Last year, Toyota overtook Ford in terms of vehicle sales – and it says much of the drive behind its success is down to its staff management.
For a car firm, there can’t be many more satisfying moments than seeing a motoring goliath such as Ford in the rear-view mirror when global sales figures are calculated.
When this success is partly attributed to a company’s employees and the way they are managed across the world, the achievement becomes even more noteworthy.
Last year, the Toyota Motor Corporation increased sales by 9.9 per cent. It shifted an amazing 6.78 million units and replaced the legendary Ford as the world’s second largest vehicle manufacturer, behind General Motors.
According to Toyota, the crucial factor that underpins its recent rise is the reliability and quality of the products which, in turn, have been achieved by maintaining a consistency in the way employees operate across international boundaries.
This is underpinned by a key set of company principles that guide the way staff and managers work through shared beliefs, values and business processes.
This philosophy – the ‘Toyota Way’ – was developed in Japan, the firm’s home country, and acts as a foundation for the way the whole company operates, from management and manufacturing techniques to building the brand ethos.
The system has enabled Toyota to build an organisational culture that spans many countries, which it believes will help it react more flexibly and consistently to challenges in the regional and global markets.
In the UK, HR director Sarah Fisher was responsible for officially implementing the philosophy, which until 2001 had been an informal corporate tradition.
“The people element is of huge importance to us,” she says. “The strength of our staff is related into the core values of the organisation, which is translated into the Toyota Way. There’s a real emphasis on teamwork and being a learning organisation. This is grounded in logic and a structured approach to decision making.”
The implementation of the Toyota Way has taken up a major part of her two-and-a-half years with the UK division of the firm, which employs 400 permanent staff and another 400 temporary workers.
She says the experience has been very satisfying as it has created an integrated approach to HR, placing people policies at the heart of the corporate agenda.
“I think it gives us real clarity on the business principles of the company and a consistency of approach,” Fisher adds. “It gives us a deeper understanding of how we interact and work together. It encourages a cohesive, learning organisation that can work together more effectively.”
The Toyota Way is based on two central pillars – continuous improvement and respect for people – which intersect with five fundamental ways of working.
Within the framework, staff are required to have a realistic vision for their department, share best practice, gain consensus before making decisions, respect colleagues and maximise team performance.
The system was explained in a 13-page booklet, and distributed to staff who were promised it would be integrated into the way they were recruited, managed, developed and motivated by the business.
“It touches everything we do and from a people perspective, it’s incredibly strong,” Fisher says. “It’s about the respect for individual contribution and the effects of teamwork. The strength of the culture is enormously helpful in recruiting and retaining the best people.”
To ensure the system was consistent across the entire organisation, an international working group came together to develop a list of skills and aptitudes that would reflect the culture Toyota wanted.
The group, which included Fisher and representatives from other European countries, came up with a competency matrix that they felt reflected the cultural principles they wanted to achieve.
Although all the European divisions worked together to design the matrix, each area implemented it independently, in some cases adding their own competencies to reflect regional differences.
The competencies were used to shape senior management development, and executives around the world were brought to the Toyota Institute to learn how to introduce the programme. They were also coached on how to implement the scheme into staff appraisals and how to manage employees by using the competencies.
In the UK, every job in the country was profiled against the competencies, so that every member of staff would understand exactly what their role was and how they were expected to operate.
“If you follow the steps in the Toyota Way, you will be able to make sound business decisions, and I think our success owes a lot to this system,” says Fisher. “It helped establish a common culture in the way the company works across the globe. If you were to speak to anyone in the organisation it’s not something they would need written down, because it’s becoming automatic.”
Further training was provided for staff and managers so that everybody understood the integrated approach and the way it would be used in the appraisal and career planning process.
Online guidance and advice on the Toyota Way and the competency matrix were also made available so staff would have a constant reference source to help manage their career.
Additionally, the company used HR consultancy CDA to help transmit the message to staff and get them used to going through the process whenever they made decisions and examine how that would relate back to their own management.
“Every member of staff was briefed on how the whole system would be used in career development, job profiling, assessment and career planning. It was a new way of working and it’s been very well received. The whole of the HR process is more transparent now,” Fisher says.
“It’s interesting because some of the terminology was very Japanese, but there’s been no resistance to it because employees see it as a logical approach to our business. Our staff have found it an extremely effective way to work.”
Fisher believes the scheme has dramatically improved the training and development at Toyota UK because it’s now much more aligned to the strategic needs of the business.
She says it has become a common language to communicate and manage expectations, placing people management at the heart of the corporate agenda. “It forms a complete framework of people policies which means that we have an integrated approach to development, appraisal and recruitment.
“I think it’s critical that you look at a completely integrated approach to culture and values within an organisation. We now use a completely holistic approach to people policies and it has become embedded into the heart of the company.”
The initiative has been operational for around 12 months and Fisher is confident that Toyota will reap even more rewards as the commitment to learning and growth become even more prevalent in the way it operates. “It places development at the most senior level of the competencies,” Fisher says. “The principles we’ve adopted aren’t just used internally. We now use this to interact with franchise holders and customers.”
The Toyota way
Continuous improvement and respect for people are the two central components of the system which are used alongside five key ways of working:
Having a long-term, realistic and stretching vision for the company and department that will add real value to the business
Continually looking for ways to improve the business through innovation and best practice
- Genchi Genbutsun
A process where individuals must seek consensus and consider all the facts before proposing a solution. It’s also a way of putting decisions into action
Understanding and building mutual trust with colleagues
Maximising individual and team performance
Learning points for HR
- Take an integrated approach to people management so the same principles underpin recruitment, appraisal, development, planning and so on.
- Aim for continuous improvement within your organisation and establish a culture that touches all parts of the company – from the CEO to the post room.
- Ensure all managers are fully trained and ready to implement any culture project and that leadership comes from the very top.
- Define competencies, common values or business processes clearly and formally so they are accessible to employees and easily benchmarked.
- Pin down the most important skills, knowledge, behaviour, traits and competencies that will build a unique organisational culture and drive the company forward.
The Toyota way competencies
- Effective fact finding and analysis for problem-solving
- Delivering innovation and continuous improvement
- Developing and sharing action plans
- Effective decision making
- Efficient use of resources and work methods
- Developing organisational learning
- Managing performance
- Long-term development
- Awareness of the company mission and a commitment to it