Learning to Lead at Toyota

I. Executive Summary Toyota is one of the world’s largest car manufacturers which have a better approach on developing their product and management’s quality, reliability, productivity, cost reduction, sales and market share growth, and market capitalization. It is one thing to realize that the Toyota Production System (TPS) is a system of nested experiments which operations are constantly improved also known as Kaizen.

It is another from TPS to have an organization in which employees and managers at all levels in all functions are able to live those principles and teach others to apply them. Being in a big company like Toyota is a long process to go, especially on Managerial position, they must follow the long, hard way importantly on training. For this following analysis we took the experience of Bob Dallis who trained for Toyota US Plant. II. Defining the Issue

What is the effective way of developing a manager’s process improvement capabilities? The pseudonymous Bob Dallis, a talented young American was hired for an upper-level position at one of Toyota’s US plants. Dallis, who had taken two (2) Master’s Degree in Engineering and previously worked for various large plants of Toyota’s North American competitors, thought that he already knew the necessary knowledge on managing the company. Before formally working at the said plant, however, he had undergone a tremendous training under Mike Takahashi, a senior manager of the Toyota Supplier Support Center (TSSC) for more than three (3) months.

One of Toyota’s principles is to transform individuals into great managers, let alone generating superb cars. The study emphasizes how the company newbie had learned and realized the real essence of being a manager, hence, learning it the long, hard way. This aspect is relevant, but does the ‘Toyota way’ of training the managers complement the needed traits for them to achieve operational excellence? III. Analysis of the Case Data

All managers at Toyota believe in the supremacy of observation. For the company, “there is no substitute for direct observation”. Before any employee can take part in improving the process, the general expectation is that he should be well aware of the existing products and the processes entailing these. For the first six weeks, Dallis only observed how production was done at Toyota. He was not left alone, though.

On Mondays and Fridays, he had meetings with Takahashi where they review the gaps between the expected outcomes and what actually occurred. By the sixth week, Dallis and the group he worked with recommended 25 changes in individual tasks and 75 in redistribution of work. His second six weeks of training bracketed the improving of the machine productivity.

After 12 weeks of training, Dallis in observational method of changed leadership was still 5% below the target of 95% operational availability. He was then taken to Japan to observe the change management in the parent country of the company. Within 3 days at Kamigo plant, he was able to recommend 50 changes and implement 35 with the help of his team at the plant. The way Dallis was trained, same way every leader in the organization was trained to be the enablers of the company.

There are certain aspects which have to be considered before putting a capable person on a managerial position wherein the Human Resources Management of Toyota is responsible. The HR Management considers some components that should be consistent with the company’s structure and strategy. These are the following: (1) recruitment; (2) training and development; (3) performance appraisal and feedback; (4) pay and benefits and; (5) labor relations. * Recruitment ― Is Bob Dallis qualified for the upper-level position at one of Toyota’s US plants? Yes, he is. Even before he was hired for the said position, he had already benchmarked the ideas of TPS on improving his previous employer’s company.

This is not to mention his achievements and experiences. He is truly a competent man with the necessary abilities of being a plant manager. * Training & Development ― Is the training undergone by Dallis applicable? Did the training develop his abilities and skills? After more than three months of training, Dallis had been an efficient problem seeker and solver.

The training program aided him well on his succeeding work as the manager, having been fully aware of the actual occurrences of the operations. From labor productivity to machine productivity and operational availability, he had significantly improved the system of Toyota plant, and in these processes, realization hit him: Toyota’s training program for would-be managers aimed not at making direct improvements but at producing a group of excellent leaders who aspires for continuous improvement.

* Performance appraisal and feedback ― Does the senior manager Mike Takahashi made Bob Dallis feel that his efforts and hard work are recognized? All throughout the study, however, there is no such instance where Takahashi praised Dallis for a job well done. Perhaps at Toyota, this serves as a challenge. For instance, at Kamigo engine plant, Dallis was to observe his Japanese workmate and reduce the overburden on his part, by the shift’s end he reported that he had seven ideas, four of which he and his workmate had implemented. However, Takahashi told him the two Japanese team leaders who were going through the same training (whose jobs are far less senior than Dallis’ intended job) had generated 28 and 31 change ideas respectively, within the same amount of time.

Fortunately, Dallis didn’t take this as destructive criticism; instead he had this in mind to strive harder and better. * Pay and Benefits ― Does Dallis receive due compensation and raises? Perhaps, yes. Toyota is one of the world’s leading companies; in fact, by March 2007, Toyota had a net income of $13 billion while the competitors GM incurred a loss of over $12 billion and Ford $2 billion. This information will give as an assumption that Toyota must be giving just compensation to its employees. * Labor relations ― Does Dallis has an effective relationship with his workers?

Yes. His superior Mike Takahashi coached him well and the workers who had worked with him performed their respective tasks effectively for Dallis to determine which aspect of the operations needed improvement. IV. Generating Alternatives

Being informed of Dallis’ training program under Mike Takahashi, we can say that the Toyota way is effective and efficient which helps it to have continuously improving processes. But is this the best way? Is there a better training approach? To answer the stated issue, we have settled two alternatives that may be applied on developing a manager’s process improvement capabilities. These alternatives were derived from the one of Toyota’s main competitors: the Ford Production System. 1. The Chicago Assembly Plant

The Quality Operating System coordinators (QOSC) at Chicago Stamping Plant (CSP) have taken on the task of conducting quality training for production team members. Given their extensive knowledge of quality processes, the QOSC's are a natural fit to conduct this training.

All recently transferred and new employees receive the training, which includes a review of quality-specific procedures (corporate and local), single-point lessons, quality documentation, error proofing and the Ford Product Audit (FPA) process. (Reference: Quality Training at Chicago Stamping Plant by Diana Torian, UAW Quality representative, Chicago Stamping Plant)

2. The Outsourced Training Company was selected as the main delivery agent and programme management organization for the Ford’s turn-key project. The Outsourced Training Company is directly responsible for loading delegate information and tracking through direct entry onto Ford’s Oracle based Learning and Management System.

Ford recognize the importance of all their employees having a good understanding of Diversity and Dignity at Work (D&DAW) both in basic compliance terms and how a greater awareness can significantly enhance business performance as well as the appreciation for the diversity of everybody and the right to be treated as an individual, with respect and with dignity. (Reference: Ford Diversity Training Case Study)

V. Selecting the Decision Criteria We must check the case data if the said alternatives are conforming to develop a manager’s capabilities. For each part, it must answer the following criteria: * Recruitment: Hiring and Selection of the would-be managers must possess the necessary traits. * Training & Development: Toyota must train a flexible person who can quickly absorb the training for his inferred abilities and skills. * Performance appraisal & feedback: On this, the positioned manager must evaluate and then give feedbacks to enhance worker performance. VI. Analysis and Evaluation of Alternatives

The said alternatives must comply with the stated decision criteria to measure on which of the two alternatives more effective to come back with the said issue. First Alternative: * Recruitment - All recently transferred and new employees receive the training. * Training & Development - The training gives each employee basic knowledge of the Quality Operating System and understanding of the importance of following standards.

The training is given to production line team members to enhance their surface acceptance knowledge and better able them to recognize and contain defects. * Performance appraisal & feedback - The conductors try to be mentors to make it easier for follow-up coaching on the plant floor. Second Alternative

* Recruitment. The manager is recruited from the Recruitment Agency. * Training & Development. The training is given by the agency and the company is not responsible for the manager’s development. * Performance appraisal & feedback. The recruited manager may encounter a culture shock or may experience difficulties on blending with his co-employees in the workplace. VII. Selecting the Preferred Alternative

Upon comparing the two alternatives, we have decided that the first alternative, the Quality Training at Chicago Stamping Plant is better than the second. In our opinion, this option may be adopted by the Toyota Production System.