Toyota’s current predicament is a result of poorly designed practices and weak execution on the part of the human resource department, writes Dr John Sullivan
Unless you have been living off the planet Earth, you have
probably already read or heard about several mechanical
failures in Toyota automobiles that led the automaker famous
for quality to recall nearly nine million cars worldwide. In ad
dition, poor handling of the issue in the public eye has dam
aged the automaker’s brand reputation and caused sales to
fall to their lowest point in more than a decade.
This think piece wasn’t written to inform you further about
the mechanical failures, but rather to determine if the human
error could have been caused by factors beyond the employee’s control.
The eight HR processes that contributed to Toyota’s
If the root cause of the problems Toyota is facing are failure by
employees to make good decisions, confront negative news, and
make a convincing business case for immediate action, then the
HR processes that may have influenced those decisions must
The HR processes that must at least be considered as sus
pect include rewards processes, training processes, perform
ance management processes, and the hiring process.
1. Rewards and recognition –
The purpose of any corporate reward
process is to encourage and incent the right be
haviours and to discourage the negative ones. It’s im
portant for the reward process to incent the gathering of infor
mation about problems. It’s equally important to reward employees
who are successful in getting executives to take immediate action
on negative information. Key questions – Were rapid growth (sales
have nearly doubled recently) and “lean” cost-cutting recognised
and rewarded so heavily that no one was willing to put the brakes
on growth so as to focus on safety? Were the rewards for demon
strating error-free results so high that obvious errors were swept
under the table?
2. Training – The purpose of training is to make sure that em
ployees have the right skills and capabilities to identify and han
dle all situations they may encounter. Toyota is famous for its
four-step cycle – plan/do/check/act – but clearly the training
among managers now needs to focus more on the last two. In
addition, in an environment where safety is paramount, every
one should have been trained on the symptoms of “group
think” and how to avoid the excess discounting or ignoring of
negative external safety information. Key question – If Toyota’s
training was more effective, would the managers involved have
been more successful in convincing executives to act on the neg
ative information received?
3. Hiring – The purpose of great hiring is to bring on board
top-performing individuals with the high level of skills and capa
bilities that are required to handle the most complex problems.
Poorly designed recruiting and assessment elements can result in
the hiring of individuals who sweep problems under the rug and
who are not willing to stand up to management. Key questions –
Did Toyota have a poorly designed hiring process that allowed it to
hire individuals who were not experienced in the required con
structive confrontation technique? Were their hires poor learners
that did not change as a result of company training?
4. The performance management process – The purpose
of a performance management process is to periodically monitor
or appraise performance, in order to identify problem behaviours
before they get out of hand. If the performance measurement
system included performance factors to measure responsiveness to negative in
formation, Toyota wouldn’t be in turmoil today. Key questions – Was the perform
ance appraisal and performance monitoring process so poorly designed that they
did not identify and report groupthink type errors? Did Toyota’s famous high level of
trust of its employees go too far without reasonable metrics, checks, and balances?
Did HR develop sophisticated metrics that produced alerts to warn senior managers
before minor problems got out of control?
5. The corporate culture — The role of a corporate culture is to informally
drive employee behaviour so that it closely adheres to the company’s core
values. Because these errors occurred under difficult driving conditions, it’s
hard to blame the production group, which has a well-known reputation for
Six Sigma quality in its construction. The negative reports came to func
tions such as government, risk analysis, corporate and customer satisfac
tion. As a result, it is the culture within the corporate offices that need to be
more closely monitored rather than assuming that the culture was aligned.
It appears that the corporate culture created leaders so concerned with “sav
ing face” and so adverse to negative publicity, that they for years post
poned making the announcement of a massive recall. Key questions – Did
HR’s failure to measure or monitor the corporate culture contribute to its mis
alignment? Was the corporate culture (the Toyota Way) so biased toward pos
itive information that employees learned not to make waves, in spite of their
professional responsibility to be heard on safety issues?
6. Leadership development and succession – The purpose of leadership
development and succession planning processes are to ensure that a sufficient
number of leaders with the right skills and decision-making ability are placed into
key leadership positions. It is likely that the leadership development and the pro
motion process both failed to create and promote leaders who were capable of
confronting problems and making difficult decisions. Key question – Was the
leadership process at Toyota so outdated that it produced the wrong kind of lead
ers with outdated competencies, who could not successfully operate in the
rapidly changing automotive industry?
7. Retention – The purpose of a retention program is to identify and keep top
performers and individuals with mission-critical skills. Key question – Did the re
tention program ignore people that brought up problems and as a result, did these
whistleblowers often leave out of frustration?
8. Risk assessment – Most HR departments don’t even have a risk assess
ment team whose purpose is to both identify and calculate risks caused by weak
employee processes. Clearly HR should have worked with corporate risk man
agement at Toyota to ensure that employees were capable of calculating the long-
term actual costs of ignoring product failure information. Key question — Should
HR work with risk-assessment experts and build the capability of identifying and
quantifying the revenue impacts of big HR errors, including a high hiring failure
rate, a high turnover rate among top performers, and the cost of keeping a bad
manager or employee?
Toyota’s problems are not the result of a single individual making an isolated
mistake, but rather a companywide series of mistakes that are all related to each
other. So many corporate functions were in
volved, including customer service, government
relations, vendor management and PR, that one
cannot help but attribute the crash of Toyota to
systemic management failure.
Unfortunately, in this case, the famous Japan
ese saying is true. “The nail that stands out” was
not encouraged to be different, but instead it was
“pounded down” to conform.
The key lesson that others should learn from Toy
ota’s mistakes is that HR needs to periodically test or
audit each of the processes that could allow this type
of billion-dollar error to occur.
Dr John Sullivan is professor and head of the HR program at San
Francisco State University, and is a noted author, speaker and
advisor to corporations around the globe.