2012

HRD In Toyota Motor Corporation

Submitted To: Proff. Radhamohan Chabelu

Submitted By
YASH KUMAR GUPTA 11BSP2133 Section H

Human Resource Development in Toyota Culture

Introduction
From the founding of Toyoda Loom Works in the 1920s to the creation of Toyota Motor Co. in the 1940s, its leaders believed that the key to success was investment in its people. The Toyota culture has evolved since the company's founding and is the core competence of the company. It is the reason why operations are lean, cars hit the market on time and on budget, chief engineers developing cars deeply understand the customer, company executives anticipate long-term trends and have clear strategies, and every employee is vigorously working on achieving the annual plan of the company. The Toyota Way is first and foremost about culture -- the way people think and behave is deeply rooted in the company philosophy and its principles. At the core it is about respect for people and continuous improvement and this has not changed since the company's founding. Organizations of many kinds throughout the world have been borrowing specific methods from Toyota that have been turned into programs like lean manufacturing, lean enterprise, and lean six sigma. Underlying these programs is a fundamentally different assumption than we see in Toyota's culture. The assumption of these lean programs is that the right tools applied to specific problems by expertly trained individuals will dramatically improve business performance in a relatively short period of time. Toyota's underlying assumption is that carefully selected and developed people over long periods of time will continuously improve processes and ultimately lead to competitive advantage and mutual prosperity. How a change to lean management impacts the HR function? We will use as a model for lean management the original -- Toyota. We will see that in fact there is a very profound difference in HR at Toyota compared to traditional companies but perhaps not in the way we might think. Toyota's view is that lean management requires more highly developed people and deeper trust than in a mass-production system. People become the most critical part of the system and their willingness to identify and solve problems is what drives continuous improvement. As such, HR is arguably the most critical function in the enterprise. The accounting roles of HR are fairly trivial at Toyota compared to roles in developing people and creating a fair environment based on mutual trust.

What is the Role of HR in a Lean Enterprise? Toyota was the original model for lean and the concept of "just-in-time" epitomized the focus on waste elimination -- only make exactly what is needed, in the amount needed, when it is needed. In fact the just-in-time principle is one aspect of a broader philosophy represented by the Toyota production system. In TPS, the just-in-time concept is one pillar and the other is to build in quality at every step of the process, not allowing defects to propagate through the value stream. The foundation is stable and repeatable processes. In the center of TPS is the person who must be motivated to identify and solve problems. What does HR contribute to the creation and maintenance of Toyota culture? The human resource department at Toyota plays a very different role than that of processing people as a stream of assets. The Toyota Way views the way team associates are developed as the key competitive competency of the company. And since developing exceptional people is the most important work of the company, the organization charged with that responsibility had better be exceptional. One only has to look at the people who pass through HR as managers to notice something is different at Toyota. Managing directors, vice presidents of manufacturing and engineering, and some of the leading experts on the Toyota production system have spent time working in HR. Since lean management is a method for eliminating waste and the object of much of waste elimination is labour cost, one might think the main purpose of lean methods is head-count reduction. Toyota has a very different view. The tools of TPS are designed to surface problems so that people can solve those problems, thereby continually strengthening the system. In part because of Toyota's heritage in Eastern culture, the world is viewed as complex and dynamic. It is impossible to anticipate exactly what the future holds. So things like forecasts of demand and detailed schedules based on those forecasts are viewed with great suspicion. To create as much control as possible, Toyota views all plans as tentative and then uses problem solving to respond to the inevitable deviations that will occur from the plan. The just-in-time system is a good example of this. Many companies view JIT as an inventoryreduction system. Lower batch size and use pull systems to reduce inventory. Toyota also works hard to reduce inventory but for a different purpose. Large inventory buffers will hide problems. A piece of equipment breaks down or a person gets behind in their work and as long as there is inventory, the next process can keep working without interruption. In a JIT system, a problem in one process will quickly shut down the next process. Toyota uses an andon system and team members are instructed to pull a cord when they notice any deviation from standard which can stop the production line. The andon (light) goes on for all to see and the problem is immediately elevated to a high level of urgency and must be addressed.

How can we capture what we have learned and sustain it? The final step in Toyota's problem-solving process is to make the new method a standard. The new standard is followed until another problem occurs that exposes another weakness and a better solution is developed. Those trained in quality will recognize this as the plan-do-check-act cycle taught by W. Edwards Deming. The implication of this philosophy of management is quite profound. If TPS, or what we now call "lean," is intended to surface problems and people serve the function of problem detectors and problem solvers, certain conditions are necessary: 1. 2. 3. 4. 5. There must be a standard, so team members can recognize deviations as problems. Team members must be well trained to understand the standards. Team members cannot fear that exposing a problem will get them in trouble. Team members must be trained in problem-solving methods. Team members must be motivated to help the company achieve its goals.

Our vision: Be a company respected worldwide for producing the highest quality vehicles at the lowest cost in a safe environment. We will achieve this by following the principles of TPS, promoting mutual respect, living our values, and by maintaining an environment of continuous learning. Our Values: Safety -- To make safety and health the priority, we accept individual responsibility for our own safety as well as others. Customer Satisfaction -- To gain and hold our internal and external customers' respect and loyalty, we live by our philosophy that the "next process is our customer." Respect -- To achieve an environment where all team members treat other with dignity, trust each other, and care about the work we do, we foster initiative and creativity. Integrity -- To demonstrate the highest ethical standards in all interactions, we deliver on our commitments, admit our shortcomings, and act as an environmentally, socially, and economically responsible corporate citizen. Teamwork -- To ensure the success of our company, each team member has the responsibility to work together, and communicate honestly, share ideas, and ensure team member understanding. Continuous Improvement -- To contribute to our competitiveness and long-term success, we take responsibility for improving ourselves, our processes, and our products through innovative thinking, and continually challenge ourselves to improve, take pride in our work, and play an active role in making TMMK a better company.

The HR Reorganization Routinely at Toyota, problems identified are solved by getting a cross-functional and crosslevel team together and allowing them to use the problem-solving process and empowering them to make the decisions necessary to take care of the problems. In this case a senior-management team developed the goals of the activity and guidelines acting as a "steering committee" to a working team. The goals or outcomes of the activity were identified as: Improved teamwork within HR and with manufacturing. Development of individual skills in HR. Integration of HR principles into each section. Greater flexibility in the workforce. Improved communication and access to HR for team members. Improved consistency of policy applications across manufacturing areas.

The working team was made up of the assistant manager and specialist levels within the HR department. They were given the following directions: o o o o o o Gather input from customers (the team members and manufacturing management). Benchmark other organizations. Map out all current processes and flow. List all current member roles. Identify the key roles of HR and then align the organization accordingly. Operate within budget constraints.

The working team spent several months getting input from the customers and benchmarking, and then two more months of analysis. They looked at the current structure of the HR organization and found that the biggest problem with the current layout was that HR was literally and figuratively apart from the manufacturing sections and not doing a good job in partnering with them or being available to the team members and building the relationship of trust. The team also found a problem with the structure and the role of the HR rep. TMMK had the rep being the team member advocate one day, but if the team member went into a corrective action situation, the same rep may be sitting on the other side of the table from the team member as part of the investigation and disciplinary process. It was a logical consequence for the team members to see the HR reps as more of a management advocate than a team-member advocate, and as a result they were not confided in when there was a problem. The last thing the team discovered was that the reps were spending the majority of their time with administrative issues from the team members. They were answering questions about picnic dates and funeral leave benefits for a sister-in-law, but not solving issues and problems that the team members were having. Responding to administrative questions is a common role of HR in traditional companies, but not what Toyota was looking for.

As a result, the team then proposed that the "new HR" organization be structured around four key roles with the corresponding functions: 1. Strategic Partners

Act as an integral part of the business team. Engage the business team in systematic organizational audits resulting in clear priorities. Provide HR resources to the business. Possess clear understanding of current business conditions (internal and external). 2. Administrative Experts Develop and manage guidelines, plans, and policies for effectively managing human resources. Act as consultants in fields of expertise, supporting other HR professionals and other HR clients. Take responsibility for continuous improvement in programs and operations. 3. Employee Champions Speak for employee needs and management concerns about employee relations. Know the employees and anticipate their concerns and issues. Be available and approachable by employees. Be experts in assisting employees with concerns. Provide employees with the resources they need to commit themselves to meeting company objectives.

4. Change Agents Influence and drive organizational change strategies in support of business objectives. Manage the process to ensure successful change management. Continuously take the organization's pulse regarding both internal and external matters. Remain current about tools and practices of change in order to effectively and efficiently manage change and respond to the organization's requirements. The team proposed that the new HR structure be set up in order to facilitate these four roles. This new structure had a "mini HR team" set up in each of the manufacturing areas in order to do a better job of both partnering with manufacturing management and performing the role of team member advocate. This team performed the HR roles of both employee champions and strategic partners. The roles of the teams included: Development: on-the-job development, process improvement, section-specific training, coaching, section business and strategic planning. Employee Relations: employee advocate, concern resolutions, peer reviews, safety and health.

HR Systems: salaried promotions up to assistant manager, salaried relations, training for salaried members. The change resulted in a mutually beneficial partnership between manufacturing and HR. HR and manufacturing now work on the annual business plans together, resulting in better collaboration and integration of the two departments, while at the same time preventing some of the team member concerns from coming up like they used to. The move had addressed the problem of having "silos" in the organization. At the same time, the design was meant to prevent just taking the HR and manufacturing silos and turning them horizontally and creating "sewer pipes." In other words, if HR and manufacturing are two silos and Toyota splits HR into mini teams to work closer with management, it will help the collaboration of each but make it harder to ensure fairness and consistency across all of the departments. For this reason, the team recommended that there still be a central HR administration group that would be split into certain functions in order to address the issues that were highlighted. This central HR group was formed in order to connect the rest of the teams for consistency and fairness and to be the window to Toyota North American Headquarters. The group consisted of the following functions: Personnel -- Comp/benefits, payroll, staffing and recruiting, transfer system Health and Safety -- Medical leave of absence, ergonomics support, early symptom investigation support, family and medical leave, Americans With Disabilities Act, data reporting, new hire health evaluation, health assessment, workers' comp. Employee Relations -- Policy development and training, communications, recognition. Training -- Promotion process, team leader training, problem solving training, quality circles and suggestions, plant-wide training.

Improvements Resulting from Implementing the Team Member "One Stop" The final team in the central administration group was set up to be a projects and planning group. Their role was designed to be the "change agents" of the company, partnering with the manufacturing sections in order to work on improvements in areas such as: Management and organizational development. Internal Toyota production system development. Supplier development. Safety benchmarking and interfacing with affiliates as part of a global network.

Pete Gritton, vice president of human resources for TMMK and Toyota for all of North American manufacturing, summarizes how this restructuring helped the Georgetown plant with developing and sustaining the Toyota Culture:

"Who is the customer of HR? It is everybody. Our mission is to make sure that we get the maximum utilization out of all of our people whether it is team member on the floor, or a VP, or whoever. Everybody is the customer and we are trying to achieve a successful business, which requires everybody operating at the maximum level. It is company success that we are after. "With HR there is a potential danger of bureaucracy, but if HR is set up correctly, it does not have to be that way. The restructuring took us out of the role of "The HR Police" and put HR on the floor where we need to be. "Instead of managing from the 'Administrative Ivory Tower,' we sent HR people to the floor to work directly with management. We had gotten to the point in our maturity that it was time to work more closely with manufacturing, and it was time to share with manufacturing that authority -- to partner with manufacturing. "It gave the manufacturing people one-stop shopping. Before, we were set up here within silos. If a performance problem occurred, a person may start out talking with employee relations people and might be told the problem was with training and then they would go to the training person and be told it may be a skills issue and be told they need to go to the development people, and the manager is going from group to group, and this is where the bureaucracy comes in. "With the new system, all the manager had to do was talk to a team that is sitting right near him and the team covered all the functions, and they had the connection back to central HR, and the manager does not have to worry about that. "At the same time, our role became that of employee advocates, making sure the team members get a fair shake. There are systems to make sure values are being followed correctly." Toyota Culture (Trust and Improvement, Make it all Work): There are many distinctive characteristics of Toyota culture but one at the center is that Toyota people trust each other to an unusual degree for a large corporation. Moreover, it is assumed that everyone is responsible for continuous improvement via Plan-Do-Check-Act (PDCA). PDCA has gone beyond a tool and become integral to the culture -- probably one of the most difficult things to teach in America. PDCA is actually contrary to many aspects of Western culture. With an uncanny desire to do and get results and move on to the next problem, we are strong on the doing and weak on planning, checking and further action. Just "get on with it" is a common refrain. Continuous improvement via PDCA has become engrained in the Toyota culture at a very deep level and goes hand in hand with a deep level of trust. Replicating this in other companies is undoubtedly the most challenging part of learning from the Toyota Way. One of the most common questions asked about Toyota is how people are rewarded for continuous improvement. How does TMMK get 90,000 employee suggestions per year? How

does Toyota get hourly employees to contribute to business-affecting issues? There must be large cash payments associated with employee suggestions. They are surprised to learn that Toyota intentionally deemphasizes cash rewards. In fact most American companies have much more elaborate systems of performance evaluation and pay for performance. Companies like Toyota build their trust accounts through daily interactions between members. They build a culture of interaction that enables the members to feel like they are part of a family or partnership, rather than just of a business or a job. Trust interaction requires trust by both parties that over the long term the other will hold up their end of the bargain. If trust breaks down, it can erase years of fair play in the mind of the person who feels wronged. The role of HR at Toyota is to monitor and maintain the trust economy. Toyota Approach Toyota's approach is very more broad and holistic. It starts with a philosophy that the strength of the company is based on kaizen and respect for people. Measurement of success is multidimensional and reflects the success of the enterprise, not specific projects. The leadership hierarchy is not there to delegate improvement to black-belt specialists but rather leaders at every level play an integral role in daily improvement and leaders are teachers to develop team members. There are a broad set of methods available for improvement but the social unit of improvement is primarily at the level of the work group led by a group leader. The group leader is supported by hourly team leaders who facilitate kaizen at the team-member level. Improvement is not focused only on large lean projects, but numerically more are small improvements led by shop floor-team members so there is strong ownership of the process and results. Over time continuous improvement by identifying and solving problems strengthens the company, which can be regarded as a learning organization. Overview: We must reemphasize that Toyota is made up of people and people are highly variable from person to person and even the same person over time. So not every action of every person every day supports the ideal of Toyota culture. What does stand out at Toyota is the ability to recognize problems accurately and honestly and solve them with great rigor. Toyota provides an example of a learning organization that is real and successful. It is successful for the owners of the business and for the team associates. It starts with the assumption that people are the most important resource and need to be nurtured and developed and challenged. Human resource management is one of the most visible and important functions in the company because humans are the only competitive resource that cannot be copied.