Toyota's HR Challenges: Analysis and Recommendations Report

This report provides an in-depth analysis of human resource management issues within Toyota. It identifies critical problems, such as a flawed reward system prioritizing cost containment over product quality, the upper management's disregard for lower-level concerns, and failures in risk management. The report examines how these issues have contributed to manufacturing defects and overall corporate culture problems. Furthermore, it outlines a detailed process for implementing necessary changes, including securing management support, building a case for change, involving employees, communicating changes systematically, and following up on implementation. The conclusion emphasizes the need for Toyota to address these HR issues through a structured change process to ensure better outcomes and results, highlighting the importance of effective risk management and employee engagement.

Running Head: TOYOTA 0
Human Resource Management

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Contents
Introduction...........................................................................................................................................2
Analysis of HR issue in Toyota.............................................................................................................2
Most significant problem needing to be addressed in Toyota................................................................3
Process for implementing the change(s) that will address the problem.................................................4
Conclusion.............................................................................................................................................5
References.............................................................................................................................................6

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Introduction
Human resource management plays an essential role in the success of any
organization (Collings, Wood & Szamosi, 2018). There are many fields, theories and
philosophies which can be applied to organisation domain so that to achieve extended success
in various areas. Due to breakdown in the human resource management, Toyota is facing
number of crisis and issues. One of the major issue in the Toyota Company is the reward
system. The issue with this is the rewarding of manager based on cost containment in spite if
the sustaining the quality of product. Another issue in Toyota is the top-level management is
ignoring concern of lower level manager. In addition to this, human resource department of
Toyota is also failed to perform the proper risk management. All these issues are being
discussed in the report and outlines explicitly. Furthermore, a necessary process has been
discussed for implementing the change so that the company can remove several barriers in
path of success.
Analysis of HR issue in Toyota
In previous years, Toyota was the standard for all the other manufacturing industry
and other worldwide companies. With the various recalls in current years due to the defects in
manufacturing of Toyota, manufacturing companies are no longer striving to imitate the
quality of Toyota. The major human resource issue in Toyota is the reward system at the
corporation (Soliman, 2017).
The overall culture is the most common issue that caused the manufacturing defect in
Toyota. It is because personnel, as well as lower level manager, were complaining about the
quality of Toyota quality. The upper-level management was also having no reason to take the
lower level management complaints seriously. This proves to be dangerous corporate culture
where the upper level management ignores the lower management on the production floor.
Besides this, lower level management is also lee likely to receive the bonus for achieving the
target (Quirke, 2017). Another issue has led the company in making continuing series of
immense calls. In recent years, Toyota has experienced huge development but in domain of
HR management, the company not able to effectively manage their employees in terms of

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training, proper knowledge, and skills. Therefore, human resource failure issues were related
to workforce planning. It was also not able to train the personnel proper because of vast
growth. It also founded to be difficult for properly supervising those because of the growth.
One of the basic requirement of human resource department is to position and recruit
adequate amount of individuals at particular position so as to make balance between demand
and supply of human resource (Noe, Hollenbeck, Gerhart & Wright, 2017). Afterwards,
giving them necessary training and guidance is also important in order to use their full
capability towards achievement of particular strategic goal. The growth that occurred at the
Toyota caused human resource to achieve failure in having the right people in the right
position.
Most significant problem needing to be addressed in Toyota
It is founded that “How HR has caused Toyota to crash” is one the major reason for
the failure of Toyota. Behind this issue, mechanical defects have occurred that exist by the
leader of Toyota for a substantial period. In this way, in spite of hiding the problem, various
sources have claimed that management of Company has tried to cover all the problems with
the mechanics (Sullivan, 2010). The main reason behind taking such type of action is the
reward system that presents at Toyota. It has been seen that despite rewarding managers for
sustaining quality, Toyota continues to reward managers based on their capability to contain
the cost within the organization.
The failure in properly assessing the risk is yet another issue in Toyota. The vital
purpose of risk management is to recognise the problem proactively and further eliminate
them on priority basis so that it not create any major issue. It is therefore significant for the
organisation to come up with necessary “HR risk management strategy.” In addition, the four
pillars of human capital risk management also aid such as operational risk, Financial risk,
strategic risk and compliance risk (Hcamag, 2010). Considering two categories, human
resource has already been unsuccessful. Strategic risk stood by the organisation ethics,
philosophy and inclusive human capital strategy have led the company to be unsuccessful
failed the corporation because declaration of defects left totally wrong. The main reason for
this is the announcements received from the lower level management and not from the upper-
level management. Operation risk management means making decision by concerning

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whether organization is properly recruiting in order to meet the recent needs. Human resource
management is responsible for assessing whether recruitment or hiring practices is proper to
meet the current as well as future needs (The Conversation, 2012). By considering this,
human resource department of Toyota is failed in making the proper assessment of the risk.
Both issues require Toyota to give consideration as it can lead to several other problems in
the organization.
Process for implementing the change(s) that will address the problem
It is true that whenever organization facing any challenge, it becomes essential to
address those issues effectively. In order to implement the change at Toyota, it is
recommended to use the following steps:
 Support of management for change: It is true that employees develop their level of
comfort when they know that management is supporting the process. Management team of
Toyota can also show the support for change by properly interacting and communicating with
all the staff members (Jiang & Probst, 2015). By doing this, employees will also take the
initiatives to participate in the change process effectively.
 After this, it is recommended to make a situation for the change. There are various
sources from where case for change can come from. It can be customer comment cards,
customer satisfaction survey, employee satisfaction survey and business goals because of
budget pressure or the session of strategic planning. Use of data can prove to be the best way
for Toyota in order to identify as well as justify the areas that are essential to improve by
taking the change initiative.
 It is essential to involve all the employees at some level. Whatever change Toyota is
taking, it should explain and properly communicate all the change that will specifically affect
how employees affect their job. For example- when it will change the reward system of
company, employees will definitely change their way of working in some or another way
(Karanges, Johnston, Beatson & Lings, 2015).
 It is also significant for Toyota to communicate change in a systematic and structured
manner (Jackson, 2019). It is true that whenever poor communication is done, rumours can
create regarding change that can be the cause of resistance to change.

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 After planning the change in Toyota, it is essential to have good communication
regarding implementation of the change. It can also make a timeline for the change
implementation. For example- if it is changing policies for risk management, training is
necessary in order to communicate those policies in proper manner (Fujimoto, 2018).
 Whenever any change is made, it should follow up after the implementation. This will
help Toyota in assessing how the change is working for it and what changes are still required
in the Company. There are times when changes do not bring the desired expectation. In such
a case, it is recommended to Toyota to make the adjustments until the desired results do not
come.
 There are times when employees encounter the barriers at the time of implementation
of change. It is true that barriers can occur with other departments, other employees, lacking
equipment, and inadequate training. Therefore, management of Toyota is required to deal
with difficult and resistant employees.
 At the end of following this process, it should celebrate success. It can also celebrate
the small changes and can build a big momentum for bigger changes. When employees of
Toyota will understand reason behind the change, they will allow for a better chance for the
successful implementation.
Conclusion
In the limelight of above discussion, it can be concluded that Toyota is facing several
problems in recent year. In recent time, all the top managers who receive the bonus or reward
for keeping the cost low at the organization overlooked cautions from the lower level chiefs
regarding manufacturing defects risks. Besides this, Toyota has also failed to perform the
essential function of risk management as well as assign the significant persons to perform the
function. An additional issue of human resource management at the Toyota Corporation is the
problem in its overall corporate culture.
In order to address all these issues of human resource, implementation of effective
change process has been discussed. By using this process, proper number of people will be
assigned that will ensure the better output and results.

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References
Collings, D. G., Wood, G. T., & Szamosi, L. T. (2018). Human resource management: A
critical approach. In Human Resource Management (pp. 1-23). United Kingdom:
Routledge.
Fujimoto, T. (2018). Evolution of Organizational Capabilities in Manufacturing: The Case of
the Toyota Motor Corporation. In Industrial Competitiveness and Design
Evolution (pp. 191-221). Springer, Tokyo.
Hcamag. (2010). How HR has caused Toyota to crash. Retrieved from:
https://www.hcamag.com/au/news/opinion-and-best-practice/how-hr-caused-toyota-
to-crash/135577
Jackson, N. (2019). Organization Communication. In Organizational Justice in Mergers and
Acquisitions (pp. 167-188). Palgrave Macmillan, Cham.
Jiang, L., & Probst, T. M. (2015). Do your employees (collectively) trust you? The
importance of trust climate beyond individual trust. Scandinavian Journal of
Management, 31(4), 526-535.
Karanges, E., Johnston, K., Beatson, A., & Lings, I. (2015). The influence of internal
communication on employee engagement: A pilot study. Public Relations
Review, 41(1), 129-131.
Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human resource
management: Gaining a competitive advantage. New York, NY: McGraw-Hill
Education.
Quirke, B. (2017). Making the connections: using internal communication to turn strategy
into action. United Kingdom: Routledge.
Soliman, M. (2017). A Comprehensive Review of Manufacturing Wastes: Toyota Production
System Lean Principles. United Kingdom: Routledge.
Sullivan, J. (2010). A think piece: How HR caused Toyota to Crash. Retrieved from
https://www.ere.net/a-think-piece-how-hr-caused-toyota-to-crash/

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The Conversation. (2012). Toyota’s low productivity workers and the problem of
performance assessment. Retrieved from: https://theconversation.com/toyotas-low-
productivity-workers-and-the-problem-of-performance-assessment-6492