Since its inception in 1937, Toyota has grown to be the third largest auto producer and fifth largest industrial company in the world. Toyota sets the standard in efficiency, productivity and quality in the auto manufacturing industry; and is the envy from rivals such as Ford, Chrysler and GM. Toyota’s product quality and service is recognised by various independent agencies such as J.D. Power and Associates and Motor Trend.
IndustryWeek has named Toyota as one of the world’s 100 best-managed companies.
With its transplant to Georgetown, Kentucky (TMMK) in 1988, industry insiders have wondered how Toyota will implement its form of management and team culture in the American setting. Earlier in 1994, Toyota’s joint venture withGMinNewUnited Motor Manufacturing, Inc. (NUMMI) had yielded valuable lessons in labour-management co-operation.
Toyota reproduced many features of management philosophy and practices, yet several practices have been altered or eliminated. Practices such as teamwork, group orientation, work structure, plant layout, job rotation and community of fate theme have been adopted. Promotion based on seniority, lifetime employment, company unions have been modified to fit local needs.
Since quality is an end result of a process, we will have to examine the process and the human side of the process. Lessons learned can then be applied to our own organisation for improvement.
Japanese Value/Philosophy In order to better understand Japanese management systems, one needs to understand the social-technical systems (STS); which are based on the awareness that everything depends upon everything else, and that performance is the product of the interactions of the sub-systems. Japanese prescribed to amodel and follow the correct process, result will then follow. In an organisation, it is translated to employees as to think of the implications of the network first and individual second.
Mutually beneficial relationships are based on mutual trust, and participants share in business gains. Harmony or wa, is the foundation and building block of Japanese relationships. The desire to keep harmony in relationships puts emphasis on co-operation, consensus building “nemawashi”, participative management and
shared decision-making “ringi”. Although the process is time-consuming, implementation is fast because of the widespread awareness and support for the proposal already gained throughout the process. Japanese use this to look at the “big picture”, consider alternatives and foreseeable problems before implementation.
It is interesting to note how harmony plays a unique role in Japanese competition that is unconceivable in the United States. Competition is intense within the industries, but players compete with the spirit of co-operation. Japanese competition centres on preserving market share, not on seeking profitability. To gain a favourable impression from consumers and market share, organisations become service-oriented, with emphasis on quality and reliability.
Toyota Production System (TPS)TPS was established by Taiichi Ohno, with concepts designed to maximise flow, eliminate waste and respect people; with the foundation based on efficient use of resources to produce materials with a repetitive, reliable system. The system eliminates non-value added physical activity with automation and a multi-task workforce. Some have described the system as the essence of “Taylorism and lean production” (Rawlinson, 1996). TPS is accomplished through the use of Jidoka, Just-in-Time, Kanban inventory system and Kaizen.
Calling attention to problems and fixing them before the product is finished is the basic essence of Jidoka. The task of quality inspection formerly done by a human is built-in into the machine, thereby creating product quality within the process (Toyota, 1987). With the operator managing several machines at once as opposed to one in each station, efficiency and productivity rises. Under this system,workers must be free to move from one job to another, hence they are trained to be multi-functional.
Kanban is a system of inventory control, where a work request is delivered to the preceding processor through the use of a card and behaved as a “pull” system. The plant produces a car only after it receives an order from the dealer. Resulting in a flow-type production that set the tone for the
Justin- Time system. Just-in-Time is a system that keeps inventory at a minimum, requiring tight control in order to achieve smooth operation. The JIT system eliminates inventory build-up, storage and makes better use of capital. Kaizen is defined as continuous improvement. This is where worker suggestions are implemented to improve the work process, with a focus on raising quality and efficiency of the production line.Corporate Structure To make TPS work, Toyota utilised a relatively flat hierarchy and egalitarian corporate culture.
Company uniforms, songs, morning exercise, afterwork social gatherings, and ceremonies are organisational mechanisms used to sustain and build Toyota culture. Individuals develop identification to the group and a sense of community of fate, and believe that all share a common destiny with one another. The group will all sink or swim together. Employees and managements believe they have common interests in the well-being of the organisation. This “welfare corporatism” gave rise to employee empowerment, job security, job enrichment and consequent employee commitment and organisational goal achievement (Besser, 1996).
Unions in Japan are organised along corporate membership, contrarily to specific trades in the United States. Unions are often part of a company and are looked on as a partner not an enemy, as membership does not split the worker’s loyalty between union and management (Yoshimura, 1997). Harmony again plays an important role, as management and labour all want fairness on both sides; they are co-partners working for the good of the company and the nation.
Management and labour share a common “oneness” in an effort to minimise the differences. That is why both wear the same company uniform, park in the same parking lot and dine in the same cafeteria. Office setting is that of an open space environment, as opposed to the cubicle office setting in the West. Managers have no private offices or secretaries. Management are more visible to the employee and are expected to wander around and interact with employees.
Job descriptions are not narrowly defined as in the West, employees identify with the organisation’s goals and are willing to assist the organisation to succeed. In return, the organisation is concerned with the total welfare of the employee and provides a wide range of benefits. This includes assisted housing, low-interest loans, skill-improvement classes, access to
recreational facilities and pensions upon retirement.
Hiring ProcessToyota prefer employees that are young, well-educated but inexperienced. Graduates fresh out of college are impressionable and easier to indoctrinate. The whole process from application to hiring usually requires aminimum of six months. What does Toyota and worker gain from this arduous and tedious process? The length of time it takes is a test of motivation and perseverance of the employees. Time and energy expended by Toyota
communicates to potential workers that they value ordinary workers and they are important for overall company success. Lastly, the process communicates to employees that they were chosen on the basis of ability and potential, not on prior work experience or know how. This is Toyota’s method ofarticulating organisational philosophy and fosters a certain “esprit de corps” among team members (Kamiya, 1976).
Since the organisation is oriented around teams, this philosophy is constantly communicated in the hiring process. As one manager described, “by the time candidates get through the process, they realise it is not just a single job they are applying for, but membership in a team” (Besser, 1996).
Workers are screened in the process to ensure compatibility with the system. Week-long orientation stresses teamwork skills, the Toyota philosophy and various job-specific skills. TMM’s equal pay policy and job rotation encourage feelings of equality and co-operation among team members, which produces close-knit work groups that extends beyond the workplace. Management sponsors team social events such as family picnics through “Personal touch” programmes with funding by TMM.
TeamThe team is central to understanding the internal functioning of TMM. It is a primary element in the Toyota philosophy, an integral part of workers’ daily interactions with each other and with the organisation as a whole. It must be regarded as the central theme of Toyota culture (Besser, 1996). The concept of Team is defined as “people who work together co-operatively for
the common good”. Toyota divided it into three types of teams. At the primary level is the “work team”, responsible for production and maintenance. All members of the team know each other well and know how to do each other’s job assignment.
The next level up is the “company team”, including all employees of the local operation. Hierarchy in position, function in the company and education level is irrelevant in this setting. Under this structure, allTMMemployees are viewed as members of the same team, sharing the same goal.
The purpose is to provide the context and the ideology for intra-group cooperation and commonality of goals among all employees (Besser, 1996). At the top is the “corporate team”, including all members of the Toyota Corporation, suppliers, subsidiaries and business affiliates. The corporate linkages at this level allow management to see the “big picture”. Toyota used “Team Toyota” as a starting point in reproducing its culture and tailored it to fit the American norms and values.
Each work team is made up of four to five peers. Three or four of work teams form a group. A leader heads each team and group.TMMencourages team-work on the job and gave members a certain degree of job freedom and responsibility for assigned tasks. An atmosphere of co-operation is developed, and members themselves became control mechanisms.
Members want to do a good job as they will be evaluated by peers, and nobody wants to be pointed out in the group as the one who made a mistake. Open Communications TMMengages in open, two-way communications. Regular opinion surveys enableTMMto gauge workers’ sentiments.Ahotline is established to assist employees to voice their concern and act as a relief outlet. Industry related information is constantly fed to workers and is designed to highlight common external threats. Open communications make the relationship between work effort, organisational success, and job security more salient to employees (Damanpour, 1998).
Feedback to employees often takes the form of inexpensive tokens such as t-shirts, placards, pictures and lunch. It is always accompanied by ceremonies, company announcements and recognition in Toyota Topics, the corporate newsletter. The first time Toyota was recognised nationally for the quality of Camry in 1989, employees were greeted at the entrance with banners praising their accomplishment. The TMM president personally sent a letter to each employee thanking him/her for his/her contribution (Besser, 1996).
Members that have thought of new kaizens were given gift certificates instead of money. The purchase of a tangible item serves as a reminder to the member and his family of the rewards, with far more impact than money spent on ameal. One employee commented that his wife was constantly encouraging and helping him to think of new kaizens, so that she would be able to purchase items for the family (Besser, 1996). The important theme of the awards is that they symbolise recognition and the sharing of the feeling of accomplishment that comes with goal achievement.
Pay/Bonus SystemIn aWestern organisation, the employment contract specifies time and tasks to be performed by the employee for a pre-arranged wage. Employment with Toyota is a bit different as the contract has two parts. The first part states the minimum expectations and obligations.
The second part or “tacit agreement”, Toyota expects that employees will give 100% in commitment and effort; “that they will contribute ideas to improve the quality, effectiveness and safety; and that they will do whatever is necessary to get the job done well” (Besser, 1996). This type of agreement fosters feelings of ownership among members. Employees anticipate an equitable share of the fruits of the success, including monetary bonuses as well as psychological rewards of success, such as recognition, feelings of accomplishment and pride.
Twice annual performance awards are given to all employees based on management’s assessment of goal achievement, not on the bottom line. All team members in the same category receive the same wage and bonus, re-gardless of their individual performance. This concept communicates to
employees that it is overall company-team performance that matters, and the only way to increase pay is by helping the company to be more successful. Conclusion
Quality and reliability of products are the end result of amanufacturing process. Without the right process and committed employees, quality would not exist. TPS calls for action and problem solving before the product is finished. Project teams flourish under an environment that is teamwork oriented. Flat structure and close member relation allow rich informal communication, which leads to more action, experiments and learning.
The kaizen system empowers workers to experiment to find new and better methods of work. Emphasis on market share instead of profit leads to a focus on product quality and customer service. Open office environment and egalitarian culture encourages active involvement from management to wander around and mingle with workers. Good employee relations thereby mirrors on good customer relations of Toyota. Just-in-Time and lean manufacturing system requires extensive market research by Toyota to gauge consumer taste and sentiment.
Team orientation and kaizen translates to productivity through people for Toyota. Members are on a constant search to improve the work process and look out for defects. Consensus building during the decision making process ensure fast implementation upon approval. As parties involved are well informed and problems are well thought out.