HR PRACTICES FOR SUSTAINABLE CORPORATE GROWTH:

THE TOYOTA WAY

Jagadish B.1
Dr. Parashurama K.G.2
Dr. Siddegowda Y.S.3

1.0

INTRODUCTION

Many companies today are turning to lean in a time of crisis. The rapidly changing
global market demands that organizations be responsive in order to keep pace. Only
those that respond quickly and skillfully will survive. Toyota has kept its identity as a
company, including its philosophy and principles, remarkably consistent for many
years. Its values of trust and continuous improvement permeate its commitment to
long-term thinking, developing people, standardization, innovation and problem
solving. It is a learning organization that literally thrives on its people engaging in
identifying and solving problems together and achieving results that will benefit
everyone.
From the time Toyota first started its operation, the leaders believed that the key to
success was investment in its people. The Toyota culture has evolved since the
companys 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 (called team
members) 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
1

Jagadish B, Senior Officer, IR Department, HR Division, Toyota Kirloskar Motor, Bidadi, Bangalore,
Email:jagadishb@tkm.co.in, jagadishb_msw@yahoo.co.in
2
Dr. Parashumara K.G., HOD, PG Department of Social Work, SDM College, Ujire, D.K.District
3
Dr. Siddegowda Y.S., Chairman, DoS in Social Work, Manasagangothri, University of Mysore, Mysore.

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
companys founding.
Since its inception, Toyota has adhered to the core principle to contribute to society
through the practice of manufacturing high-quality products and services. The rapid
growth, diversification and globalization of Toyota in the past decade have increased
the scope of Toyotas manufacturing and marketing presence throughout the world.
Today, having invested authority and responsibility in a worldwide network of
executives, Toyota is well prepared to operate as a truly global company guided by
common Human Resources (HR) practices with universal corporate culture.
2.0

TOYOTA IS WORLDS MOST RESPECTED COMPANY

In a Study on the Corporate Reputations in 27 countries - The Worlds Most

Respected Companies 2008 conducted by Reputation Institute, Toyota Motor
earned the highest rating with an outstanding Global Pulse score of 86.53. Google
comes in a close 2nd with a Global Pulse of 85.234. Toyota Motor stands out as the
only auto maker in the top tier, and is followed by Swedens Volvo Bilar in the 30 th
spot, leaving BMW and Daimler a distant 80th and 96th respectively.
Toyota Motors reputation is clearly broad-based. Toyota tops on public perceptions
of five of the seven dimensions of reputation Governance, Products/Services,
Innovation, Leadership and Performance. Let us have a look at these ratings:

The study was developed to provide executives with a high-level overview of their Companys reputation with
consumers. Over 60,000 online interviews with consumers in six continents were conducted in early February
and early March 2008.
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So what is it that makes Toyota as a leader in the global scenario? It is the culture in
Toyota that makes the difference. Culture can be defined as . . The pattern of basic
assumptions that a given group has invented, discovered or developed in learning to
cope with its problems of external adaptation and internal integration, and that have
worked well enough to be considered valid, and, therefore, to be taught to new
members as the correct way to perceive, think, and feel in relation to those problems
(Schein, 1984).

Many companies have become frustrated with the kaizen events and six sigma
projects that yielded short-term results but had no sustainability. They are searching
for something more, and the missing element that creates long-term results is the
Toyota culture. And while Toyotas version of its culture varies from country to country
or even from community to community, there is an important core set of principles
and practices at work that any company can learn from. DNA of Toyota culture is the
Toyota Way.
3.0

THE TOYOTA WAY

The Toyota Way has been evolving within Toyota since the companys birth as a
producer of automatic looms in 1926. Founder, Sakichi Toyoda, based the original
Toyoda Automatic Loom Works on deeply held beliefs that concerned both the
purpose of the company and how all of their members should be treated. His original
reason for creating an easier-to-use wood loom was to help the women in his small
farming community who were working their fingers to the bone. Expanding from this
founding principle, the purpose of the company has always been twofold: to benefit
society as well as their team members who make up the fabric of the company.
The Toyota Way is based on the guiding principles at Toyota, which define the
mission of Toyota as a corporation and the values the company delivers to
customers, shareholders, associates, business partners and the global community.
The Toyota Way defines how the people of Toyota perform and behave in order to
deliver these values.

The Toyota Way 2001

Concepts of Toyota Way transcend language and nationality, finding application in
every land and society. The Toyota Way is supported by two main pillars. They are
Continuous Improvement and Respect for People. Toyota leaders believe people
who are continuously improving are what have allowed Toyota to grow from a small
loom company in a farming community to a global powerhouse. Continuous
Improvement is defined as, We are never satisfied with where we are and always
improve our business by putting forth our best ideas and efforts. There are three
values or principles under Continuous Improvement.
3.1

Challenge

We form a long-term vision, meeting challenges with courage and creativity to realize
our dreams. This includes:

Creating Value through Manufacturing and Delivery of Products and Services

Spirit of Challenge
Long-range Perspective
Thorough Consideration in Decision-Making

3.2

Kaizen

We improve our business operations continuously, always driving for innovation and
evolution. This means:

Kaizen Mind and Innovative Thinking

Building Lean Systems and Structure

Promoting Organizational Learning

3.3

Genchi Genbutsu

We practice Genchi Genbutsu . . go to the source to find the facts to make correct
decisions, build consensus and achieve goals at our best speed. This encompasses:

Genchi Genbutsu

Effective Consensus Building

Commitment to Achievement

The second pillar Respect for People is a broad commitment. It means respect for
all people touched by Toyota including employees, customers, investors, suppliers,
dealers, the communities in which Toyota has operations, and society at large.
Respect for People has two values or principles of Respect and Teamwork which
is shown in the foundation of the Toyota house.
3.4

Respect

We respect others, make every effort to understand each other, take responsibility
and do our best to build mutual trust.

Respect for Stakeholders

Mutual Trust and Mutual Responsibility

Sincere Communication

3.5

Teamwork

We stimulate personal and professional growth, share the opportunities of

development and maximize individual and team performance.

Commitment to Education and Development

Respect for the Individual; Realizing Consolidated Power as a Team

4.0

FOURTEEN PRINCIPLES OF THE TOYOTA WAY

4.1

Long-term Philosophy

Principle 1
Base your management decisions on a long-term philosophy, even at the expense of
short-term financial goals.
4.2

Lean Processes: The Right Process Will Produce the Right Results

Principle 2
Create a continuous process flow to bring problems to the surface
Principle 3
Use pull systems to avoid overproduction.
Principle 4
Level out the workload (Heijunka) like the Tortoise, not the Hare.
Principle 5
Build a culture of stopping to fix problems, to get quality right the first time.
Principle 6
Standardized tasks and processes are the foundation for continuous improvement
and employee empowerment.
Principle 7
Use visual controls so no problems are hidden.
Principle 8
Use only reliable, thoroughly tested technology that serves your people and
processes.

4.3

Develop and Challenge Your People and Partners through Long-term

Relationships

Principle 9
Grow leaders who thoroughly understand the work, live the philosophy and teach it
to others.
Principle 10
Develop exceptional people and teams who follow your companys philosophy.
Principle 11
Respect your suppliers by challenging them and helping them improve.
4.4

Problem Solving and Continuous Improvement Drive Organizational

Learning

Principle 12
Go and See for yourself to thoroughly understand the situation (Genchi Genbutsu).
Principle 13
Make decisions slowly by consensus, thoroughly considering all options, implement
decisions rapidly.
Principle 14
Become a learning organization through relentless reflection (hansei) and continuous
improvement (kaizen).
5.0

THE HUMAN SYSTEMS MODEL

According to the systems model, any given organization should have a very clear
understanding of its purpose, and Toyota has a remarkably clear vision that is
broadly shared among the leaders of the company. There are a variety of mission
statements in the various business divisions within Toyota that change over time, but
each one always includes these fundamental elements:
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Add value to customers and society,

Contribute to the economic growth of communities and countries in which

Toyota does business,

Contribute to the stability and well being of team members, and

Contribute to the overall growth of Toyota.

Toyota thinks long-term, viewing profits as a means to a long-term mutual prosperity

for all stakeholders in both the company and the communities in which it does
business, but it also knows that profits are the result of competitive advantage. The
competitive advantage comes from doing an exceptional job of adding value to
society, and to achieve this, the people value stream must produce key outputs:
quality people producing high-quality, low-cost, and on-time products. To accomplish
this, the value-added steps are:

Attracting people with the right characteristics who are trainable and can
contribute to the value-adding processes

Developing those people so that they have the capability to do quality work
every day

Engaging the people so that they go beyond doing the work to improving how
the work is done through rigorous problem solving

Inspiring the people so that they are committed to the organization and will
continue to learn, grow, and do their best for the customer, community, and
society.

The inputs to the Toyota Way culture are its:

Philosophy

Values

Partnerships

Production system principles

Job competencies, and

Eligible human resources.

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THE HUMAN SYSTEMS MODEL

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5.1

PEOPLE-SUPPORTING PROCESSES AND DAILY MANAGEMENT

There are many systems in place to support team members as they are developing
to become committed members of Toyota. Developing people, in Toyotas history is
rooted in learning by doing which is taught on the job by highly skilled mentors. It is
more of a craft-based system. Intimate daily contact is the way the apprentice is
trained. Similarly throughout Toyota new hires are immersed in living the Toyota Way
daily through involvement in work groups, in a clean and safe environment, with
intense communication, and guided by leaders who are there to support and teach.
Working Groups and Team Problem Solving
At Toyota, the old adage All of us are smarter than any of us is truly practiced on a
daily basis. People are organized into work teams with team leaders and review daily
progress, taking problems as opportunities for kaizen.
Clean and Safe Workplace
Health and safety committees are formed which respond rapidly on the same day. In
addition, leaders also promote preventive safety measures, safety awareness, and
ergonomics awareness that alert team members to abnormalities with potential
health and safety consequences.
Two-way Communication and Visual Management
Toyota leaders work continuously to ensure open channels of communication
throughout the team by emphasizing the key values of mutual trust and respect,
sharing the management point of view, and encouraging team members to
participate in team activities and share their ideas.
Servant Leadership
Leaders in Toyota coach, teach and support the members of the work force that are
doing the value-added work. In other words, they serve as a team. They do this by
clarifying and reinforcing common goals, specifying and integrating team roles and
job tasks, articulating standardized work, providing training for required job

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competencies, scheduling regular team meetings for supplying timely information,

assisting in resolving issues, and ensuring earned recognition.
5.2

ORGANIZATION SUPPORTING PROCESSES AND THE ROLE OF HR

HR is one of the most important and powerful departments in the company. Toyota
has intertwined HR with its production management department, and as such, HR is
involved in daily concerns of team members on the shop floor. The role of HR is to
partner

with

manufacturing

while

facilitating

ownership

by

manufacturing.

Organization supporting processes that HR facilitates include:

Commitment and Tools for Stable Employment

Fair and Consistent HR Policies and Practices

Slow Promotion and Rewards for Teamwork

Hoshin-Kanri (Policy Deployment)

Toyota as a company, wants and needs to make a profit, but that is not the driving
purpose of the company. Rather, the company exists to satisfy customers, contribute
to society, contribute to the economy, and achieve long-term prosperity for all
employees and partners. Employees, too, expect the minimums of a paycheck and
benefits, but they also desire the personal growth that comes from a lifetime of
working in a positive environment. They want to continue learning, develop new
capabilities, and work for a company that is making a positive difference in society.
When we add up the interests of each party, the common purpose is long-term
prosperity for team members, the company, and society.

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5.3

ATTRACTING COMPETENT AND TRAINABLE PEOPLE

In Toyota, the expectation is that people hired will be with the company for life. So
every hiring decision is taken very seriously. To balance out hiring and carefully plan
for future needs, the human resources department plays a very critical role. Hiring
the right person, in the right amount, in the right form, at the right time is what HR
looks at. Recruitment at Toyota can be explained in terms of a funnel. As indicated in
the figure, Toyota wants a large number of potential members at the front end of the
funnel in order to yield the right number of matching members at the other end.

Since selection is a long-term match, the following dimensions will be scanned:

Team orientation

Initiative

Oral communication

Problem Identification

Problem Solution

Practical Learning

Work Tempo

Adaptability

Mechanical ability

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5.4

DEVELOPING COMPETENT AND ABLE PEOPLE

For decades, Toyota has worked diligently to develop a strong and effective culture
of people who are continually improving its processes. Toyota is a learning
organization and a lot has been gleaned about how to do each and every job. Much
has also been learned about how people can effectively work together,
communicate, and solve problems. Thus, Toyota trains people like they are
surgeons.
The Human Resource Department is responsible for the new team member for the
four-week orientation period, after which the team member is turned over to the
home department. Different training modules cover the following:

Work conditioning

Human Resource Policies

Production

Training to do the job

Classroom training

Pre-promotion training programme

Post-promotion training programme

On-the-job development

Fundamental skill training (GPC)

Standardized work training

Problem-solving training

Job Instruction training

Toyota Way Foundation

Toyota Business Practices

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5.5

ENGAGING COMPETENT AND WILLING PEOPLE IN CONTINUOUS

IMPROVEMENT

It is clear that there are no silver bullets in the Toyota Way in the sense of absolute,
universal quick fixes, but if there is one key, it is problem solving. Toyota Business
Practices (TBP) is a standard approach to problem solving but like standardized
work, rather than limit peoples creativity, it aims to be a vehicle for its development.
Toyotas TBP method has two parts the method described as concrete actions and
processes and the approach described under drive and dedication.

TBP The Revised Problem-Solving Process

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5.6

INSPIRING PEOPLE TO BE COMMITTED TO THE COMPANY, FAMILY,

AND COMMUNITY

Toyotas development of its employees is not limited to minds alone: hearts are
considered equally important. Since its inception, Toyota has seen itself as a social
institution as much as a money-making company, with a role to play in regards to its
employees, the community which surrounds its plants, and society at large. Toyota
shows its commitment to its employees is by inspiring them through offering unique
learning opportunities.
Toyota believes in the pillar of respect for people. Team Members need not become
a Toyota Man or a Toyota Woman to the full extent that might happen in Japan,
but they have to behave according to Toyota core values. According to the Toyota
Way 2001, team members need to:

Respect other people,

Respect themselves and strive to become better people,

Work co-operatively with others to continuously improve products and

processes,

Do this through genchi genbutsu:

through actual time spent on the floor
and direct interaction with others,

Always think about how to serve the

end customer,

Treat all team members and suppliers

as partners in the business,

Work to make others on the team better, and

Work to positively impact society.

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Toyota respects people, and believes that the success of business is created by
individual efforts and good team work. Human Resources (HR) practices in Toyota
are ideal, standard and a guiding beacon for the corporate sector.
6.0

CONCLUSION

Thus, Toyota selects, develops, and motivates people to become committed to the
goal of building high quality products in a safe and fair work environment. Respect
for people and continuous improvement go hand in hand. Treating people as
permanent members of a community sets the stage for teaching people not only to
do their jobs, but to continually improve products and processes. Carefully selected,
well trained and challenged people combined with exceptional processes leads to
exceptional results. The lean mindset is a result of a broader culture that supports
and engages people. Toyota culture is the key ingredient in Toyotas success as the
global leader in operational excellence.
Toyota is known for its famed Toyota Production System and companies all over
the world are working to implement the system in their organizations. In most
cases, the results are impressive in spots but are overall disappointing. What they
are missing is a strong human system which for Toyota is the key ingredient to
long-term competitiveness. The technical and social systems work together to create
a culture of teams working to solve problems. The tools of the production system are
designed to expose problems, while the human systems are designed to attract,
develop, engage and inspire people to solve those problems. The Human Systems
Model, while not a silver bullet, is a depiction of how all the factors come together to
create Toyota culture.
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