Strategic Human Resource Development at Toyota
Introduction to Wider HRM Concepts
Human resource management (HRM) existed in various forms since the dawn of the industrial relations. Its vision and approaches evolved in line with the development of human society, macroeconomic transformation of the global markets, technological development, speed of innovation, and the growing significance of human involvement in the production processes. This management practice has been permanently focused at the three generic interrelated components; namely: organizational tasks, people, and managerial initiatives. The last century has witnessed the change of the four concepts reflecting the evolution of the role of people in the production industry. The first was incorporated in the philosophy of Tailorism. It considered management of jobs instead of people, and the use of cheapest labor to perform routine tasks. Labor was measured by working hours and wages, which, in turn, were regulated by the labor market (Freeman & Rogers, 1999). This “scientific management” model was substituted by the personnel management approach. It constituted a highly bureaucratic system, where the formal roles of employees, i.e., their occupational capacities, were managed by means of “authority, control, and efficiency” (Wright & McMahan, 1992).
Human resource management activated the human factor as a unique market element, provided a systemic approach to managing organizational resources, and focused on motivating performance and participation. It linked the paradigms of performance management, organizational behavior, and organizational development (Ouchi, 1980). Each of these HRM concepts allowed exploring and maximizing efficiency of human participation in production and centralized management.
Introduction to Strategic Human Resource Development
Ever since Michael Porter postulated the essence of strategic management, it became a pervasive element of all organizational processes. The general idea is that the external and internal organizational environments are characterized by permanent change and uncertainty. Therefore, businesses should change their strategies over time in order to remain adequate and competitive. In this context, strategic management stands for a situational approach that retains flexibility and openness to introduce the necessary modifications to any element of the organizational system. In the field of human recourses it is generally understood as a “the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals” (Wright & McMahan, 1992).
Strategies for Human Resource Development
SHRM concept has directly linked individual employee performance to strategic organizational goals. It suggested that firms can strategically accumulate and develop perceivably “valuable, rare, inimitable, and non-substitutable” physical and intellectual capacities of their employees as a sustainable competitive advantage (Barney, 1991). Following this implication, different models appeared suggesting the efficient ways of turning human capital into a meaningful and valuable resource. The key elements of these models are (1) the set of existing knowledge, skills, competencies and behaviors, (2) organizational environment that favors personal development, learning, and career growth, and (3) organizational processes that instrument strategic transformations in employees, i.e., reward systems, organizational culture, knowledge management, outcome based evaluation, learning organization, etc. (Wright, Dunford, & Snell, 2001).
Strategic Case for Learning Needs
I have selected Toyota Motor Corporation as a strategic case for these learning outcomes, because this global leader in the automobiles market owes a great deal of its success to the innovative and exemplary commitment to SHRM.
The company first emerged in the textile market in 1933 as a family business under the name of Toyoda Automatic Loom Works. Going into automobiles was the bold idea of one of the owner’s sons, Kiichiro Toyoda. In order to differentiate and grow, he made another landmark decision, i.e., to revolutionize Japan-based production of luxury cars in the form of its Lexus-division. Toyota Motor Co., Ltd. survived numerous internal and external crises and expanded its overseas sales operations through international partnerships. The company’s owners have embedded their original business concept of better social living, inimitable safety, and superior quality into the principles of corporate labor and management (Besser, 1995).
Taking into account the abovementioned model, it is possible to argue that Toyota managed to tackle all of its elements in order to secure sustainable transformation and growth. Lean manufacturing set the recruiting requirements for a specific mix of employee qualities, such as “teamwork and cooperation, social communication, enthusiasm, consistent decision-making, and studiousness” (Liker & Meier, 2007).
The hiring process is extremely selective and includes hours of tests, interviews, and reference checks. Potential employees are expected to show a great deal of professionalism coupled with flexibility and subordination to the organizational policies. Toyota welcomes diversity and is likely to hire young, inspirational, and creative specialists it can mold into committed partners with “strong work ethics”. This is why learning and training are the essence of its organizational culture. The company claims “we do not just build cars, we build people” (Liker & Meier, 2007). The company has an impressive schedule of formal learning activities, while informally every process and every situation are considered to be a valuable lesson.
Organizing Learning Events and Their Strategic Contribution to Organizational Effectiveness
Toyota boasts that the launch of every new model is preceded by almost thousands of training hours. The company pours in huge investments into Kaizen activities, total quality management, continuous improvements, and just-in-time production efforts. Toyota operates 3 regional training facilities in Thailand, England, and Kentucky to ensure assimilation and integration of its global workforce into the environment of corporate culture. The company has eliminated geographical distance and cultural differences by introducing “interactive learning systems,” i.e., webinars, CD training, online conferencing, etc. (Liker & Meier, 2007). This approach brought significant improvements to Toyota’s team coherence. The human resources network constitutes of the small teams commanded by the team leaders and organized into the groups accountable to the corresponding leaders. The goal of learning and training events is to maximize teamwork performance through multifunctionality of individual employees and commitment through positive cooperation.
Role of the Training Specialists and Line Managers in their Support of Strategic Goals
Toyota’s training specialists and line managers play a significant role in supporting its culture and philosophy. Unlike similar positions in the European and American companies, these positions incorporate only a small premium for the administrative aspects of the job. Position of a leader and teacher is considered to be a tremendous responsibility and privilege. They are selected through peer-evaluation and require approval of a managing superior. They are expected to coach the new additions to the team, offer a supportive hand to the underperforming team-members, and substitute for the missing individuals to get the job done. All individualism and exceptionalism are erased from Toyota’s training initiatives. The company has renounced such phenomena as great trainers, outstanding leaders, indispensable workers, and personal success. Corporate and training leaders are regarded as part of the team, and are not supposed to be distinguished on the principle of individual performance (Besser, 1995).
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The Value of Learning Evaluation Models to Strategic Growth
The four levels of the learning evaluation model adopted by Toyota included “reaction, learning, behavior, and results” (Kirkpatrick & Kirkpatrick, 2006).
Reaction was assessed in terms of employee acceptance of authority and mandatory requirements of corporate culture. The learning outcomes were measured by the results of training events. Positive behavioral changes were benchmarked by visible proactivity, increase flexibility, and multifunctionality during the regular workplace rotations, and the increase bottom-up flow of “individual and team suggestions”. These improvements have contributed to strategic growth in several ways.
First, they ensured that Toyota hired only best human resources and in the exact number required to sustain its operations. Secondly, extreme employee commitment allowed decreasing the share of financial-motivation. Third, commitment to quality and continuous improvement delivered benefits in the form of total quality management. Internal employee development and training also allowed recruiting from a less expensive labor market segment. All of these outcomes were translated into cost-efficiency, profitability, productivity, and sustainable organizational change (Besser, 1995).
Quantitative and Qualitative Approaches to Evaluating Learning
It is suggested that a company can benefit from incorporating additional quantitative and qualitative approaches to evaluate learning. The first group of techniques is grounded upon the statistical evaluation of measurable learning outcomes, i.e., key performance indicators and their reflection in the organizational financial reports for the relevant period. They might include individual number of learning events attended, valuation received, number of rotations participated, team benchmarking, balanced score card, retention statistics, etc. On the organizational level, meaningful indicators may include ratio analysis in comparison with market standards, industry averages and competitive performance, SWOT analysis, Porter’s 5 forces analysis, etc. (Kerin & Peterson, 2009).
In turn, qualitative approaches incorporate self-assessment, personal appraisal of the learning process, and reciprocal account of the participants of the learning process. They allow estimating the learners’ involvement, and see whether the strategic initiatives are really generating the desired changes in the employee’s attitudes, opinions, and values (Boxall, 2003).
It is possible to conclude that SHRM is a must-have for all modern businesses that intend to compete in the global environment, as it secures companies with a sustainable competitive advantage in the form of unique human resources. Toyota Motor Co., Ltd. has overcome all of the challenges of business development and growth due to its commitment to attracting, building, and retaining the best human resources in the automotive industry. Its SHRM is based upon the cooperative culture, team structure, collective values, diversity, total quality management, investment into continuous training and learning, multifunctionality, workplace rotations, internal career growth, and cost-efficiency.