Strategic Human Resource Management Challenges for Toyota

This essay delves into the strategic human resource management (SHRM) challenges faced by Toyota Motor Corporation, a leading automobile manufacturer. It identifies two primary potential challenges: employee turnover, driven by competition in the industry, and resistance to change, particularly in response to technological advancements and recalls. The essay emphasizes the importance of SHRM in mitigating these risks and enhancing employee productivity. It explores various SHRM models, including the SHRM model, resource-based view, management by objectives, and the Harvard model, to provide recommendations for Toyota. The analysis highlights the significance of business strategy, risk management, and effective corporate culture in addressing the challenges. The essay suggests implementing employee retention strategies, integrating management bonus structures, and utilizing training and development programs. It concludes that by proactively addressing these challenges through effective SHRM practices, Toyota can improve employee efficiency and sustain its competitive advantage in the global market.

Running head: Toyota 1
Strategic Human Resource Management
Potential challenges in Toyota Company

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This essay will define the importance of strategic human resource management in the functions
of the company for increasing the productivity of the employees. Toyota Motor Corporation is
Japanese Company that headquartered is situated in Aichi. It is leading the business in
bestselling car models. Toyota developed the sales and revenue streams around 29.4 trillion
Japanese yen in March 2018. There are a number of problems or issues faced by Toyota Motor
Corporation and in spite of recent issues with inflators of the airbag, the company never stops to
compete with its competitors such as BMW, Honda, Mercedes Benz. The essay will explain the
two potential challenges in the context of Toyota Company which can be the cause of failure in
future. The model of SHRM will be defined in an efficient manner in the essay to provide
recommendations to the company so that it can take initiative in against of potential challenges.
The models of SHRM will be evaluated in concise way so that the role of each model in
preventing the potential issues can be determined.

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Toyota is well known company however it has faced number of issues regarding improper
human resource management but it has taken several actions to fix them. Future is unpredictable
but it is vital for the company to analyze the present situation in an efficient manner so that
human resource department of the company gets to know about the potential issues. I am
currently working with this company as a General Manager and identify that company can face
various challenges in future that may impact the company’s image in the future. Two potential
challenges will be described below in the context of Toyota Company that would be helpful for
the company to take appropriate action in against them. Employee turnover is one of them
because there is a number of competitors available in the car manufacturing industry that can
attract a number of skilled employees of Toyota Company. It would be the biggest loss for the
company due to a shortage of skilled employee. Another challenge would be resistance to change
as it can be seen that Toyota has faced number of recalls in its model and it needed to change the
process time to time which may bring difficulties for the company. It shows that it can face the
issues of lack of risk management in future.
Employee turnover defines the number of workers who are not the part of an organization and
are appointed organization as a new employee. It is vital for the company to measure the
employee turnover analyze the causes for a turnover or estimate the cost to hire for budget
purposes. Employee turnover defines the number of workers who are not the part of an
organization and are appointed organization as a new employee. It is vital for the company to
measure the employee turnover analyze the causes for a turnover or estimate the cost to hire for
budget purposes. Employee turnover defines the number of workers who are not the part of an
organization and are appointed organization as a new employee (Aruna & Anitha, 2015). It is
vital for the company to measure the employee turnover analyze the causes for a turnover or

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estimate the cost to hire for budget purposes. As per the statistic report, it has been found that
Toyota Corporation appointed around 369,124 people in the 2018 fiscal year. Toyota
Corporation is the largest automobile manufacturers in the world that is why it is necessary for
the company to apply the employee retention strategy in its business so that the employee of the
company can stick with it for a long period. Talent retention has become a crucial issue for
businesses. However, Toyota pays a good salary to it employees so that they can get satisfied
from their job in a significant manner but there are other competitors like Mercedes Benz, Ford,
BMW and many more that provide a good hike to the experienced employees of the automobile
industry.
Resistance to change is considered as the action which is taken by an individual and groups at
the time of recognize that a change that is happening as a threat to them. Toyota is the company
that is always looking for a change for getting continuous growth. It has been analyzed that
Toyota has more than eight plants in North America and it has focused on the latest plant in
Mississippi in which the project made regarding making cars with the workers of America. It has
been found that more than 75% of the cars in this project have been assembled in North America.
It would be the great challenge for the employees of the company and the potential challenge in
the form of resistance to change can be developed in the future. In recent months, it has been
discussed by Toyota to develop solid-state batteries to power future electric cars. The company
would launch only one car of this model by 2020 or earlier (Bodek, 2007). The employees of the
company can face the challenges regarding resistance to change in which they may think that
changes in the various programs may bring huge challenges for them (Šišmová, 2018).
The appropriate strategy should be identified by the department of human resource management
of Toyota Company so that the influence of potential issues can be reduced by implementing

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them. The business strategy, risk management strategy, competitive strategy, and effective
corporate culture should be adopted by the HRM of the company. These strategies facilitate
business to know about those areas that required proper change or training for the existing
change. These strategies target the competitive advantages and determine the way in which
business is prepared to make its own environment. Toyota is well-known company for its change
and it has been found that it expects to have sold 5.5 million electrified vehicles by 2030
(Thakkar, 2017). To get success without losing its customers and employees, it is vital for the
company to implement the business strategy as well as HR strategy within the operation so that
the initiation of this planning can be done without facing any obstacles.
Strategic human resource management involves distinctive components of a human resource
such as discipline, hiring, quality of the work experience, payroll and working with employees in
a mutual manner to encourage retention and increase the mutual advantages of employment for
employees (Truss, Mankin and Kelliher, 2012). it is considered as the practice that alights the
business strategy with that of practices of HR to attain the strategic goals of the organization.
The objective of SHRM is to make sure that strategy of HR cannot be considered as the means
but an end in itself as far as business aims is unease. It is necessary for the company to fit with
the HR strategy according to the SHRM model and thus ensure that there is configuration
between the HR practices and the strategic aims of the organization (Wei, 2006). this model is
helpful for the Toyota company to make effective strategy in the human resource management so
that the company can prevent potential challenges.

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Figure 1: SHRM Model
Source: (Wei, L., 2006).
This model facilitates organization to connect the functions of the human resources functions
with the strategic objectives of the company in order to improve the performance of the
employees. Consequently, the themes of SHRM are linked with the functions of HRM and
receptiveness to the external environment. There is external fit in the form of vertical integration
and internal fit in the form of horizontal integration entailed in this model that covers the
competitive strategy which would be helpful for the company to control the steps of change in
the commodity. Horizontal integration is the competitive strategy that aids to enhance the value
of the company and to reduce the potential challenges of Toyota Company. SHRM model entails
the model of Harvard business model, management by objectives and resource-based view
model that would be helpful for the company to implement the effective strategy for reducing the

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impact of potential challenges (Wu and Chiu, 2015). The resource-based model of SHRM
facilitates in determining the exits resources within the organization and unites them with the
capacity of the organization in a sophisticated manner. With the help of this theory, HRM would
be able to attain the competitive advantages by using the resources in an adequate manner.
In the context of employee turnover challenge, this model can facilitate Toyota to retain the
employees significantly. Management by the objective model of SHRM is efficient to retain the
employees noteworthy (Zadeh, 2009). There are some steps of it by which the company can
reduce the turnover of employees such as revise the objectives of the company, defining the
purpose of change in the objectives to the employees, participation of employees of the company
in the decision making process, evaluating the performance management system of the
organization in order to attain the objectives and at last step of management by objectives is to
evaluate the performance and reward them appropriately (Anitha & Begum, 2016).. The issue of
employee turnover can be reduced within the organization of Toyota Company with the aspects
of total rewards system and performance management system. The company is known for its
effective change that is why it is required for the company to integrate management bonus
structure in which the managers of the team will be rewarded along with the employees of their
team for their ability to contain costs within the corporation (Chen, Tang, Jin, Li and Paillé,
2015).

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Figure 2: Turnover Ratio of Toyota Company
Source: (Pathan, Mahesar & Shah, 2016).
In above image, it can be seen that in comparison to its competitor Ford the employee turnover
ratio of Toyota is high. There is number of reasons that is the cause of employees turnovers such
as lesser pay scale, work-life balance, employee misalignment, lack of coaching and feedback,
organizational instability, shaken of faith and confidence. These reasons are liable for employee
turnover in the company of Toyota.
Along with employee turnover, there is another potential issue for the company for resistance to
change. The main reasons behind resistance to change is a misunderstanding about the need for
change by the employees, fear of the unknown, connected to the old process, low trust, poor
communication, saturation and lack of benefits and rewards (Ritala, Golnam and Wegmann,
2014). The HRM department of the company should implement the SHRM model appropriately
in the function of the Toyota Company. It should include the proper structure of training and
development program, effective strategies such as 360˚ feedback and appropriate evaluation of
the performance of the employees (Sajeevanie, 2015). These will be helpful to make them,

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understand that the proposed change is being done for the benefits of not only to the company
but also in the context of employees as well. The Harvard model of SHRM can be implemented
in the Toyota Company as it contains six aspects such as stakeholders, HR outcomes, HRM
Policy changes, situation factors, long-term consequences and feedback. This model has the
potential to connect the human resource strategy with business strategy. As per Harvard model of
SHRM, the human resource strategy of the company need to focus on a rewards system, work
system and employee influence which link with business strategy (Liker & Hoseus, 2009).
In the limelight of above discussion, it can be concluded that Toyota can face potential
challenges regarding employee turnover and resistance to change. The role of SHRM in
improving the efficiency of the employee within the organization is huge as it facilitates to
reduce the risks of the company. The models of SHRM such as management by objectives,
resource-based view and Harvard model has been discussed in this essay to represents the
importance of SHRM model in reducing the impact of potential challenges (Bhasin, 2011). The
discussion has been made in an efficient manner which makes clear understanding of the model
and their role in improving the potential challenges of Toyota Corporation.

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