Background Of Toyota Motor Company Limited Management Essay

Since it was founded in 1937, Toyota Motor Company has contributed to the development of the automobile industry and society by providing people with quality vehicles. TMC manufactures automobiles in 25 countries and regions all over the world. Today, its vehicles are sold in more 160 nations worldwide under the brand names of Toyota, Lexus, Daihatsu, and Hino, manufacturing small cars to luxury sedans, full-sized pickup trucks, and crossover vehicles.

This report is mainly focusing on the human resource management system of Toyota Motor. The major issues like technological issues of HRMS, change management and innovation to management style of Toyota Motor Company in detail. It also depicts the relation between the human resource management system and among these key issues in the context of Toyota motor company.

Technological changes in HRMS of Toyota include the recruitment and selection process of Toyota and different techniques how to motivate and encourage employees towards the objectives and goals of organization. In change management an example of change management has been explain about the Toyota Motor and different styles of management which are used in Toyota are also describe in detail and some techniques which Toyota’s management is using to control and directing its employees.

Some recommendations are given at the end of the report on those areas where Toyota needs some improvements.

Background of Toyota Motor Company Limited

Toyota Motor Co. Ltd. (TMC) was first established in 1937 as a separated company from Toyoda Automobile Loomworks, the leading manufacturing of weaving machinery. The Toyota Automobile Loomworks was then headed by Sakichi Toyoda, the king of investors (Schewe, Charles and Hiam, Alexander, 1998).

The giant automaker faced its one and only strike in 1950. This event, however, supplied Toyota an important philosophy, giving it the labour and management system which helped Toyota to gain mutual growth and success in both domestic and overseas markets. Today, this philosophy is very important to the structure of Toyota.

Toyota’s production system improved in the late 1950s, establishing the ‘Toyota Production System. This system became the major factor in the reduction of inventories and defect in the plants of Toyota and its suppliers. It also underpinned all of Toyota’s operations across

the world. It launched its first small cars in 1947. The operation outside Japan started in 1959 in Brazil and continued with growing network of foreign plants.

Toyota celebrated its 60th anniversary in August 1997. It believes that its local production can provide customers with the productions they need, giving it the stable and long-term growth. It also has a global network of design and research and development facilities, consisting Japan, North America, and Europe markets (Schewe, Charles and Hiam, Alexander, 1998).

Toyota is at rank 8 in fortune global 500 2007 companies of the world Toyota Motor Company is committed to the principle of Equal Opportunities by providing fair and equitable treatment to all individuals and applicants. Toyota seeks to abide by the intent as well as the letter of appropriate legislation in these matters and Toyota management team is committed to the promotion of and adherence to the Equal Opportunities Policy.


Why Toyota Motor need Innovation and Change?

Any organization needs change for some reason. It may be for its survival if business is not doing well or may be business wants to attain competitive advantage. Sometimes this change is required due to the external pressure like mergers or change in any legislation. Overall change is for the benefit of the business and their employees. There are so many reasons for the Toyota for the innovation and change which are:

Reduced Sales

Customer Turnover

Employee Turnover

Loan Repayment

Investments in a new project

Extension of Organization i.e. overseas business

Need for Technology

Core Competence

Customer Value Creation

Basic Issues to Toyota Motor Company

In the past, Toyota was not giving much attention to its Human Resource management system but now it is known that success of the Toyota is more dependant on its employees rather than on any thing else. Toyota Motor also believes its employees are assets for them and sometimes they give more attention to the employees than customers. They believe on the philosophy that organization with more satisfied employees having more satisfied customers. So now, It is necessary for the Toyota to choose the right employee for the right job. Because one wrong decision regarding selection of the employee will harm Toyota till that employee will work on that job. The three most vital issues related to HRMS of Toyota includes

Technological Changes in HRMS of Toyota

Innovation to Management Styles of the Toyota HRMS

Change Management perspective of Toyota HRMS

Technological Changes in HRMS of Toyota

In this competitive environment of global business, it was very difficult for Toyota Motor Company to remain always competitive and managed profitable relationship with the customers. Toyota Motor is the 3rd best automobile corporation of the world and it always needs innovation (Ronald J. Burke, Cary L. Cooper, 2006). Innovation can be in any form or in any field e.g. it can be in the design, production processes, quality, product, managing human resource effectively etc. in this report main focus will be on the human resource management system of the Toyota. The solution of technological changes in HRMS of Toyota includes:

Innovation in recruitment and selection process

How Can Toyota maintains employee’s satisfaction and low employee’s turnover

Innovation in recruitment and selection process of Toyota

With the passage of time, so many technological changes have also come into the recruitment and selection process of the Toyota. Now for the selection of employees Toyota gives special attention. Because finding right employee for the any position is necessary for the Toyota Motors (R. L. Compton, Alan R. Nankervis, 2008). The first step in the process of acquiring the human resource for the Toyota is to specify the kind of work which will be done by the employees. Job analysis and job design are the process used to determine this

Job Analysis

Job Design

Training of Employees

Job Analysis

Job Analysis means gathering the pertinent information regarding the nature of the specific job. It is determining the tasks that comprise the job which includes skills, qualification, abilities and experience of the employees (Ronald J. Burke, Cary L. Cooper, 2006). Now job analysis is must for every job in Toyota Motor. Job analysis serves as foundation of the every human resource functions.

Products of job Analysis

Job description: means written synopsis of nature of the job.

Job specification: means description of competencies, educational, and experience qualification the incumbent must possess to perform the job.

Job Analysis Method

Different methods are used by the Toyota for the job analysis which are:

Observation (Motion and time study, Work Sampling)



Functional job Analysis

Job Design

Job Design is the process of structuring work and designing work for the specific job in Toyota. Job design gives the answers to basic questions of how the job is performed, who is to perform. Both job analysis and job design are linked with each other. Two dimensions of job design include job scope and job depth (Ronald J. Burke, Cary L. Cooper, 2006).

Job scope refers to the number and variety of tasks performed by the jobholder in the Toyota Motor Company. In Toyota’s working environment most jobs have high job scope. In a job with less scope, jobholder has to performed few tasks. Low job scope can be the reason for dissatisfaction of the particularly job.

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Job depth refers to the freedom of the job holders to plan and organize their own work. Toyota’s management gives freedom to its employees up to his control or limit and works at your own pace and communicates according to your need (R. L. Compton, Alan R. Nankervis, 2008)

Training of the employees

After selecting the employees, Toyota arranged training activities for its employees. To get this training is compulsory in Toyota. This training is very helpful for the employees and it takes less time to learn the employee’s lots of things than learning on job from own experience. Toyota Motor used different methods for the training of its employees like some lectures and training classes are arranged for them or give them on job training with the senior members who are having vast experience and can help the employees in its training. Job rotation is another term which is used for learning and developing new skills of the employees.

How Toyota can maintain employee’s satisfaction and low employee’s turnover

In managing human resource of the Toyota effectively the first step is to select the right employee for the right position. For this right selection of employees, it is necessary for Toyota to use new innovative techniques for selection of employees, compensating and rewarding to employees. Because job satisfaction is the most important variable and Toyota’s success is dependant on its employees. So, Toyota always follows the innovative techniques for managing its human resource. Satisfied and committed employees are asset for the Toyota. It has seen organization with more satisfied employees perform better than other whose are not satisfied. So, Toyota’s success or failure also depends on its employee’s satisfaction or dissatisfaction. Organization whose employees are dissatisfied with their jobs cost too much to the organization. Mostly they will be absent from the work or might quarrel with the co-workers .These employees do not take interest in their job which affects the overall productivity of the organization and ultimately organization will suffer. There are so many reasons for their dissatisfaction; it can be the environmental conditions in which they work, Nature of the work like repetition etc. There are different techniques which are used to make employee satisfied and ultimately low employee’s turnover which are:

HR Development

Career Development



Skills and knowledge of staff is crucial for Toyota’s innovation process. Most of the innovation ideas are come through the employees of the Toyota Motor. But the time is changing so quickly that every technology and change becomes obsolete in no time. It is important for the Toyota that its employees remain up-to-date with the knowledge and changes to compete in the industry

Career Development

It is the duty of the Toyota’s management to provide the growth opportunities to its employees. Career development is an ongoing process that focusing on the developing and enriching the organizations human resource in the light of both employee and organization need. It is also the responsibility of the Toyota’s employee himself to think about his career development. It is something which one can not do for others. It has to come from the individual himself. Toyota also helps, guide and provides opportunities to its employees.


Motivation is a feeling of satisfaction and commitment towards its goals and objectives. This is an internal psychological state which determines the action of the person. Employees are motivated via different ways .It is important for Toyota to give much attention to the needs of its employees and keep moving in the desire direction. Toyota enhances its employee’s motivation through two basic ways:



Financial motivators

Toyota’s financial motivators are connected to the monetary need of the employees which includes salary system, bonuses, and allowances etc. which have usually short term effect on the employees.

Base salary:

A person is paid a salary for the job he/she is doing in a specific time. In Toyota, person’s basic salary depends upon his knowledge, skills, qualification and competencies of the employee. Basic salary should be compatible with the job. It is required for the Toyota to give the compatible salary to its employees which keep them motivated and committed.

Variable pay

Sometimes Toyota gives incentives to employees to enhance or improve the performance of the employees focusing on the specific targets or projects.

Financial rewards provide financial recognition to people. Extra money is given to the employee for their achievements.

Benefits are also given to the employees for their well being which includes contribution to pension fund, health insurance schemes, life insurance, loan with no interest or lower interest rate, free use of products or services of the company, etc.

Allowances for relocation, transportation, subsistence, accommodation, recreation, etc   

Non-financial motivation techniques

The most important technological changes which are used by the Toyota to motivate its employees include non-financial motivation techniques. These non- financial motivators are very effective it cost nothing to the Toyota but depend on the willingness of pertinent managers to pay more attention to their staff. These non financial motivators are connected to the work itself and having a longer term effect. Non financial motivators are honors, self respect,

Change Management perspective of Toyota HRMS

“Change Management” as it seems made up of two words Change plus Management. Change means “to transform” while management means “the art of controlling, leading, organizing and decision making”. So apparently change management means the art of controlling, leading, organization and decision making in the transformation process (J Dawkins, 2007)

More precisely, in the context of Toyota Motor, we can define change management as systematic methodology of changing the individuals, teams and organizations from current state to the desired state. This change may or may not include all the employees of an organization.

In the case Development of new system was very crucial for Toyota Motor. Company was using old system but new computerized system was needed. And Toyota was facing problems in changing the old system due to its employee’s behavior (Chaffey D, 2004)

Change Management process

Change Management process includes the Toyota’ context, pace and scale of change, people management, change management content plan page and implementation of plan

In Toyota’s Context

In Toyota Motor company, management decided to change its old manual accounting system with new computerized system. Toyota Company needed the new computerized system for the following reason: Toyota Motor wanted to increase its efficiency in doing business and also wanted to gain competitive advantage over its competitor. For the development of new system company took the services of the other organization (J Dawkins, 2007)

The new system was after the stage of successful testing was almost complete and the only problem for Toyota was the implementation because its workers who were resisting this new change they were thinking that after the development of the new system they will have problem to use it and they have to made major adjustment even layoffs are expected as a result of new system in reality company was predicting for the growth they were planning for product development and wanted to add new models and staff for managing this growth (Ayse Saka, 2003). After this implementation of new system lots of employees of Toyota was thinking about the early retirement.

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Pace and Scale of Change in Toyota Motor Company

In pace and scale of change business needs to know that how many people are affected with the development of the new system. For this organization can choose different ways that how they will know about these affected employees because this new system had been used by the same people there was very high cost attached with the new system so Toyota Motor needed to know exactly about the number of people who are affected and how often they had to change their attitudes and behavior. Toyota should know the time period in which the old system will be replaced by the new computerized system (Joel Oleson, 2009)

For this change Toyota needs a sponsor and best person fits to this role are senior and as well as influential personality of the Toyota. This was the first step for the Toyota to identify the sponsor next step was to identify champions and change agent who will bring this new change system in the organization.

People Management in Toyota

In the new system development process at Toyota the most complicated stage in the process was people management. This is the most difficult process of development of new system. Because people are the final user for this new system in this case Toyota was facing some challenges as their employees were not favoring the new system due to some future doubts e.g. they were feeling their selves insecure that this new system will be harm for them (Joel Oleson, 2009)

It will not in the benefit of them. There are so many ways organization can manage this issue of contradiction (Ayse Saka, 2003). First it is the responsibility of the Toyota’s management to tell about the change to its employees who will be affected by this new system. They should be aware of about this system before it’s starting so, then these hurdles do not exist. Now proper coaching is required for the employees who will use this new system. They should be trained and learned to use new system. Toyota should communicate new system’s benefits and new opportunities which will arise due to implementation of the new system to the employees like presentations, road shows; team briefing and regular meeting of the senior employee would be called and arranged for the employees.

Toyota’s Change Management Plan Contents Page

Change management is a very difficult process that demands a proper step by step process for the change in a firm or organization. It has been often found that employees resist to the change management process a lot. Same as the case of Toyota Motor which wanted to implement a change within the organization and was facing resistance from his employees. Change management plan contents page includes:

Initial Knowledge

Implementation Plan of Toyota

Initial Knowledge

For Toyota initial knowledge is called as the foundation to the change process. Toyota Motor believes, when they have a strong introduction to your change requirements, they can have a first impact on the stakeholders who may be the cause of the resistance to the change. The more impressive the introduction to the problem and the change need, you have the most chances of the success in the change management (Ayse Saka, 2003). An introduction is the part of the change process in which you introduce the objectives, needs, rules and policies and deliver change effectiveness.

Implementation Plan of Toyota

For Toyota Implementation plan in the change process works as the milestones towards Toyota’s destination. In the plan first Toyota management sets its milestones so that they may not lose their track from the change process. Plan has a significant importance (Chaffey D, 2004)

.It helps the people, technology, process, and the change implementers like Toyota Motor Company define the service, reduce ambiguity in the change process and it also help to mitigate conflicts within the firm where change needs to be implemented. Communication

Whenever a change is required, the change management team is required to seek, produce and properly communicate the evidences to Toyota’s management in support to the change. Taking employees in confidence has a great importance for Toyota, as the change is mostly not implemented due to the resistance from the employees (Helen Taylor, Cary L. Cooper, 1998)

.And to get their support, it is widely required the good communications of the evidences to the support of change. Because if the employees will understand the benefits and reasons behind change, they will respond positively. Implementation plan includes:

Readiness measurement By Toyota

Involvement of employees


Readiness measurement by Toyota

Along with the strong communication, Toyota Motor also measures the readiness to use the change in the daily operations. If the staff will see it more ambiguous and difficult to implement, they will deny accepting change as it will not be secure to them. It may harm their performance that will impact on their jobs too. The experts in new system may replace them. So they will never accept the change. But if they find the system is easy to use and change, then most staff will embrace changes for the long term security.

Involvement of employees

Keeping the involvement of the staff and employees in the change process is also an important step for Toyota. If you keep their opinion and suggestions in the changing process, you may face very less probability of the resistance from them. It will give them an affiliation with the change process (Helen Taylor, Cary L. Cooper, 1998). They will consider the success of the change as their success. Keeping them aware and involve also keep them aware what is going on so that there would be less chances of negative words of mouth and rumors.


The new systems and the changing should have training sessions for the employees who are use to the older systems and the business environment. The training sessions should be conducted by Toyota so that it may reduce the resistance, to increase efficiency and to avoid any risk in the stoppage of the production, jammed processes or other factors related to the less knowledge for the new systems (Chaffey D, 2004).

Innovation to Management Styles of the Toyota HRMS

Different management styles are used in Toyota to manage its workforce. These styles are dependent on the on various factors e.g. culture of Toyota, nature of the task, skills, qualification of the employees, nature of the leaders (Kotter, J. and Schlesinger, L. 2003). Style of leader depends on all these factors and after analyzing appropriate style is employed. Sometimes different styles are used at same time to control the situation.

Different Management Styles

Normally there are three management styles which are followed by the different organizations including Toyota which are



Lassie Faire


In Toyota’s Autocratic style employee’s involvement is minimal or not taken. No information is shared with the employees. Rules are set and then tell employees to follow them. All the objectives and goals are set by the Toyota top management. The communication flow is from up to downward from top level to low level. The advantage of this style is that objectives and goal remain constant. These type of leaders make unilateral decision and always keep an eye on subordinates whether they are doing the right things. In this style subordinates have no control on any thing and they just need to follow leader (Kotter, J. and Schlesinger, L. 2003). The disadvantage of this style is that employees are dissatisfied and which cause the reason of turnovers, absenteeism and low productivity.

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In Toyota’s Democratic style, employees input are taken in the planning and decision making process. Employees are motivated and encourage participating in the affairs of the Toyota. In this style every issues and problems are solved with the consent of the majority. The communication flow is both way upward to downward and vice versa. Democratic style is more often used at Toyota when the problem is complex and need everyone input. There are some advantages and disadvantages of this style. Employees are more satisfied with their job and turnover rate is low and productivity is high. Disadvantages may include to get everyone consensus is difficult. This style is time consuming because it takes time to get the input from others.


In Toyota’s Laissez-faire leadership style, leader gives free hand to employees or a group or team and asked for the end result. Toyota’s leader does not set any rules and regulations. Toyota’s employees set the rules and objectives according to their need. Leader role is very nominal in this style. The communication style is horizontal in this style (Kotter, J. and Schlesinger, L. 2003). This style is not very common in the so many organizations including Toyota but still used when management feels its need. There are also some disadvantages for this style, lack of staff focus, no clear hierarchy, poor company image and less dissatisfaction of customers

How to manage Toyota Human Resource?

Toyota motor company has also adopted the different management techniques for keeping its employees competitive, satisfied and to solve all the potential problems related to its HRMS. These different techniques are:

Job rotation

Job Enrichment

Involving employees


Management by walking around

Employee driven innovation

Maintain a knowledge sharing network

Job rotation

In Toyota job rotation is the newly concept and it is effective as well. The process of moving employees among different jobs is job rotation. Job rotation helps employees to improve their skills, Knowledge and competencies. Employees get bored by doing the repetitive task every time so job rotation is a good way to keep them active and fresh every time (Jeffrey H. Dyer and Kentaro Nobeoka, 2000). Job rotation also helpful for the Toyota itself in the time of crisis, if an employee is unavailable due to the any reason other employee can do its work

Job enrichment:

Toyota Motor Company knows intrinsic factors in a job such as achievement, responsibility and growth need the job enrichment. With job enrichment employees are more likely to be satisfied with the job and motivated to perform it. Combining tasks takes existing and fractionalized tasks and puts them together and form a larger module of work. Forming natural work units’ tasks and employee does create an identifiable and meaningful whole. Establishing client relationship increases the direct relationship with the clients. Expanding jobs vertically gives employee more responsibilities and control (Jeffrey H. Dyer and Kentaro Nobeoka, 2000). Opening feedback channel lets employees knows how well they are performing their jobs whether performance have improved or not or remain constant.

Involving employees

Take input from the employees to increase their commitment is important for the success of the Toyota. The extent to which decisions affect the employees and Toyota should involve the employees. By increasing their autonomy and control over their work lives, employees will become more motivated, more committed to the organization, more productive and more satisfied with their jobs.


Keep informing the employees about the goals and direction of the Toyota. Communicate all the related issues regarding employee future, job and performance. Each and every matter which Toyota can share to the employee should communicate them. Every thing which affects the employees itself also communicated to them.

Management by walking around:

Visit to the Toyota’s offices, factories, workshops, and labs regularly, always asking the employees about their work and work related problems, sort out the problems and giving them feedback etc.  

Employee Driven Innovation

Toyota believes in collection of key ideas and uses the experiences of most of the employees to create opportunities and new ways for them. It is important to bring incremental changes in culture of Toyota, products, behavior, processes, and in business models that create value for customers, stakeholders and the company.

Maintain Knowledge sharing network

It is necessary for organization to maintain knowledge sharing network that will help in quick knowledge diffusion than other competing manufactures. Due to the best knowledge sharing network organization can gain competitive advantage on other competitors. Knowledge sharing system made organization effective and capable to do any thing with in no time. This knowledge sharing network includes organization’s employees, suppliers, management and all the related stakeholders. This network improves the productivity and reduced the delivery time. This knowledge sharing network of will solve three basic problems:

Motivate and encourage member’s involvement and share their valuable ideas

Reduce cost of doing business

Prevent free Riders


Studies have proved that organizational success is affected by the innovative management styles. These management styles are vary from every organization to another organization. There are different managing styles which all used to manage employees. Management styles can bring success and innovation in the organization but the most important thing is that management style should be suitable for the organization

Satisfied and committed employees are asset for the Toyota. It has seen organization with more satisfied employees perform better than other whose are not satisfied. So, Toyota’s success or failure also depends on its employee’s satisfaction or dissatisfaction. Organization whose employees are dissatisfied with their jobs cost too much to the organization.

The Change Management Could arises from several many situations and could be applied in several many kinds. Actually the type of problem or situation decides why and how to change. The successful implementation of change depends on the human capital that an organization possesses and also on the measures adopted to implement change. The main objective of organizational change is to bring about a strategic change in its organizational structure to better utilize its human and non-human resources to efficiently achieve organizational goal.


Effective and Timely Change Management is the secret of success of Toyota. But for effective change, Toyota needs to plan the design, sequence and implementation of change proactively.

Satisfied and committed employees are asset for the Toyota. It has seen organization with more satisfied employees perform better than other whose are not satisfied. So, it is vital for Toyota to maintain a healthy relationship with its employees in order to become competitive.

Today world is changing very quickly so Toyota should change and up grade its self with the modern standards and technologies. Toyota should welcome any key idea by the any employee.

Self recognition, self esteem and honors are also very important for the employees so, Toyota should more emphasis on these non financial motivators and keeps its employees as most satisfied and happy.

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