Change Management at Toyota - Case Study Example

Change management at Toyota s Submitted by s: Introduction The quickly transforming business environment results in human resource management challenges that will continually evolve for a long time to come. The human resource problems that are a commonplace occurrence in the organization include the establishment of productivity, recruitment of workers, and arrangement of training as well as preventing discrimination among others (Bohlander, Snell and Sherman, 2001, p. 13). The people in charge of personnel management also experience challenges that involve solving of conflict and maintaining the safety of the workers. The establishment and distribution of benefits, encouragement of diversity and dealing with outsourcing as well as management of change are other core concerns as far as human resource management is concerned. The manner in which a particular business addresses particular human resource issues depends on the Human resource manager or director along with the policies that guide the company. Regardless of the form of operations that are associated with a business or company, dealing with human resource issues is usually a progressive process. Since Toyota Motor Company was established in 1937, it has made significant contribution to the development of the automotive industry by making sure people have access to quality vehicles (Rasiah, Sadoi and Busser, 2013, p. 18). The company has manufacturing operations in twenty-five different countries and regions all over the globe. Presently, its vehicles can be found in more than one hundred and sixty countries under different brand names such as Toyota, Lexus, Daihatsu, and Hino, with the vehicles varying from small cars and pickup trucks to crossover vehicles. The focus of this essay is the human resource management system of Toyota with specific emphasis on key issues such as change management and the management style that is utilized at the Toyota Motor Company. Organization overview Toyota Motor company was started in 1937 as an independent enterprise from Toyoda Automobile Loomworks, which was a renowned manufacturer of weaving equipment under Sakichi Toyoda. The automaker experienced its first and only strike in 1950, which was important in supplying Toyota with a crucial philosophy that provided the company with a labour and management structure that has assisted Toyota to achieve mutual growth as well as success its local and international markets. The production systems of the company improved in the late fifties with the establishment of the Toyota Production System that developed to become the key aspect in reducing inventories and defects in the plants associated with Toyota and its manufacturers. It also informed all the operations associated with the company all over the globe. The company launched its initial small vehicle in 1947 while starting operations out of Japanese boarders through opening an assembly in 1959 in Brazil. The company had its sixtieth anniversary celebrations in 1997, and maintains the belief that local production can give the customers the productions they require while at the same time providing the company with steady and long-term growth. The company also boasts a worldwide network of design and research along with development facilities in Japan, North America and the markets in Europe. The company was ranked at number eight among the global fortune 500 companies and remains committed to the principle of Equal Opportunities through the provision of fair and equitable treatment to all the people and applicants. It further seeks to adhere by the intent since the letter of appropriate legislation in this form of issues and the management team at Toyota has a commitment to promoting and abiding by the Equal Opportunities Policy. Human Resource issues at Toyota For a long time, Toyota has enjoyed the desirable position of being considered as the Gold standard in relation to the manufacture of motor vehicles (Dawson, 2011, p. 18). The company employs more than three hundred thousand employees all over the globe and for or the first time in history, Toyota’s sales surpassed those of GM’s in the first quarter of 2007 to rise to the top of automotive manufacturing in the globe (White and Ingrassia, 2014, p. 238). The company achieved this success partly as a consequence of its outstanding reputation in terms of quality and customer care. Regardless of the global recession and the difficult economic times that the auto companies in America including GM and Chrysler experienced in 2009, Toyota still posted profits of more than sixteen billion as well as a growth in sales of six percent. The manufacturing systems used by Toyota are considered as the main reason for the reputation the company has earned in regard to quality. The use of the Toyota Production System, which is based on principles of “just-in-time” production, has allowed Toyota to be able to deliver raw materials along with supplies to the assembly plants in precisely the time they are needed. This form of system empowers the assembly line workforce to pull cords to halt the their operations in the event that they identify any issues. The company is also reliant on Kaizen, which is the philosophy of continuous improvements and this had developed a reputation for quality, which is a core competitive advantage associated with Toyota. Toyota has taken decades to develop its reputation; however, it was severely threatened by the end of 2010 as during this period the company witnessed a recall of more than eight million vehicles that were affected by unintended acceleration (Sehgal, 2011, p. 72). It was perplexing that this could be witnessed in a company that was renowned for quality and had structure that dealt with issues as soon as they were identified. Investigations showed that there was not faults associated with the manufacturing system as the accidents could be attributed to floor mats and sticky pedals, but since the company did not acknowledge the issues with quality and also failed to act quickly, Toyota’s customer base was alienated and this lead to the loss of its leadership position (Ryu, 2012, p. 4). Even though investigations did expose problems with the manufacturing process, they revealed structural and cultural issues at the company. Among the main issues that were revealed was the quick growth of Toyota as the degree of expansion put a strain on the resources throughout the entire company leading to slower response times. It is considered that the company had started putting objectives linked to growth inform of those associated with quality, especially through giving rewards to those who attained their metrics linked to growth (Pride, Hughes and Kapoor, 2012, p. 183). Quick growth also means that the company had to employ new workers as quickly as possible with very little time being dedicated to giving them training. The change in the structure of the employees means that communication, management and trust were severely affected. Another core issue that affected the company was the centralized structure of the organization that was Japanese-controlled. When the crisis was being experienced, the company had a highly centralized structure, which did not delegate powers in terms of making decisions to its operations in the US regardless of the fact that the US operations provided two thirds of its profits. In the event that there was a quality issues that led to a recall, the issue had to be communicated to the head offices using a highly bureaucratic process, before the head offices could come up with a solution. All the executives in the US were given a supervisor from Japan as a guide and these executives in the US were allowed to authorize any recalls (Phillips-Beaudan, 2012, p. 142). A huge part of the flow of information in the company was one way, always going back to Japan, which was the only place where decisions could be made and in most cases, the top management dismissed concerns that had been raised by the lower management, regarding quality. The company had simply become too bureaucratic and centralized making it too huge for the challenges that it was going through. The problems associated with Toyota did not end with the safety crisis as strengthening of the Yen as well as the 2011 tsunami disaster both aggravated its problems. Regardless of all this setbacks, there appears to be a cause of hope for Toyota, as Akio Toyoda who had become CEO prior to the start of the safety scandal, has taken measures of turning around the structures and cultures of the company. He is considered as an uncharacteristic Japanese executive and he began taking action through delegating more power to the operations in North America, developing objectives with the aim of reducing the number if outside engineers to ten percent as well as increasing the quality of teams responsible for responding to various issues in the operations of the company. This is most demonstrated by how the companies dealt with the tsunami, as a number of its suppliers were affected by the disaster, and this affected the company’s operations. To deal with this, Toyota sent teams to the different sites of the suppliers with the instructions to ensure that production was restored without any worry about reporting back. How Human Resource issues led to Toyota’s problems The mechanical issues that affected the Toyota models may not have resulted from the human resource experts at the company assuming the product design roles and creating defective accelerator pedals and on-board computers. Based on failure analysis, it can be concluded that the breaking point of a particular product is usually not the main cause of the failure. In the instances where the workers do not perform in the manner the company expects them to, the investigators must find out in human error may have been associated with factors that were beyond the control of the workers. These external factors may include the actions of the senior management, inadequate job training or information, defective input processes or rewards that provide incentive for actions that do not necessarily support the documented objectives. With regard to accountability, it can be assumed that human errors that result in corporate calamities may be attributed to defective human resource process, especially those liked to the acquisition, development, motivation and management of labour (Campbell and Craig, 2005, p. 526). Weak management of people and change in the organization has been considered as the main causes of failures in several notable occurrences (Clayton, 2011, p. 4). For instance, in the case of Enron and Bear steams, the rewards structure that motivated dangerous conduct easily overpowered the impact of control systems that were intended to prevent frauds and moral breaches. The numerous slayings that took place at Fort Hood may have been avoided had the army improved its connections between managing of performances and important event report structures. Toyota is estimated to have lost more than one hundred and fifty million dollars every week during the recall period and eventually lost more than thirty billion dollars in stock valuation. The long-term effects of the original grounds that resulted in the circumstances Toyota found itself in may make the organization lose huge losses that may run into billions (Pride, Hughes and Kapoor, 2012, p. 242). The defects in the recalled vehicles were already known to Toyota’s management prior to any corrective measures to be taken and the company adopted decisive measures to keep the facts hidden and misrepresent the magnitude of the crisis. The principal issue of not acting on the information in a way that was consistent with the company’s design may be considered as a rewards issue that resembles to one at Enron. When the company rewarded the managers in a disproportionate manner for their activities towards cost-containment against maintaining the quality of their products, it led to a situation where all the personnel involved ignored the facts and denied that a problem existed. If the employee had been trained appropriately and subjected to balanced rewards while their performance was monitored, then this situation would not have escalated the way it did. The problems faced by Toyota mainly originated for the workers making poor decisions, failing to deal negative news and inability to make a business case for instantaneous action created a situation where the human resource operations that may have had an effect on these decisions, should be assessed (Scudder and Scudder, 2012, p. 177). The human resource activities that must be looked at as suspect include the process of rewarding the employees, training, management of performances as well as the hiring process. Similar to other companies, the role of the corporate reward process of Toyota is the encouragement and motivation of the right behaviour while discouraging the negative behaviours. It is imperative that the reward process motivates collection of information about the prevailing issues and it is equally vital to make sure that the workers, who have success in getting the executives to act immediately on negative information, are rewarded. In Toyota’s case, it is important to find out if the rapid increase in sales, as well as lean cost cutting was acknowledged and rewarded too much to the point that there was no one willing to halt on growth and concentrate on safety. There is a possibility that the rewards for the demonstration of error free results were so high that even the clear errors were ignored. On the other hand, the main aim of training is to ensure that the workers have the appropriate skills and abilities to identify and handle all the circumstances they may experience (Singh, 2010, p. 104). Toyota is renowned for its four-step cycle that entails planning, doing, checking and acting, and training among managers has to put more focus on checking and acting (Klitgaard, 2005, p. 222). Additionally, in a setting where safety is utmost, all the people concerned should have been given training on the indicators of groupthink and ways of avoiding excess discounting and ignoring of external safety information of a negative nature. It should be considered that had the training been more effective, the managers would have registered more success in the process of convincing the top management to deal with the negative information they received. The hiring process for any company involves bringing into the organization people who perform exceptionally and possess exceptional skills and abilities that are necessary for handling the most intricate issues. Below per, recruitment and assessment procedures can lead to hiring people who ignore issues and are not willing to cooperate with the management. In this regard, Toyota may have inadequately designed its hiring processes making it employ people who did not have experience in the necessary confrontational techniques. The company may also have hired people who are poor learners who did not adjust after they were trained by the company. Further, the performance management processes are supposed to regularly monitor or appraise the performance of employees so that problem behaviours may be identified before they escalate to levels that will make them difficult to deal with. If the measurement systems at Toyota comprised of elements that measured responsiveness to negative information, the Toyota may have been able to circumvent the turmoil it went through. There is a possibility that the performance appraisals as well as performance monitoring processes associated with Toyota may have been designed poorly to a point that they were not able to identify and errors. The high level of trust that Toyota accords to its workers may have been a factor in its turmoil, as this trust does not include instigating practical metrics and balances. The human resource department of the company did not create cultured measures that could produce alerts that would warn the senior management prior to small issues becoming unmanageable. The corporate culture that is associated with a specific company is tasked with informally driving the conduct of workers so that the conduct can closely abide by the core values of the company (Drake, Gulman and Roberts, 2005, p. 11). Since the issues, that Toyota faced took place under tough driving conditions, blaming the production group may not be the way forward as this group is renowned for six Sigma qualities in its operations while the negative reports were associated with aspects such as management, risk assessment as well corporate and customer satisfaction. Therefore, it is the culture that is in the corporate offices that needs to be monitored more closely instead if assuming that the culture has already created an alignment. There is a possibility that the corporate culture at Toyota developed leaders who focused more on saving the reputation of the company from negative publicity to the point that they postponed announcing the recall for years. The failure by Toyota’s human resource department to assess and monitor the corporate culture of the company may have contributed to the misalignment that resulted. It is also possible that they corporate culture of the company was prejudiced towards information of a positive nature that workers ended up remaining quiet despite their professional responsibility to voice their issues on safety. The main aim of leadership development along with succession planning processes is ensuring that an adequate percentage of the leadership has the appropriate skills and decision-making capabilities are afforded to core leadership positions (Cadwell, 2004, p. 72). There is likelihood that the development of leadership as well as promotion procedures was not able to produce and make leaders with the capacity to confront issues and make difficult decisions. The leadership processes at Toyota were outmoded to the extent that they generated the wrong kinds of leaders who possessed outmoded competencies and had no experience in working in the automotive industry that is constantly evolving. Retention programs in all the companies aim at identifying and maintaining the employees who perform exceptionally in the organization as well as those with skills that are important to the goals of the organization. The retention program at Toyota may have ignored the people who voiced their concerns and there is a further possibility that these people became frustrated to the point that they decided to leave the company. In terms of risk assessment , there are numerous human resource departments in the world that do not boast of a risk assessment team which is supposed to focus on identifying and calculating the risks that result from weak processes associated with the workers. In Toyota’s case, the human resource department should have cooperated with corporate risk management to make sure that the workers have an ability to calculate the actual long-term costs of ignoring information concerning product failure. Therefore, the human resource department should have worked with the risk management professionals in order to develop the capacity to identify and quantify the effects on revenues of major HR mistakes that include a high degree of hiring failures, an escalated turnover rate and the costs associated with retaining bad managers and employees. The problems that Toyota went through cannot be attributed to the mistakes of one person but instead to a series of mistakes throughout the company which were linked to each other (Swan and Zou, 2012, p. 104). There was an involvement of numerous corporate aspects that included customer services, associations with the government, and the management of vendors as well as public relations, which were critical to crashing of the systematic management of Toyota. The main lesson that other companies are supposed to learn from Toyota’s case is that Human Relations is supposed to regularly test and assess all the processes that may allow this degree of error to take place. Recommendations for dealing with the HR issues at Toyota The main standard for human resource departments is upholding the values of the company and collaborating with the manufacturing department with the aim of attaining the objectives of the company. In Toyota’s case, none of these aspects was achieved and there was many data that substantiated this including regular opinion surveys and team member meetings. It is important that since this gap has been identified and acknowledged, ways of solving this issue be pursued. Typically, the issues identified at Toyota are addressed by bringing together a cross-functional and cross-level team while allowing these teams to utilize problem-solving processes as well as empowering them to make decisions that are needed to deal with the issues at hand. The top management should develop objectives of the activities and guidelines that act as a steering committee to a functional team while identifying goals and outcomes as an enhanced teamwork in both HR and manufacturing, developing skills of individual people in the HR and integrating HR principles into every section, developing increased flexibility in the employees. Others include improving communication along with access to the HR team for the members of various teams, collecting feedback from the customers, benchmarking other organizations, listing all the roles of the members as well as identifying the main roles of HR and then aligning the organization appropriately. The working team should spend enough time getting feedback from the customers while benchmarking as well as more time for analysis of the collected information. The team should consider the structure of the human resource organization so that it can reveal the main issue, which appears to be the fact the manufacturing aspects were not properly collaborating with the HR department to develop a relationship founded on trust. Dealing with administrative questions is a commonplace occurrence for human resource department in typical organizations, but in the case of Toyota, the activities are different. Therefore, Toyota should develop a new HR organization around four main roles and their corresponding functions. In regard to strategic partners, the human resource department should act as a critical component of the business team, engage the business team in audits that will lead to clear priorities, provide HR related resources to the business and understand clearly the prevailing business environment both internally and externally. The HR should also get administrative experts who will be charged with the development and management of guidelines that will lead to an effective management of human resource. These administrative experts will act as consultants in disciplines of expertise while supporting other HR experts and clients, as well as be responsible for the progressive improvements of initiative and operations in the company. An employee champion should also be appointed to speak for the workers in terms of their needs along with management concerns relating to the relations of the employees. The employee champions should have an awareness of the other workers and be able to predict their problems and issues. Further, they should be accessible and approachable to the workers and providing them with the necessary resources that are needed to develop a commitment to achieving the goals of the company. Finally, change agents are required to inspire and support organizational change strategies that will support the goals of the company, act as managers of the processes to make sure efficient change management and increasingly monitor the progress of the company in its internal and external operations. The change agents are required to remain up-to-date about the methods and practices involved in change so that they can be in a position to efficiently manage change and react to the needs of the organization. Toyota should develop new HR structures that will be able to facilitate these four roles with the structures having a sub-HR team in every manufacturing section to improve the collaboration between manufacturing management and the roles of the HR department. This team should perform the role of being the champion of the employees as well as their strategic partner in developments on the job, improvement of processes; the provision of training is particular sections as well as business and strategic planning. The team should also be a strategic partner in relation to employee relations through advocating for the employees, resolving concerns and conducting peer reviews, and HR systems through recommending salaried promotions and providing training for salaried members. This form of change has the likelihood of leading to mutually beneficial partnership between the manufacturing department and the HR department to allow them to work on yearly business plans as a team. This will lead to enhanced collaboration and integration of the two sections of the company while simultaneously preventing some concerns of the team members from clouding the operations of the company. This move will go a long way in avoiding “silos” in the company while at the same time preventing the transformation of the HR and manufacturing silos into horizontal pipes that are not functional. Therefore, if the Human Resource department and the manufacturing department are two silos and the company separates into small teams that work closely with the management, it will assist in the cooperation of each but make it more difficult to make sure there is fairness and consistency throughout all the departments in the company. Therefore, there should be a centralized HR administration that should be separated into particular functions to allow it to deal with the issues that are identified. This centralized HR group should be created with the aim of connecting the rest of the teams to create consistency and fairness. The team should deal with the functions that relate to the personnel such as their benefits, transfer structures and their staffing and recruitment. It should also address health and safety concerns such medical leaves of absence, investigations of early symptoms and support, health evaluations of new employees and health assessments among other aspects. Regarding employee relations, it should develop policies and training programs as well as recognizing communication, and in training, it should address the process of promoting employees, training of team leaders, provide problem solving training and suggest training that will cover the entire company. This centralized group will give Toyota the capacity to concentrate on planning and setting of policies in order to become experts in their specific areas. All the concerns should also be tracked through using computers in order to ensure that the concerns are brought closure in the standard time so that the trust of the team member in the HR department may be restored and they are not left waiting for answers. Tracking issues through the computer also, assists to improve operations continuously by considering the most frequently asked questions and then applying the problem-solving approaches that will deal with any system breakdown. Bottom of Form Conclusion The public reputation of Toyota was severely hurt when the company had to recall vehicles that affected by unintended acceleration in 2009 and 2010 (Sodhi and Tang, 2012, p. 24). During this time, the company was slow to deal with and manage the crisis partly because of its management structure that prevented it from being able to make instantaneous decisions. Toyota has also been at the receiving end of criticism concerning its plain and safe styling of the vehicles it has been manufacturing in the recent years. Previously, Toyota’s global efforts have been hindered been hampered by its resistance to include outsiders and people who were not of Japanese origin to the decision making body of the company. This has eventually changed as part of a wider strategic plan developed by Toyoda shortly after he became the CEO of the company that was started by his grandfather. Change is a necessary aspect as far as Toyota is concerned and the company should consider the external factors that include global market share are issues concerned with the environment as well as health awareness when making improvements to its human resource operations. All the operations of the company are linked to its main shareholders that include the customers, workers and competitors making it important to focus on the responses that will come from all the stakeholders during the process of change. The organizational objectives of Toyota as well as the Global Vision 2020 are affected by the performance and work return as well as the reactions that will come from the stakeholders making its critical to develop a positive image in terms of strategic changes for Toyota and the stakeholders associated with the company. Bibliography Bohlander, G., Snell, S. and Sherman, A. 2001, Managing human resources, South-Western College Pub, Cincinnati, Ohio. Cadwell, C. 2004, Leadership skills for managers, fourth edition, American Management Association, New York. Campbell, D. and Craig, T. 2005, Organisations and the business environment, Elsevier Butterworth-Heinemann, Amsterdam. Clayton, M. 2011, Risk happens!, Marshall Cavendish Business, London. Dawson, C. 2011, Lexus, John Wiley & Sons (Asia), Singapore. Drake, S., Gulman, M. and Roberts, S. 2005, Light their fire, Dearborn Trade Pub, Chicago. Klitgaard, R. 2005, High-performance government, RAND, Santa Monica, CA. Phillips-Beaudan, E. 2012, Creative execution, John Wiley & Sons Canada, Toronto. Pride, W., Hughes, R. and Kapoor, J. 2012, Business, South-Western Cengage Learning, Mason, OH. Rasiah, R., Sadoi, Y. and Busser, R. 2013, Multinationals, Technology and Localization in Automotive Firms in Asia, Taylor and Francis, Hoboken. Ryu, D. 2012, Improving reliability and quality for product success, CRC Press, Boca Raton, FL. Scudder, V. and Scudder, K. 2012, World class communication, Wiley, Hoboken, N.J. Sehgal, V. 2011, Supply chain as strategic asset, Wiley, Hoboken, N.J. Singh, K. 2010, Organizational behavior, Pearson, Chandigarh. Sodhi, M. and Tang, C. 2012, Managing supply chain risk, Springer, New York. Swan, S. and Zou, S. 2012, Interdisciplinary Approaches to Product Design, Innovation, and Branding in International Marketing, Emerald Group Publishing Limited, Bingley. White, J. and Ingrassia, P. 2014, Comeback, Simon & Schuster, New York. Read More