Toyota's HR Challenges and the Role of HR Analytics: Case Study

This case study examines the HRM failures at Toyota, which led to quality problems and product recalls. The analysis highlights poor HR practices in areas like training, hiring, and risk assessment, attributing these issues to human error and a lack of data-driven decision-making. The solution argues that HR analytics could have significantly improved outcomes by providing data-backed insights into workforce performance, improving hiring quality, enhancing employee retention, and transforming HR into a strategic partner. The study emphasizes the importance of aligning leadership behavior with business results and using HR analytics to predict future organizational needs, ultimately suggesting that a data-driven approach could have helped Toyota avoid significant financial losses and brand damage. The case study underscores the value of HR analytics in identifying and mitigating risks associated with ineffective employee processes and overall business performance.

HRA CASE STUDY ASSIGNMENT
(Submitted by: Bhargavi Mehta 28108)
Case
Looking Beyond Gas Pedals- How Human Resources Lead to Toyota’s Failure
Toyota today is riddled with quality problems. Quality was once the prime USP of this
company. The problem reached such a critical level that the company had to recall almost 9
million cars worldwide. Obviously, this led to a significant lowering of the brand value of the
company, and a drop in sales. John Sullivan (2010) attributes such failure of Toyota to the
poor HRM function of the company. Sullivan added that while hull design flaw contributed
to this catastrophe, the root cause of the problem was human error. Human error at times
caused for factors that could be beyond the control of employees. It cascades for the actions
of the senior management. People at the operations level may have inadequate information
and poor job training.
Toyota’s poor HR practices, which Sullivan classified under eight categories, attributed to
such mechanical failure, causing recalling of their supplies. Such HR practices are reward
and recognition, training, hiring, performance management process, corporate culture,
leadership development and succession, retention, and risk assessment. In all these HR
practices, the company failed to integrate with the business goals. Moreover, HR decisions
were not backed with data, rather it was in accordance with the existing systems and
standards. Hence the systematic failure of management contributed to quality problems and
subsequent recalling of cars, resulting in several billion losses to the company. With data-
driven HR decisions, HR managers could have been more analytic and predictive in
foreseeing such problems and warned the top management.
Question: In the context of this case study, do you think Toyota could make a difference
with HR analytics? Elucidate your answer.
I completely agree that Toyota could make a difference in HR analytics for a variety of reasons,
including:
1. Training: If Toyota training had been more effective, employees would have had the
skills and capabilities to deal with any situation that arose.
2. Hiring: The goal of great hiring is to bring on top-performing individuals with high
levels of skill. A problem can be caused by poorly designed recruiting and assessment
elements, as was the case in this case.
3. Risk Assessment: Most Human Resources Departments do not even have a risk
assessment team whose purpose is to identify and calculate risk caused by ineffective
employee processes.
Toyota's problem is not the result of a single individual making an isolated mistake, but
rather of the company concealing a series of mistakes that are all related to one another. If
Toyota had used HR Analytics, it could have made a significant difference.

HR Analytics can assist the company in many ways in aligning leadership behaviour with
business results:
1. In order to make better HR decisions, there is a greater need for data and analytics
tools in HR.
HR analytics plays an important role in providing access to critical data and insights
about the workforce, which can then be analysed to make better decisions.
It not only improves HR performance, but it also provides a better understanding of
what motivates employees to work productively and how organisational culture
influences employee performance.
2. One of the advantages of HR data analytics is improved hiring quality.
Running machine learning algorithms on jobseeker data enables businesses to identify
the best matching talent for a vacant position, thereby improving hiring quality.
3. Employee retention is a critical benefit of HR metrics and analytics.
Similarly, using employee data, recruiters can identify a pattern of high-performing
employees and adjust their employee hiring and retention strategy accordingly.
HR analytics can help identify which departments are experiencing the most attrition
and why. It can also assist HR in identifying activities that have the greatest impact on
employee engagement, allowing organisations to invest in such activities.
4. One of the advantages of workforce analytics is the transformation of HR into a
strategic partner.
The use of HR analytics can provide the HR department with a unique vantage point
to validate its importance and role as a strategic partner in a company's performance.
HR professionals can provide verifiable data to business leaders to support their talent
hiring, retention, and engagement policies.
5. Business analytics in human resources can aid in predicting an organization's hiring
requirements.
HR analytics can assist in forecasting changes that may occur in the organization's
future. HR analytics can be used to forecast the skills and positions required to
improve business performance.
With the manifestation of HR technology on a never-before-seen scale, we can expect
more focus areas to be added to this list where HR analytics can play a role in ensuring
better HR performance and improving overall business performance.