Element

Competitive advantage through HR management

Define the Problem
Developing exceptional people has always been Toyotas number one priority. This has
become ingrained in the Toyota Way as a cultural value throughout the company and is
believed by Toyota leaders as their only source of differentiation 1. However, HR
management fails to align its training capacity with Toyotas high target growth.
Toyota set targets to surpass General Motors as the worlds number one car maker that
would require for them to rapidly increase global market share from 7.3% in 1995 to 10%
over the next decade. Toyota did in fact achieved a global market share of 9.7% in 1998 and
set a new target of 15% by 2010 2. However, these accelerated growth cycles pushed
Toyotas human resources to the limit. In order to meet the targets, Toyota hired significant
numbers of new employees including overseas contract engineers and local temporary
engineers. However, training and development did not keep up with the increased growth.
Consequently, these inexperienced engineers who were not familiar with Toyotas standard
practices or did not internalize Toyotas values contribute to quality glitches in the 2010 recall
incident (Independent report for Toyota, p7).
Current Strategies
Toyota slowed down product development by adding 1,000 quality engineers to the current
team. It also aimed to reduce outside engineers globally from 30% to 10% (What really
happened to Toyota).
However, the above strategies do not address the root cause of the problem. Merely
reducing the size of temporary hires prevent the repeat of quality glitches since the hires
are . Instead, adequate training should be provided to ensure the hires are up to Toyotas
standards and will keep up with the growth target.
New Strategies
Therefore, the following two strategies are proposed:

Implement training programme for contract engineers

Since hiring contract engineers is necessary for Toyota to strive for the fast growth goals,
training needs to be provided in order to help them adapt Toyotas standard practices and
internalize the Toyota values. This will help build a common understanding among all
employees so that they could work together to maintain consistency in Toyotas product
quality.

Management to work with HR team to set realistic growth target in view of the
available resources

HR team should also coordinate with management during goal-setting process so that the
development goals would not strain the current human capital or come at the sacrifice of
training standards for new hires.
Implementation Feasibility
The second proposed solution may limit Toyotas growth plan. As an organization actively
seeking for expansion, human capital should be fully employed and developed to its
maximum potential.
1 http://www.thetoyotaway.org/excerpts.html
2 http://www.qualitydigest.com/inside/twitter-ed/toyota-there-are-always-limits-growth.html

In contrast, training programme for contract engineers allow Toyota to fully utilize its human
resource to grow its market share sustainably. Besides, it is also highly aligned with its
upheld belief that developing people is its top priority. Training and development
programmes allow the contract engineers to better understand the corporate culture and
standards thus incorporate them into their daily work. Therefore, this is a more effective
solution that targets the root cause.
Timeline

Conduct
Training
Needs
Assessme
nt

Design
Training
Program
me

Determin
e Training
Method

Evaluatio
n During
and After
Training

Action plan
Week
How to carry out the action
Step 1
Conduct
training
needs
assessmen
t
Step 2
Design
training
programme

Use survey or interview to

find out contract engineers
level of understanding of
corporate
values and
standards
HR managers to design the
programme with Japanese
veteran field professional
Training should emphasize
on:
-

Step 3
Determine
training
method

How to monitor and

measure
Survey
or
interview
questions to be drafted by
HR

Management to assess
the feasibility and HR
managers to incorporate
the feedback and revise
the design accordingly.

Toyota Way and other

key values
Hard skills
Standard practices
Importance of reporting
potential quality problems

All employees whether local

or overseas-hires are to
undergo trainings of the
same standard

HR
managers
should
assign the personnel with
the relevant expertise and
experience to conduct the
training.
Japanese veteran field
professional should be
dispatched to oversee the
progress
and
ensure

1 2 3 4 5 6 7

training is up to
expected standard
Step 4
Evaluation
during and
after
training

the

Kirkpatrick model of training

evaluation
Step 1: Reaction
HR managers are to gather
feedback
about
the
effectiveness
of
the
programme and how it could
be improved.
Step 2: Learning
Trainees are required to give
presentation to demonstrate
learning outcome.
Step 3: Behavior
HR
managers
are
to
Implement monthly feedback
system
which
allows
managers
to
evaluate
performance of employees
and check if the training is
indeed effective in equipping
skillsets and also imparting
key values of Toyota.
Step 4: Results
Managers to check if quality
management of Toyota has
improved substantially over
time

Assess how well the stakeholders/beneficiaries are involved

HR team designs and executes the training programme. They
Areas of risks and how to address possible side-effects:
Substantial amount of time and resources to be put in to devise and ensure the effective
implementation. Besides, Japanese veteran field professionals dispatched have to stop its
current duty in order to make time for the training of overseas employees.
To mitigate the potential side-effects, management should emphasize on the importance of
workforce quality in order to maintain its competitive edge gained over the years. Therefore,
Such programme also need to be constantly revised to keep the skillsets updated with the
development in the industry and ensure the traditional values is upheld.
Evaluate Outcomes
HR team will need to evaluate outcomes of the training programme after it is completed so
that it could be improved for the next batch of engineers.
A direct measure of the outcome should be how well the trained engineers are able to
adhere to Toyotas own standard practices at work. For example, the way they solve
problems and react to different situations reflects their training outcomes. This could be

evaluated through feedback from senior or permanent engineers working with them. Their
own feedback on how well they adapt to Toyotas working environment and standards is also
important to assess the effectiveness of training programme.
Another measure of outcomes would be
-----------------------------------------------------(END)------------------------------------------------------------Firstly, HR team developed the reward system in a way that focuses on cost-cutting rather
than quality-control. It is reported that Toyota disproportionately rewarded managers for
cost-containment versus sustaining product quality3.
Currently, teams and managers receive JIT rewards for completing tasks on time with little
waste. Such JIT rewards include monetary incentives, gold and silver factory floor awards, a
QC circle prize, and a QC circle contest4. Therefore, employees tend to be negligent about
quality problems occurred in order to achieve cost-cutting goals.
HR team should develop a reward and performance monitoring system based on a balance
of cost-containment and quality management. For example, manufacturing teams that
maintain the high quality of products at adequate cost will be rewarded with monetary
incentives. This helps shift managers focus from merely cost-cutting back to quality-control.
The company should also reward employees who point out potential quality problems along
the way during their manufacturing process. This encourages more people to take the
responsibility to monitor the process, ensuring higher quality.
Little to talk about Toyotas culture should be more effectively incorporated through
training of new employees and bonding activities. HR team needs to ensure that every
employee understands the companys concern of quality throughout the manufacturing
process.
Toyota practices centralized decision-making
culture does not encourage feedback on quality problems. Employees are not willing to
report negative news or potential problems discovered in manufacturing process as the
company culture does not provide enough incentive for them to do so. They are afraid that
recall may cause more severe impact, thus usually avoid the problem until fatal incident
happened and external investigation came in (Linkedin).
The Toyota Way principle 5 stated Build a culture of stopping to fix problems, to get quality
right the first time.5 However, in the 2010 incident, after-sales service employees neglected
the quality concerns raised by customers. As a result, Toyota had to conduct a massive
recall which escalated the impact of the quality glitch. Thus, we can see that such principle is
not very effectively implemented through the training process of relevant employees.
Cost-effect analysis
3 https://www.linkedin.com/pulse/20140910121649-31890108-a-leadership-case-study-how-hr-caused-toyota-crash

4Should You Reward Employees For Success With JIT Processes http://www.brighthubpm.com/monitoring-projects/74341appropriate-reward-systems-for-jit-processes/

5 http://www.toyota-global.com/company/history_of_toyota/75years/data/conditions/precepts/index.html

BUT Indepth approach to solve the problem

More manageable and measurable
Culture approach:
Make changes from the root
Slow process
Hard to control by merely training

HR PROCESSES:
1. Hiring
Lack of manpower temp. contract engineers but may not meet the standard of
TOYOTA communication prob. with suppliers AND diff. ways of doing things not
sustainable quality prob.
2. Training
-

Ignorance of customers complaints about potential problems

Should ensure the employees have met the standard after training

3. Feedback
Low incentives for employees to feedback on potential quality problems OR managers
ignorance of the feedback
4. Reward & Compensation System
-

Reward based on quantity not quality because of the high growth targets

Cost control targets sacrifices quality measures

Toyotas accelerator
pedal recall, which affected a vast number of vehicles, came down to design flaw was in a
single, relatively simple part used on many models and sourced from a non-Japanese
supplier in order to diversify the supply chain and reduce costs
FEASIBILITY

Toyota had set targets to surpass General Motors as the worlds number one car maker that
would have required for them to rapidly increase their global share from 7.3% in 1995 to
10% over the next decade. Toyota did in fact achieved a global market share of 9.7% in
1998 and set a new target of 15% by 2010. However, these growth target and accelerated
growth cycles pushed Toyotas human resources to the limit becoming the catalyst for the
resulting quality failures in their products.
http://www.qualitydigest.com/inside/twitter-ed/toyota-there-are-always-limits-growth.html
In order to meet their targets, Toyota had hired significant numbers of new employees and
increased their overseas manufacturing facilities from 37 to 53 between the years 2002 and
2008. However, the expansion of the organization allowed management little opportunity to
adjust their systems and practices to properly integrate and accommodate the new changes
as the company was unable to support continuous improvement through training and
developing their workers.
Organizational incentives for Toyota also became skewed towards growth, and neglected the
traditional specific policies that focused on quality, resulting in more managerial decisions
becoming biased in favour of the short-term rewards.
Strategies

Controls to determine performance goals?

Re-plan goals on all three levels: Strategic, Tactical, Operational

Solutions:
Current solutions:
In addition to unifying employees, the company has also allowed greater flexibility when it
comes to ways of working.
Traditionally there was a belief at Toyota that if youre not here, the work is not getting done.
Now the company is allowing more telecommuting as well as relaxed dress codes. Plus
decisions are now more manager-led. Things are a lot more liberal than when I started
working here 15 years ago, Kirkpatrick points out.
https://www.simply-communicate.com/case-studies/company-profile/how-toyota-executeswell-driven-strategy-recover-crisis