Toyota Motor Corporation abbreviated as TMC, is a Japanese multinational organization headquartered in Toyota, Aichi, Japan. TMC was first established in 1937 as a separate company from Toyoda Automobile Loom works. Toyota has employed 300,734 consolidated employees and 69,148 non-consolidated employees worldwide, as of 31/03/2012. ( Toyota-global ,2013a) . TMC reclaimed the lead in global car sales over General Motors Co and Volkswagen Group in the first half of 2012 accounting for sales worth? 18583. 6 million (Rall. P, 2013).
Today, Toyota has 7 factories in the United States, 15 in Japan and in 13 more countries around the world. Toyota is well known for its small cars and SUVs, but it is an industry leader in manufacturing techniques and has been a pioneer since its inception (Toyota,2011). The Toyota Production System (TPS) is a benchmark for all manufacturing companies. Yet, it is questionable how a renowned company like Toyota could experience the type of quality problems that created numerous media headlines during the year 2009 -2010. (Cusumano. M: 2013,p-33).
This report further looks into Toyota’s unique production system and its philosophy and will go along with inspecting the significance of human element and technology while considering the causes of the recent quality issues and thereafter suggesting the most important element that needs to be managed in view of its future. Furthermore, the report will suggest the most suitable management perspective whilst justifying.
Toyota’s production system
Toyota has been shaped by a distinctive set of principles and values that have their ancestry in the company’s developmental years in Japan.
The Toyota Way, a management philosophy used by TMC consist of 14 key principles including the Toyota production system ( TPS ). The Toyota Way has four components: Long-term thinking as a basis for management decisions, a process for problem-solving, Adding value to the organization by developing its people and recognizing that continuously solving root problems drives organizational learning. (1000advices ,2001)
The “Toyota production system” (TPS) is the basis of Toyota’s global competitive advantage. It is not a solitary process but a cultural mindset that involves every element to work together, in other words, the system depends in part on human resources management policy that encourages employee creativity and loyalty but also on a highly efficient network of suppliers and components manufacturers. The critical components of the TPS house are the just-in-time (even workflow) and jidoka (quality through human-controlled automation), Kaizen – Continuous Improvement, they are the pillars that create the structural integrity and protect continuous learning. (Toyota,2013) (Source: Toyota,2013). Toyota Production System. )
Human element vs. Technology
The human element and technology are two critical aspects in any organization in today’s context, when considering Toyota it is no exception. Liker (2004), states that the incredible consistency of Toyota’s performance is a direct result of operational excellence and is based in part on tools and quality improvement methods made famous by Toyota. He further mentions that tools and techniques are no secret weapon for transforming business, but Toyota’s continued success at implementing these tools stems from a deeper business philosophy based on its understanding of people and human motivation ( Liker . J: 2004a, p-14).
Toyota, the world’s largest automobile manufacturer carries out advanced research and practical application of technologies. According to The Toyota Way, the company uses “only reliable, thoroughly tested technology that serves its people and processes”. Yet again, “testing” entails both existing technology and new/revolutionary technology that Toyota has systematically evaluated and conducted to confirm that it works. ( Liker. J: 2004b, p-165)
However, justifying the J. K Liker’s(2004) statement honorary advisor Eiji Toyoda states “Because people make our automobiles, nothing gets started until we train and educate our people”, as seen in these words, it is understood that the human element as well plays a critical role. Toyota believes that lean management calls for highly developed people and deeper trust in comparison to a mass-production system, also that it becomes the critical element and their willingness to recognize and solve problems is what drives continuous improvement (Liker. J. and Houses. M: 2010a, p34-50).
TMC’s basic theory is that cautiously chosen and developed people over extended periods of time will constantly improve processes and eventually direct to competitive advantage and mutual prosperity. Nevertheless, the mechanical failures in Toyota automobiles during 2009-2010 which caused Toyota to recall nearly nine million cars worldwide ( Bunkley. N and Maynard. M, 2010) questioned the above-mentioned philosophies and strategies.
These incidents were shown as mechanical failure and not as a result of human resource professionals assuming product design roles and producing faulty accelerator pedals and onboard computers, but as we know the breaking point of a product or service is hardly ever the underlying or root cause of the failure. Toyota leaders had identified the mechanical failures long before corrective action was taken. Many close to the issue are indicating that the company took significant action to hide the facts and distort the scope of the problem.
When the organization disproportionately rewarded managers for cost-containment versus sustaining product quality, it created the incentive for everyone involved to ignore the facts and to deny that a problem existed. (Sullivan. J, 2010). The HR processes that must at least be considered as suspect include rewards processes, training processes, performance management processes, and the hiring process. Equally, Eiji Toyoda pointed to the failure of Toyota’s commitment to “genchi genbutsu”, meaning go see for yourself to thoroughly understand the situation.
He stated that Toyota should have required upper management to go to the source of problems to ensure that they did not base decisions on superficial understanding. (B. Chung and H. Kleine,2012) Therefore these incidents that caused a negative impact on Toyota’s brand name for providing trusted and quality products show the importance of the management of the human element in its coming years to gain its customer’s trust back. The 2020 Vision of Toyota (Source: Toyota. u (2010a) Vision 2020: Four key pillars. ) The plan for the year 2020, known as “Toyota global vision 2020”, drafts the automobile giant’s new management direction and vision for the future. The Vision itself explains that it has prioritized the management of its human element in “ Becoming a Leading Player ”. The 2020 Vision focuses on four key pillars shown above in exibit1. 2, namely Customer Delight, Environmental leadership, Good Corporate Citizen and Self reliance with a focus on locally produced models.
Three of these key pillars has a direct link to human elements relevant to TMC , most importantly the customer delight. In addition, Didier Leroy, President Toyota Motor Europe, too stated that the “utmost priorities were, regaining customers’ trust, people’s respect and customer confidence in Toyota’s commitment to superior quality” while ensuring that each member in their team aims to deliver the best (Toyota. EU: 2010b,p 11-15)
When having to decide if the Management of technology or Human element would be more important for Toyota when looking ahead at the next 5 to 10 years, based on the above research and after understanding about the Toyota way of doing things where it calls out for continuous improvement and With solid controls on TPS which is a Human resource management policy and with the 2020 vision of Toyota giving more emphasis on the Improvement in managing the human element, We could conclude in stating that the management of the Human element would play a more important role during the next 5 to 10 years.
Which management perspective might best suit Toyota? Management practices and perspectives vary in response to these social, political and economic forces in the larger society. During difficult times, managers look for ideas to help them cope with environmental turbulence and keep their organizations vital. A management tools survey conducted revealed a dramatic increase over the past dozen or so years in the variety of management ideas and techniques used by managers. (Daft, R. et al : 2010a,p-43)
Behavioral management perspective
Management principles developed during the classical period were simply not useful in dealing with many management situations and could not explain the behavior of individual employees. In other words, classical theory ignored employee motivation and behavior. As a result, the behavioral school was a natural outgrowth of this revolutionary management experiment. Hence behavioral management perspective emphasizes individual attitudes and behaviors and group processes. It addresses the human dimension of work.
Behavioral theorists believe that a better understanding of human behavior at work, such as motivation, conflict, expectations, and group dynamics, improve productivity. Mary Parker Follett (1868-1933) recognized the importance of the role of human behavior in the workplace and that lead to the human relation school of thought. (Daft, R. et al :2010b,p 49-51) A major tip for being a well-known car manufacturer since its inauguration has been one of the management perspectives which Toyota has considered when managing the organization.
It could be stated that the best or most suited management perspective would be The Behavioral Management perspective or in other words Human relation school of thought for Toyota. Accordingly, the below paragraphs make understand the significance of this management perspective to Toyota and while justifying it as the most suitable The ‘respect for humans’ system Toyota builds their future planning around the people they employ as it is the base of their success.
The main drive of the argument is that under the TPS, workers’ dignity is respected because the system makes full use of their capabilities and entrusts them with the running and improvement of the plant. There is a discussion of ‘respect for humanity’ and ‘treating workers as human beings and with consideration’ but there is no element of the discussion which relates to relieving the monotony of factory work or reducing the pace of work, or of worker autonomy.
Indeed, with the emphasis on standardized work, worker autonomy as far as the core processes are concerned is explicitly ruled out. ( Weerasombat. T and Hampson. I,2012)
Human Resources Development of Toyota
Toyota seeks to develop human resources through the activity of making things. Toyota believes that the development of human resources requires the handing down of values and perspectives. In conjunction with the geographic expansion of business and the growth of business areas, undertaking global actions for the development of human resources has become a priority issue.
Toyota is building both tangible (a new learning facility) and intangible (course content) structures relating to team member development that ensures a secure and steady flow of qualified human resources to conduct Toyota’s global business in the 21st century. ( Liker, J. and Houses, M: 2010b,p 34-50) This process of development goes on for two years, at which point the temporary employee is either hired or not. Newly hired will continue on- the- job development for another three years, which means the development lasts five years total.
Overall, Toyota invests substantial amounts of money acquiring and developing its employees because they understand that the employee is the only appreciating asset that they have, and therefore, it is worth investing in employees. (Toyota-global: 2005b,p53-57) The Toyota Company works on a scale and has an influence so vast that it is often difficult to envision as a whole. The level and diversity of technologies that it must deploy are increasing, which imposes both new investment burdens and new uncertainties and risks.
Roughly a million new cars and trucks are built around the world each week, and they are easily the most complex products of their kind to be mass-produced in such volumes. Conclusion In conclusion, it is certain through the acquiring and development process performed by Toyota, that they value employees and spend many resources on these two aspects for good reasons. The result is a competent workforce within a strong culture which is the main reason for Toyota’s success. And based on all of the mentioned areas and research we could justify that the Behavioral Management perspective would be the most suited Management perspective.
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