Impact of Toyotas Organizational Culture on Performance - Case Study Example

Impact of Toyota’s Organizational Culture on Performance Name: Institution Table of Contents Introduction 2 Models of Organization Culture 3 Overview of Toyota Motor Corporation 4 Toyota Organizational Culture 4 Importance of Culture in Strategic Development of Toyota Corporation 9 Conclusion 11 References 13 Introduction Edgar Schein an organizational culture theorist, defined culture as a pattern of shared general assumptions and beliefs that a group learns as it solves its problems of internal integration and external adaptation that has been effectively applied and worked well for validity consideration, and can be learnt by new members as the right way to think, perceive and feel in line with the problems experienced (Schein, 2004). This study analyzes the culture of Toyota Motor Corporation and its effectiveness in enhancing the company’s performance. Models of Organization Culture Organization culture has been defined in various ways over the past. Edgar Schein an organizational culture theorist, defined culture as a pattern of shared general assumptions and beliefs that a group learns as it solves its problems of internal integration and external adaptation that has been effectively applied and worked well for validity consideration, and can be learnt by new members as the right way to think, perceive and feel in line with the problems experienced (Schein, 2004). According to Robbins (1990), organizational culture has a connection with the system of shared meaning and beliefs. Robbins (1990), culture has got connected characteristics, for instance, communication patterns, individual initiative, direction, risk tolerance, control, reward system, integration, identity, management support and conflict tolerance. According to Schein (2004), culture can be divided into three levels, that is, norms and values, artifacts and the underlying assumptions. Charles Handy however suggested four types of cultures, namely, role culture, power culture, person culture and task culture (Boddy, 2008). On the other hand, according to Hoftede, culture has five dimensions, which comprises of, individualism and collectivism, power distance, avoidance, uncertainty, masculinity, femininity, and time orientation (Hofstede, 2005). Overview of Toyota Motor Corporation Toyota Motor Company was created in the year 1937. In 1950, Toyota Moto Sales was created which later merged with the Toyota motor company in 1982 to form Toyota Motor Corporation. After two years, the company entered into a joint venture with General Motors. After the joint venture, the companies engaged in production of vehicles in the United States of America (Fang &. Kleiner, 2003). In 1989, the company launched the Lexus brand of car. Production in the United Kingdom began in 1992. In the early 1990’s Toyota Motor Corporation launched various vehicle brands including sport cars, luxurious cars, huge pick-ups and SUVs for the American market. Production of Toyota’s Prius brand began in the year 1997. The company has its headquarters in Tokyo, Japan (Fang &. Kleiner, 2003). The company’s main products and services include auto manufacturing, robot technologies, environmental technologies, personal mobility vehicles, ITS and Toyota financial services (Hoseus &. Liker, 2008). Toyota Organizational Culture Analysis of the Toyota culture indicates that it covers two models. One of the models of the company’s culture is indicated in the ‘Toyota Way 2001’, which is its internal training document (Hoseus, &, Liker. 2008). The internal training document provides the employees with the company management style, values and features. In the model the culture of Toyota is based on two pillars, that is, respect for people and continuous improvement. Continuous improvement is further divided into, genchi genbitsu, kaizen and challenge (Hoseus, &, Liker. 2008). Gench genbitsu – this involves looking for various ways of coming up with right decisions and working towards achieving organizational goals Kaizen – Kaizen comprises of innovation, permanent evolution and continuous improvement of all the areas in an organization (Elsey &, Fujiwara, 2000). Challenge – Challenge entails coming up with new ideas, encountering various risks, problems, and long-term thinking. Respect for the people is the second pillar in the internal training document. Respect for the people is further divided into teamwork and respect Teamwork – Toyota’s cultures requires its employees to work as a team in order for the individuals to improve and develop their professionalism. Teamwork also helps in motivating employees in the organization. Respect – Toyota’s culture requires its employees to create mutual trust among themselves, accept their responsibilities, create harmony and to respect everybody that forms part of the company. Another model that is captured in Toyotas culture is Jeffrey Liker 4P model, which comprises of process, philosophy, problem solving and people and partners. Problem solving – Here, employees work towards finding ways of solving company problems that may arise, a process that involves constant learning and self-improvement. People and Partners – Under this, the company’s culture requires people to work as a team. People enhance a company’s efficiency. Philosophy – It is the culture of Toyota to draw more attention to customer need and expectations in order to ensure maximum satisfaction. Process – Toyota is in a position to create an effective process since its investments is geared towards research and development. In both the models, there is a close link and all the elements of the models are very important and should be taken into consideration. Both the models considers respect for the people and continuous improvement as the basic elements in Toyota culture. Toyota employees are encouraged to follow all processes involved in performing a task in order to ensure they achieve the desired results. Toyota Company does not praise its employees until they achieve the desired results, a factor that is also covered in the company objectives (Trompenaars &., Woolliams, 2003). The company also encourages its employees to always follow the due process in order to enhance their learning process and be able to grasp important aspects of any project they handle. Toyota Company considers teamwork as an important aspect that enhances its performance. Each team in the organization comprises of five people since it is easier to control five members (Hoseus, &, Liker. 2008). In a team of five, members can easily develop mutual trust and be able to agree on various ways of solving the company problems. To ensure effectiveness of the teams, Toyota Company: Employs matrix management style Decisions are made based on the company standards Each team has a team leader whose functions must be clearly stated Every team in Toyota company has a team leader who is responsible for supervision, control, problem solution, assurance of members safety and examination of work process and the results achieved. The team leader is also responsible for guiding new employees through the organization culture (Liker, 2004). Team leader is also responsible for checking the each team member self-improvement since employees are expected to improve themselves and learn from other members of the group. A general view of the organization performance, it is clear that the performance depends on mutual trust that exists between the Toyota employees and the employers (Liker, 2004). Toyota employees are more concerned with the personal growth, safe working environment, paychecks, reasonable benefits, organizational long-term success, organization profit and quality of the service delivery. Toyota Company has been able to have mutual trust with its employees since the company culture is based on persistent improvement and long term mutual propensity. Employees work towards achieving the company objectives while in return the company offers the best compensation to its employees (Hoseus, &, Liker. 2008). . The goals of the company include long-term success, profitability, contribution to the economic growth, corporate social responsibility and provision of excellent services and goods. On the other hand, the company employees are provided with paychecks, good working environment, and excellent benefits as they work towards personal and organizational growth. These ensures the company and its employees develop long-term mutual prosperity as it enhances mutual trust (Hoseus, &, Liker. 2008). In addition, Toyota Company has worked towards eliminating social discrimination between the top-level management and other employees in the organization. The company has ensured that all of its members equally enjoy its services, for instance, all members can park anywhere within the parking region since there are no executive parking areas, there exists same uniform for all the employees and offices and dining rooms are similar. Furthermore, the company expects its employees to be fully devoted to the company and naturally be motivated by what they do and learn in the organization (Hoseus, &, Liker. 2008). Toyota culture exhibits a particular employee development process to enhance their devotion and motivation, for example, the organization employs an individual who learns and understands the nature of his job, dedicates himself, may get new or better job after promotion, learns and understand the nature of the new job, develops new skills and experience. The whole process therefore inspires the company employees since everybody wants promotion to higher levels (Hoseus, &, Liker. 2008). With the aim of promotion, employees are inspired and deeply dedicated to the company. Mutual trust that exists between the company and its employees is an important element that enables the two parties to address their problems amicably. Toyota Company develops a culture for its departments, after which each department can develop their subcultures. The company assigns its managers in various departments from time to time in order to enable them to comment on work done in each department, develop team members and analyze the culture of each department (Hoseus, &, Liker. 2008). Toyota Company bases its culture of problem solving on the relationship between the people and the products produced. The company requires employees who are able to work as a team, trust team members and their leaders. In addition, the company trains its employees in order to enhance their competency so they can identify problems in the organization and be able to solve them. Toyota culture facilitates the organization stability, service delivery, standardization and visualization (Hoseus, &, Liker. 2008). . Importance of Culture in Strategic Development of Toyota Corporation Analysis of Toyota culture indicates that the company’s culture reflects Japan’s culture. However, the company’s culture has some uniqueness since Toyota its own approach in managing the company affairs. For example after the Second World War while Toyota was working towards the creation of a production system that could perfectly suit Japan, other companies in Japan were busy copying the United States mass production system. Toyota argued that it needed its own system of production since Japan cannot be compared with USA that has various natural resources (Liker, 2004). Japanese culture has been viewed as a family culture, a type of culture that allows the other employees and the managers to mutually coexist. It is a type of culture where the manager is a teacher and the team leader. Hoftede argues that culture of the Japanese is bases on collectivism with male domination, strict laws, rules and regulations in the work place and long-term orientation. These elements are captured in the Toyota management style making the company unique and successfully prosper internationally (Hoseus, &, Liker. 2008). . Toyota is an international company and every time the company establishes its shops in different countries across the world. To implement its culture in these countries, Toyota conducts a research on the environmental requirements and the national needs. Toyota has a policy of ‘Right Cars for the Right markets’, which is followed to enhance success in various countries. For instance, Toyota has designed Highlander and Tundra for the United States. The cars are hybrid cars that are environmental friendly and huge in size since customers in America demand cars which are huge (Sergey, 2012). Toyota’ culture enables it produce cars which are affordable and of the right quality. The company invests in research, development, and innovation in order to produce high quality cars at a lower cost. In addition, the principles of Toyota culture helps in its strategic development, for instance the principle of teamwork, continuous improvement, mutual trust and long-term orientation (Sergey, 2012). Anytime Toyota Company sets up a subsidiary in any country, it ensures that the subsidiary implements all the principles and aspects of its culture, for instance the company requires all its subsidiaries to operate in conformity with the principles of quality standards and lean production. To ensure the principles and aspects of its cultures are implemented, Toyota Company deploys kaizen instructors in various countries with its subsidiaries to offer lessons on the company cultures. The kaizen instructors also enhance the principle of continuous learning and improvement by transferring skills, technologies and experiences in the subsidiaries (Elsey, &, Fujiwara, 2000). To reduce its costs and ensure production of affordable cars, the company retains most of its workers who have reached the age of retirement. These employees are always provided with jobs in the overseas due to the experience they have in the industry. Such employees are able to offer teaching and training to non – Japanese employees and new recruits in the organization due to the experience they possess in the industry. Furthermore, the culture of retaining employees who are past their retirement age acts as a motivating factor enabling them to fully devote themselves to organization work (Sergey, 2012). Toyota also concentrates on refining its production system and technological innovation. These factors have enabled the company to produce reliable and high quality vehicles at low costs, thus forming its competitive strategy. Finally, Toyota has an effective production system enabling it to produce vehicles at low cost and of high quality. Moreover, kaizen human resources and technological innovation are some of the forces that have enabled Toyota to evolve over the years. Conclusion Analysis of the Toyota’s principles of management is based on the Schein cultural model, which comprises of values and norms, behavior and artifacts and organization underlying assumptions. Hoftede argues that culture of the Japanese is bases on collectivism with male domination, strict laws, rules and regulations in the work place and long-term orientation. Japanese company cultures are more of family like culture. Furthermore, Toyota culture reflects the Japanese culture. Toyota’s culture is based on teamwork, long-term thinking, continuous learning, improvement, mutual trust, and respect for the people. Toyota’s cultural principles help it to develop strategically and be able to achieve its objective of thriving in international markets. These principles enable the company to produce low costs vehicles that fit in each market. Further analysis of the company culture shows that the company retains more of its workers and most of them have worked for more than ten years in the company. These have made its members to appreciate the company and be able to view it as their own organization. In addition, other factors that has led to better performance of Toyota include, highly qualified human resources and technological innovation. References Boddy, D. (2008), Management. An Introduction, 4th Edition, Essex: Pearson Education Limited Elsey B., Fujiwara A., (2000), 'Kaizen and technology transfer instructors as work-based learning facilitators on overseas transplants: a case study', Journal of Workplace Learining, 12(8), pp.333-341 Fang S., Kleiner B.H., (2003), ‘Excellence at Toyota Motor manufacturing in the United States’, Management Research News, 22(2/3/4), pp.116-122 Hofstede, Geert H. (2005), Cultures and organizations: software of the mind, Rev. and expanded 2nd ed., New York; London: McGraw-Hill Hofstede, Geert H. (2005), Cultures and organizations: software of the mind, Rev. and expanded 2nd ed., New York; London: McGraw-Hill Hoseus M., Liker J.K., (2008), Toyota Culture: The Heart and the Soul of the Toyota Way, New York: Print Matters Inc. Liker J.K., (2004), The Toyota Way: 14 management principles from the world’s best manufacture, New York: McGraw-Hill Robbins S.P., (1990), Organization Theory: Structure, Design, and Applications, Third Edition, San Diego: Prentice-Hall International Inc. Schein E.H., (2004), Organizational Culture and Leadership, Third Edition, San Francisco: Jossey-Bass Sergey S. (2012) International Management New York: Print Matters Inc. Trompenaars F., Woolliams P., (2003) Business Across Cultures, West Sussex: Capstone Publishing (first published in 2003) Read More