improve the internal practices of Toyota and to nullify the risks associated with the issue, I think the reward structure should be modified with some strict regulatory policies. The lagging performance monitoring techniques of Toyota allowed the employees to get away with the faults; however a more stringent monitoring approach would have helped the company to reduce the losses. Another basic step would be to align the employee targets with their basic compensation and reward structure. The employees were not confident about achieving the target within the work policies of the company and hence the problems were created. However, allowing the employees to think that the target is achievable will also enhance their performance and productivity capability and reduce the chances of errors in the work process. Thus, motivational approaches will be my first option instead of reward models for reducing such incidents in the work place. On the other hand, implementing the equity theory will also be helpful for assuming the probable influence of the rewards on the work style of the employee base. What further support or resources do I need next time? The primary resources required for changing the above scenario will be proper communication means with employees, performance measurement techniques and effective reward structure. However, in order to analyse and resolve the situation in an in-depth manner, I will also consider some psychological models which will help me in understanding the perception of the workforce in relation to the various reward structures and work targets. Apart from this, I will be able to interact with the employees by directly focusing on their specific strengths and weaknesses. Another essential requirement will be processes to set up the work objectives for the employees. Models such as REAN and SMART will be useful for setting relevant and achievable targets. What is my next step in this area of learning? The aspect of reward management and employee motivation is directly related with theories and concepts of performance quantification and supervision. In my next segment of study, I would like to focus on performance management, measurement and monitoring processes and their influence on the employee productivity. This will also help me in designing a better work culture and work structure for the firm. Apart from this interactive work structure will be another aspect of focus to understand the employee thought process and needs and help them align their goals with the organisational objectives. Reference List Albrecht, M., 2010 International HRM: managing diversity in the workplace, 5th ed. London: Academic Press. Armstrong, M., 2008 Strategic Human Resource management. A Guide to Action. 4th ed. London: Kogan Page Ltd. Armstrong, M., 2012 Armstrongs Handbook of Human Resource Management Practice, 12th ed. London: Kagan Page Arthur, D., 2012 Recruiting, Interviewing, Selecting & Orienting New Employees, 5th ed. London: Routledge Banfield, P. and Kay, R., 2012 Introduction to Human Resource Management, 2nd ed. Oxford: Oxford University Press Barber, A. E., 2008 Recruiting Employees: Individual and Organizational Perspective, T4th ed. CA: Sage Publications Becker, B. E., Huselid, M. A. and Ulrich, D., 2009 The HR scorecard: Linking people, strategy, and performance. 4th ed. Boston: Harvard Business School Press. Biles, G. E. and Holmberg, S. R., 2007 Strategic Human Resource Planning. 3rd ed. Glenn Ridge, NJ: Thomas Horton and Daughters. Bjorkman, I. and Stahl, G., 2010 Handbook of Research in International Human Resource Management. 6th ed. Oxford: Blackwell Publishing. Bogardus, A., 2009 Professional in Human Resources Certification Study Guide. 8th Edition. David Fulton: London. Education Portal, 2015. Equity Theory of Motivation: Reward & Effort. [online] Available at: http://education-portal.com/academy/lesson/equity-theory-of-motivation-reward-effort.html [Accessed 2 February 2015]. Sullivan, J., 2012. A Think Piece: How HR Caused Toyota to Crash. [online] Available at: http://www.ere.net/2010/02/15/a-think-piece-how-hr-caused-toyota-to-crash/ [Accessed 2 February 2015]. Read More