Human Resource Management Strategy and Planning in Toyota Company - Case Study Example

The Analysis of Human Resource Management in Toyota Company Name Date Contents Contents 2 Introduction 3 Human Resource Management Strategy of Toyota Company 4 HRM strategy and organizational strategic objective 4 Human Resource Planning of Toyota Company 5 Global economy 5 Changing Demographics 6 Recruitment and Selection 8 Training and Development 9 Management of Performance 10 HRM problem in Toyota Company 11 Conclusion 11 References 12 Introduction Toyota Motor Corporation is unarguably among the world’s leading company specializing in the manufacture and Sale of automobiles. Currently, it is Japan’s and Asia’s leading manufacturer of vehicles and the world’s second largest manufacturer of motor vehicles. It is headquartered in Toyota City in Japan. The company was established in 1937 by Kiichiro Toyoda. Since its establishment, Toyota Company has continued to excel by developing a strong market base. The company was able to manufacture over 4 million vehicles within the first 20 years and by 2014, about 10.3 million vehicles had been manufactured by the company (Toyota Motor Corporation, 2015). Moreover, the company’s profits have increased progressively since its establishment. For instance, in 2011 its net revenue skyrocketed to 27.2 trillion Yen up from 1.5 trillion Yen recorded in 2009. (Toyota Global, 2015). The increasing profits are as a result of increasing sales. For instance, in 2014 the company sold about 9.1 million vehicles compared to about 7.3 million vehicles in 2011 (Toyota Global, 2015). The largest markets for Toyota Company vehicles are Japan, North America and Asia. The success of the company is its innovativeness in the design of automobiles. Technological innovations have enabled it to stay in tune with increasing costs of production. Hybrid vehicles is one product of the company’s innovativeness in an effort to respond to the environmental concerns. The company offers a wide range of automobile options to its customers. They include trucks, vans, cars and hybrids. Besides innovation, its success is attributable to robust management. The company is an epitome of successful human resource practices and its success partly depends on a healthy working environment for employees. It is known for its sound ‘Toyota-way’ culture which binds the employees together (Truss et al., 2012). Therefore it provides a good case study for examining the roles of human resource management in an organization. Human Resource Management Strategy of Toyota Company According to Stredwick (2005) the function of implementing an HR strategy in an organization, is to ensure that the HR system has the required amount of employees who are well skilled and equipped to achieve an organization’s goals. Therefore in managing an HR unit an organization aims at improving its performance through equipping its workforce with the necessary tools to achieve the organization’s overall objectives. For Toyota Company, the management mainly focuses on recruiting employees that meet their HR specification in terms of flexibility and adaptability. According to Liker & Meier (2007) Toyota Company recruits employees that are studious and can work in all departments within the company. Nonetheless, the element of adaptability within Toyota Company, the HRM strategies is keen on revolutionizing employees’ skills, knowledge and work. HRM strategy and organizational strategic objective Tyson & York (2000) argue that in order to meet the external and internal demands of an organization, a company must align its HR strategies with the organizational strategies. This will ensure that a company is able to meet current and future expectations of consumers. Toyota is highly recognized for its constant improvements on its brands and creations which is attributed to its commitment towards its HRM objectives. The HRM strategy implemented by Toyota Company, is well aligned with the company’s strategic goals towards fulfilling consumer demands and producing high quality brands. The main objective as attributed by the HRM of Toyota Company is to ensure that individual and collective efforts of employees are included in the development of the organization. In achieving this, the company has maintained a professional and skilled workforce that is committed to the company’s goals. Toyota Company has an organizational strategy which targets on recruiting high quality employees as well as ensuring that employees are equally involved in the organization’s developments in order to retain employee commitment. Moreover, in order to achieve its objectives in producing quality brands, Toyota stimulates its employees to constantly participate in the evaluation of a plan and its performance. According to Purcell (1999) HRM strategies define organizational objectives since it focuses on workforce management by tailoring plans and intentions that best suit its workforce. As part of workforce integration, Toyota continues to equip, educate and grow its HRM through rewarding and maintaining a strong and positive relationship between the organization and its employees. Armstrong (2006) affirm that treating HRM strategies as part of a business strategy enables a company to gain a competitive advantage over its competitors, since an organization is able to use its employees as a strategic resource. Human Resource Planning of Toyota Company According to Zahra & George (2002) the evolution of the business market and increased consumer demands has influenced organization to go global and invest in emerging markets. As a result globalization has greatly contributed to an increase in the number of companies going global hence increasing the competitive nature in the global markets. Additionally, globalization has provided HRM managers with diverse challenges arising from workforce selection that will meet organization specifications as well as respond to the cultural and social demands of a given market. Global economy According to Harvey et al. (2009) global economy provides a diverse overview of the international and national markets around the world. However defining the state of the global economy depends on the mode or technique which economists have used in evaluating it, this can be achieved by weighing the value of a currency. Figure 1 below represents a scale on the global economy as evaluated in 2006 Figure 1: The world Economic GDP of different countries. Harvey et al. (2009) affirm that the global economy often fluctuates from time to time and as a result the management of an organization’s HRM can easily be influenced by the trends of the global economies. This is because, the globalization of an organization faces challenges from the foreign economies as well as the social and cultural differences experienced in foreign nations. Thus the adoption of HRM culture and policies from one nation to another tends to complicate the management system of the HRM unit in a different nation. Evidently the challenges arising from the globalization requires a company to implement policies and strategies that will ensure that a company is well equipped to overcome these challenges. As a result the HR manager is required to implement an effective plan that will enable a company to maximize on its profits as well as the workforce performance. Changing Demographics In a highly globalized world, there are different factors that are likely to impact the management of an HR unit within a company. These factors as previously mentioned may arise due to the cultural and social factors that make up the markets. For instance, social dynamics of a foreign nation basically defines the cultural beliefs that the consumers in this country hold themselves to. Therefore in managing the HR, managers are required to have a clear perspective of how the social and cultural dynamics are going to influence their policies and organizational structure. For example in some societies females are not expected to work in formal structures while in others the majority of professionals and skilled employees are older than expected (Mathew and Zander, 2007). Currently Toyota Company aims at creating car models that will attract the young generation. Hence the company targets young, innovative and enthusiastic labor force which is eager to reinvent the current Toyota models so as to meet consumer demands. However, in some western nations the available labor force ranges between 50-60 years which is likely to hinder the recruitment process for Toyota as it ventures into new markets overseas. Nonetheless, Toyota Company requires its employees to have at least a degree which is relevant to the post they are applying for. Therefore, the level of education of the population in a given country is also likely to influence the HR management of Toyota Company. In some developing nations, the labor force is not as educated as Toyota would require its employees to be therefore, the company is likely to be forced to outsource for talented workers outside that country. Notably the challenges that HR managers are likely to face is the constant pressure to acquire a qualified workforce that meets organization and employment demands within a specific context. In this context workplace changes is going to be influenced by the level of education of employees, skills and expertise of employees as well as the cultural and social beliefs of the market place. All these factors will contribute in affecting the HRM practices and policies. Therefore, the HRM needs to identify the current and future needs of the organization and ensure the HR unit serves to full fill both long and short term goals. Recruitment and Selection Toyota Company is very keen in its recruitment and selection process and as a result the company emphasizes that its employees have the following traits; be enthusiastic, studious and social apart which are key from the relevant skills and knowledge. This is a technique improvised by the company as a strategy to cut its production costs. As a result, Toyota Company looks for employees who are flexible and can quickly adapt to new environments. This means that employees of Toyota Company are required to be able to work in different department apart from that which they are assigned to. During the recruitment process the company often involves a panel of judges who evaluate potential employees’ skills, knowledge, techniques, behaviors and their capabilities (Liker, 2004). According to Liker and Meier (2007) Toyota is rather selective in the workforce it employees, the company is keen on employing individuals that are highly motivated and hardworking. Additionally, leadership roles within the company are given to those employees that exhibit governing skills and are decisive. Nonetheless these leaders are individuals with extensive expertise in their field of work since they are required to train others within their departments or groups (Liker and Meier 2007). The selection process in Toyota Company, use a systematic procedure that involves; interviewing, occupational skill testing, psychometric testing and appraisal. Potential employees are required to fill out an application letter during the hiring process, this application form provides basic information about the applicant and their career developments thus far. The relevance of this information is used by the judges at the recruiting process to evaluate and examine a candidates potential and capabilities. Successful candidates are then required to undergo a psychometric test which is followed by an occupational skill testing for the department one is applying for. Lastly, candidates undergo an interview and appraisal process which mainly enables the company to critically evaluate the applicant’s qualifications as well as the background information they provided on their application forms. The occupational skill testing is needed if the applicant want to work in engineering apartment. Training and Development According to Nankervis (2008) strategic human resource management should have a training and development plan that involves employees in a continuous induction and orientation process. These two processes are implemented so as to familiarize new employees with their roles and duties within the company as well as the overall organization policies and culture. Toyota Company uses the induction and orientation process as a means to welcome their employees and create a sustainable relationship between the employees and the organization. This is because the company aims at retaining employee loyalty and maximizing on their potential. Training and development programs at Toyota Company relies on this philosophy by Toyota ’’ we do not just build cars, we build people.”(Liker and Meier 2007). Therefore every training programs at Toyota is treated as a cultural value which aims at improving employee skills and acts as a way to encourage growth and development among people. As a means to promote training and development of employees in the company, Toyota has facilitated the creation of training Global Production Centers in Thailand, England and in North America, additionally the management at Toyota is focusing on creating global satellite centers for its employees (Liker and Meier 2007). Nonetheless, Toyota has integrated the use of formal training techniques that include computer systems and interactive mode of training. Management of Performance HRM plays a big role in maximizing employee performance and potential. According to Armstrong (2006) in performance evaluation, an HRM gains in depth understanding of an organization’s employees by understanding their capabilities as well as enhance employee growth. As a result, performance evaluation involves three main steps; 1、 Measuring employee incentives against their output and organization objectives. 2、 Supervising of elements that motivate employees to perform. 3、 Evaluating ways in which employers actions can motivate employees to perform better. In performance appraisal, Toyota Company is mainly keen in the efficiency of the whole HR body as opposed to a single individual. According to Liker and Meier (2007) for Toyota Company it is vital to evaluate the total output of all employees so as to measure performance as opposed to solely focusing on an individual’s effort. In evaluating performance the Company has implemented an effective structure which adds value to team associates by encouraging them to focus on their roles through isolation during work procedure. This strategy enables employees to avoid any form of irrelevant distractions during work procedures. The process of performance appraisal at Toyota Company enables the management to assess and review employee performance as a means to issue compensations, rewards and promotions. Therefore performance appraisal at Toyota Company is a key step in enabling the company and its workforce to understand how their input and output facilitates employee and organizational growth and development. HRM problem in Toyota Company Toyota Company has a tendency of not letting go of their employees or firing them. This is an issue that raises concern for growth and development of the company. This is because by retaining old employees, the company is unable to employee new workers who are young and with fresh ideas that will meet the expectations of consumers. Additionally, this technique is likely to see the company have excess or unnecessary workforce that only adds cost to the management of the company instead of adding revenue or value. As a means to overcome this challenge the company needs to lay-off workers who are not adding value to their departments through new and creative innovations. This can be done by transferring these employees to other Toyota branches or other departments within the company. This transfer strategy will allow employees to maximize on their abilities and give the company room to expand. Conclusion This report has mainly focused on HRM and its importance to the success of an organization. The report has used Toyota Company as the case study organization in understanding the role of HRM in an organization. This has been achieved by discussing and evaluating the HRM strategy, HR planning, recruitment and selection, training and development, performance management at Toyota Company. Through this analysis, the report has identified an HRM issue that may have negative impacts on the success of the company and provided ways to overcome the challenges arising from this issue. 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