Friday, April 16, 2004

The Toyota Way

What's one of the best ways to make cars? Author reveals firm's secrets for local crowd

By Victoria Barber-Emery
Enquirer contributor

At Toyota's plant in Georgetown, Ky., Francine Bryant-Clark installs a top on the new Solara convertible before its March introduction.
The Cincinnati Enquirer/TONY JONES
Author Jeffrey Liker says it's no surprise that Toyota's net profit margin is 8.3 times higher than the automobile industry average: The company's formula for success rests in its corporate philosophy and its ability to hire individuals who embody that philosophy.

Liker's book, The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer, says this formula can be implemented in any company. And companies don't have to copy Toyota's culture to get lasting results.

"What I argue is that we need to learn the importance of having a stable culture that supports the business we are in," Liker said this week before he spoke at Northern Kentucky University on Thursday.

Liker has studied Toyota since 1991 through his position as co-founder and director of the Japan Technology Management Program at the University of Michigan. To illustrate Toyota's success, he developed a pyramid of principles where long-term philosophy is the foundation upon which all other management principles are built.

He stresses the importance of maintaining a company's philosophy through its culture and says managers must be role models who live the philosophy and teach it to subordinates.

Hiring people who fit the culture is a vital task toward maintaining the philosophy.

Weeding out good workers

Sam Heltman, senior vice president of administration at Toyota Motor Manufacturing North America Inc., has been with the company since 1986. Since 1984, Toyota North America has hired some 25,000 people in manufacturing and operations. The company's North American manufacturing headquarters is in Erlanger.

Heltman says employees are hired early in their careers before they are exposed to another company's culture.

Toyota is then able to groom them for promotion and teach them the Toyota Way without combating previously learned corporate behaviors.

Prospective managers undergo a rigorous behavioral-based hiring process. The first step is viewing a video about Toyota's culture. Next, applicants take a job fit inventory examination. At this point, Heltman says some elect not to continue when they discover what the work involves.

The third step involves a "day-of-work simulation and assessment center process." Applicants are judged on their ability to perform activities that simulate the actual work required of a particular position. Those who display the appropriate leadership characteristics are asked to come back for a series of interviews.

"We pick candidates who we believe are open and flexible and have a willingness and a desire to learn the Toyota Way. The real work then begins in planning their education and their career experiences through the job itself.

"Our challenge is to help people understand our business processes and how to make decisions and what our values are, so that they are able to adjust and adapt to the Toyota way," said Heltman.

In the early days of Toyota North America, after an American manager was hired, Japanese managers were paired with them to teach the company's philosophy through on-the-job coaching that involved self-discovery and reflection. Heltman says the technique was very effective. Today, American managers fill the coordinator role.

Heltman says Toyota uses a combination of educational tools related to the Toyota Way and on-the-job experience and discussion/reflection with a senior mentor.

Challenging the managers

Heltman's advice to companies looking to hire people who fit their own corporate culture is to make that culture explicit through full understanding of their value system. Companies that are able to clearly define their own philosophy and culture have an easier time finding a good employee fit.

"We try to avoid developing people in functional silos and employ horizontal rotation to expose people as much as possible, early in their career, to different functional areas within the company so that they can learn the business," Heltman said.

"For example, the department head here for human resources was originally hired into accounting. That individual rotated from accounting to human resources at the same level in the organization."

Maintaining employee longevity and loyalty is an integral part of grooming Toyota employees and promoting from within.

"The way you retain employees is you challenge them and develop them. I don't want to discount the importance of competitive reward systems, but really people leave an organization, based upon my years of observation, more often when they aren't learning and growing and feeling like they are making a major contribution," says Heltman.

"So, to me, the key is to give challenging assignments and ensure that people are continuing to learn."


5/3 profits up 10% in quarter
McDonald's taking steps to pump up its McImage
LabOne stays in Cincinnati
Provident's new owner plans big
The Toyota Way
In the works: Searching three-dimensional Web
Delta's finance chief leaving
Home goods major focus at Federated
Real estate booming in ex-communist states
Other banks fare well in 1st quarter
Perry nuclear power plant flagged for minor violations
N.Ky. gets big convention
Tristate business summary
Business digest