Oh what a feeling --- Australian sackings the Toyota way?

by 01 May 2012

It’s difficult enough for any corporation to let go of workers in tough economic times, but common sense and human decency, along with an organisation’s values must prevail in these circumstances.

So it was with great interest and probably disbelief that workers, unions and employers alike viewed last week’s retrenchment of 262 workers at the Toyota Altona plant in Melbourne.

The exceedingly public escort of employees as they were driven to their exit interviews and impending doom, the heavy presence of security guards, and the individually presented score sheets handed over to unlucky candidates raised a number of questions in terms of management strategies and ethics. 

It most definitely set a new low for management and HR teams where retrenchments are concerned, and puzzling in view of the Toyota Motor Corporation’s published guide “The Toyota Way 2001”.

This was a  set of principles and behaviours that underlie the car manufacturer’s approach and production system further developed in 2004 when Dr Jeffrey Liker, a University of Michigan professor of industrial engineering published "The Toyota Way”, a system designed to provide the tools for people to continually improve their work.

The Toyota Way covered the corporation’s goals and values in four key areas:

1. long-term philosophy

2.  The right process will produce the right results

3. Add value to the organisation by developing your people, and

4. continuously solving root problems drives organisational learning.

The key cultural values as stated by the car manufacturer’s published guide in its 14 principles covers continuous improvement and, interestingly, respect for people − certainly not the experience of those Australian workers at the Altona plant.

Values are the set of underlying principles that shape decision making  and actions internally and externally,  and guide a corporation’s cultural compass both in respect to business and in the treatment of customers and employees.

They determine organisational behaviour and become a core part of the companies ' way of doing things' or DNA.

All values get tested both on a personal and professional level, and it is  in those times that values need to be publically demonstrated, not bent to expedite actions or achieve the interests of a chosen few.

Toyota has made its values public and has honourable ones at that.

However,  that is where the leadership challenge starts for leaders across the business  to ensure that they are being 'lived' at every level of the organisation,  not delivered inconsistently.

Values and purpose are the immovable core of an organisation that acts as the ballast to the need for providing agile strategy and direction.

It is the deep-seated nature of values and purpose that align people to an organisation,  to a sense of contributing value through their jobs to an outcome bigger than themselves.

But what about  trust and engagement?

This is a two-way process and once the values are breached, the lifeline is often irretrievably damaged.

Indeed, of the 14 principles in “The Toyota Way”, the final ones embrace a philosophy of problem solving that emphasizes through understanding, consensus-based solutions swiftly implemented and continual reflection and improvement .

The final principle requires that Toyota be a "learning organization", continually reflecting on its practices and striving for improvement. As Dr Liker says,  this  principle involves criticising every aspect of what one does.

Seen as an HR benchmark of its time and a reflection of the corporation’s values and purpose, The Toyota Way is at odds with the actions of the car manufacturer in Altona. 

Values, set in calmer times really come into their own in stormy ones.  They need to be used by leaders to raise the level of thinking for the greater good.

Too bad Toyota didn't follow its own rhetoric.

About the author

Pia Lee is CEO of LIW global leadership consultancy. For further information visit www.liw3.com



  • by Philip Radburn 1/05/2012 2:54:55 PM

    Pia, great article.
    Yes this is unusual almost bizarre behaviour. It's as if the CEO had a 'brain snap". Perhaps the hysteria being drummed up about Australian IR got to him. All your points are truly valid, but what I find interesting is the 'banality of evil' associated with the assessment tool Toyota reportedly used. The perception that management is always right and therefore those who scored low on the assessment are 'slackers' is dangerous. As Deming said, 80% of performance is due to the system and that is a management responsibility. Also, how scientific and proven is the assessment tool? A dark day for management in Australia as well as for those workers given the sack.

  • by Amy 7/05/2012 2:18:35 PM

    I think this article is very idealistic and does not take into considertion the legal framework in the country which we all need to be guided by. In toyota's case they have followed the legal guidelines. While to someone not used to dealing with redundances this mayu seem rather crude way of handling the siutation - the law gives us no choice. It requires us to consult with all employees concerened and be completely open and honest about the selection criteria - which is exaclt what Toyota has done. From someone who deals with this situation often i sympathize with Toyota. Maybe its ourlegal framework which needs remodelling and not so much Toyota's values

  • by Legal or moral 5/03/2013 10:43:09 PM

    Amy, I appreciate what you're saying but as one teacher once said to us in our Business Ethics class - legal is not always moral. The legal framework is a 'framework' which must be adhered to at the very least but it's not the only thing a company should look to. It is a 'minimum' - and we must never forget we work with humans and not robots, yet.

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