A Think Piece: How HR Caused Toyota to Crash

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 auto maker famous for quality to recall nearly nine million cars worldwide. In addition, poor handling of the issue in the public eye has damaged the automaker’s brand reputation and caused sales to decline 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 reflect on the following premise:

Toyota’s current predicament is a result of poorly designed practices and weak execution on the part of the human resource department!

To Find the Root Cause, You Must Look Beyond Gas Pedals

The mechanical issues plaguing eight Toyota models are not the result of human resource professionals assuming product design roles and producing faulty accelerator pedals and onboard computers, but anyone who has studied failure analysis knows that the breaking point of a product or service is seldom the underlying or root cause of the failure. Using the sinking of the Titanic as an example, the damage caused by the hull colliding with the iceberg ultimately sank the ship, but the collision was the result of a series of poor decisions to travel too fast given weather conditions. While hull design flaw contributed to catastrophe, the root cause of the problem was human error.

In any situation where employees fail to perform as expected, investigators must determine if the human error could have been caused by factors beyond the employee’s control. Such external factors might include actions by senior management, lack of adequate information or job training, faulty inputs to the process, or rewards that incent actions not in line with documented goals.

If you believe in accountability, you have to accept that human errors that lead to corporate catastrophes could be the result of faulty HR processes, most notably those related to acquiring, developing, motivating, and managing labor. Returning to the Titanic example, had the owners of the Titanic implemented rewards for safety as well as speed or hired a captain more detail-oriented, there would have been no crash that dreaded night.

Weak HR Has Been a Major Contributor to Other Notable Failures

Weak people-management practices have been attributed as the primary causes of failure in a number of notable cases. At Enron and Bear Stearns for example, reward systems that incented dangerous behaviors easily overpowered the effect of control systems designed to prevent fraud and ethical breaches. The mass killings at Fort Hood would not have occurred if the Army had better linkage between performance management and critical incident reporting systems.

Employee Errors Were the Root Cause

BusinessWeek estimates that Toyota is losing $155 million per week as a result of their recent recall and in the weeks leading up to this article Toyota had lost nearly $30 billion in stock valuation. The long-term impacts of the root causes that led to Toyota’s current situation could cost the company hundreds of billions of dollars.

The mechanical failures were known to Toyota leaders long before corrective action was taken, and many close to the issue are indicating that the company took decisive action to hide the facts and distort the scope of the problem. The underlying problem of failing to act on this critical information in a manner consistent with Toyota’s brand is again a rewards issue similar to that at Enron. When the organization disproportionately rewarded managers for cost-containment versus sustaining product quality, it created the incentive for everyone involved to ignore the facts and to deny that a problem existed. Employees who are well-trained and subject to balanced rewards and performance monitoring systems would not have allowed the situation to grow as it did.

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The Eight HR Processes That Contributed to Toyota’s Downfall

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 be examined. The HR processes that must at least be considered as suspect include rewards processes, training processes, performance management processes, and the hiring process.

  1. Rewards and recognition — The purpose of any corporate reward process is to encourage and incent the right behaviors and to discourage the negative ones. It’s important for the reward process to incent the gathering of information 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 recognized and rewarded so heavily that no one was willing to put the brakes on growth in order to focus on safety? Were the rewards for demonstrating error-free results so high that obvious errors were swept under the table?
  2. Training — The purpose of training is to make sure that employees have the right skills and capabilities to identify and handle 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, everyone should have been trained on the symptoms of “groupthink” 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 negative information received?
  3. Hiring — The purpose of great hiring is to bring on board top-performing individuals with the high level of skills and capabilities 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 constructive 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 behaviors before they get out of hand. If the performance measurement system included performance factors to measure responsiveness to negative information, Toyota wouldn’t be in turmoil today. Key questions — Was the performance 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 behaviors 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 functions like government, risk analysis, corporate and customer satisfaction. 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 “saving face” and so adverse to negative publicity, that they for years postponed making the announcement of a massive recall. Key questions — Did HR’s failure to measure or monitor the corporate culture contribute to its misalignment? Was the corporate culture (the Toyota Way) so biased toward positive 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 promotion 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 leaders 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 retention 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 assessment team whose purpose is to both identify and calculate risks caused by weak employee processes. Clearly HR should have worked with corporate risk management at Toyota in order 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 major 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?

Final Thoughts

Toyota’s problems are not the result of a single individual making an isolated mistake, but rather due to a companywide series of mistakes that are all related to each other. So many corporate functions were involved, 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 Japanese 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 Toyota’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.

Note: I invite comments about what other human resource factors may have contributed to Toyota’s downfall.

Dr. John Sullivan, professor, author, corporate speaker, and advisor, is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high-business-impact talent management solutions.

He’s a prolific author with over 900 articles and 10 books covering all areas of talent management. He has written over a dozen white papers, conducted over 50 webinars, dozens of workshops, and he has been featured in over 35 videos. He is an engaging corporate speaker who has excited audiences at over 300 corporations/ organizations in 30 countries on all six continents. His ideas have appeared in every major business source including the Wall Street Journal, Fortune, BusinessWeek, Fast Company, CFO, Inc., NY Times, SmartMoney, USA Today, HBR, and the Financial Times. In addition, he writes for the WSJ Experts column. He has been interviewed on CNN and the CBS and ABC nightly news, NPR, as well many local TV and radio outlets. Fast Company called him the "Michael Jordan of Hiring," Staffing.org called him “the father of HR metrics,” and SHRM called him “One of the industry's most respected strategists." He was selected among HR’s “Top 10 Leading Thinkers” and he was ranked No. 8 among the top 25 online influencers in talent management. He served as the Chief Talent Officer of Agilent Technologies, the HP spinoff with 43,000 employees, and he was the CEO of the Business Development Center, a minority business consulting firm in Bakersfield, California. He is currently a Professor of Management at San Francisco State (1982 – present). His articles can be found all over the Internet and on his popular website www.drjohnsullivan.com and on staging.ere.net. He lives in Pacifica, California.



51 Comments on “A Think Piece: How HR Caused Toyota to Crash

  1. I completely agree. Like Republicans, Toyota was best while it was striving to get to the top; once there, it made all the same mistakes as the competitors it dethroned.

  2. Hmmmm … I think the headline should read, How HR CONTRIBUTED … lets not get vain here. We’re there to enable managers and employees to succeed, but the buck stops with leadership. There’s an old story from the NASA days where there were 3 TV interviews conducted. One with a scientist, one a janitor, one a control room person. You couldn’t distinguish between the 3. Even the janitor was saying, I’m here to put a man on the moon. Granted HR can contribute to that mission … but we as a department are only one cog in the machine. We enable managers to run THEIR business. It is THEIR decisions. We coach and advise but they make the call. Just my $.02

  3. I haven’t had enough coffee this morning, but my first reaction to skimming this is it’s silly to think that HR was much of a factor in Toyota’s problems. The engineering and supply chain processes that made Toyota #1 eventually failed. The humans who let the process fail were pretty far removed from the reach of HR.

    I think that as #1 you make yourself a very big target, especially when the US government owns the US-based auto companies. I think this is a PR issue more than an HR issue. And I am not sure PR could have been prepared for MSM coming after them so hard in patriotic support of Government Motors et al. Just no precedent for it; nothing to have learned from.

  4. I agree that saying HR “caused” vs “contributed” may be a little extreme; however, as long as HR continues to whine about wanting a seat at the table – we also have to be able to take the bad with the good and this is a PERFECT example.

    HR wants to be tied to business results, but with that comes “business” accountability. We can’t have one without the other and a seat at the table isn’t all sunshine! Perhaps we take examples like this, put blame at the feet of HR and ask them to fix it… seems like a pretty good opportunity for HR to win their seat.

    But if HR is going to throw their hands up, say “not me” – then it’s hard to presume HR will ever be ready and will ever have that coveted seat. `

  5. I like the focus of this article since it is in an HR forum. I won’t argue “caused” vs “contributed” but I will argue the statement that PR had nothing to have learned from. It is likely that in a PR forum we would read a similar article – not that PR caused the systemic breakdown, but that PR caused the lasting damage to the company from a problem that started elsewhere. Toyota PR can probably say they tried, but they also don’t have a seat at the table because although you can advise an executive in an emergency, you can’t make him do what you advise.

  6. @Caron: I based my PR comment on my annecdotal knowledge of the high value consumer products companies put on PR. I have a relative at a high level in PR/Communications at one of the most successful quick service restaurant firms. I know that that group has a “seat” very near the “head of the table”. I just assumed any B to C industry would place similarly high value on their PR groups. The nothing to learn from comment is based on the partial socialization of the idustry. I don’t think PR has anywhere to look for case histories of how to respond, but, again, I don’t know for sure.

  7. Wow, HR has so much power that it can bring a company to its knees? There are so many other factors involved and to blame it all on HR is a little over the top. Who makes the final hiring decisions? Who decides which suppliers to use? Who created the culture there at Toyota that prevented the reporting of these malfunctions. Who initially decided against a recall? HR is an advisor not the final decision makers. How do we know that HR did not try to stop this but was shut down from the top? Unless someone has an inside track at Toyota, we can only make assumptions at this point. Just my two cents.

  8. -Arrogance at the top. Nothing to do with HR – sorry.
    -A flawed system installed starting in 1997, but only affecteing a very small % of cars.
    -Ignoring, covering up and lying. Despite a ‘New Mindset’, they only admit knowing about (acceleration) problem for a year despite 20 documented NTSA meetings in 2004. Is this bad PR or no PR? Lessons learned from Ford (cruise control problems drug out 10 yrs -’08 – biggest recall ever – 14.3 Mil) and Chevy trucks(outside-of-the-frame gas tanks).

    Toyota stopping production and sale of 8 models, then realizing half of the serious cases & 24 deaths involved models not recalled, and of course the press all over it will cause a lot more damage than in the past where saving a few bucks per in production paid easily the millions in lawsuits & then some, and they were able to get away with it for years (think Pinto).

    ‘I BRAKE FOR TOYOTAS’ (Sold my ‘foreign holdings’ in ’06, back to Buick)

  9. I agree with Carrie. This is a THINK PIECE. Dr. S is forcing us to consider if we want total credit, we get total credit – good or bad. Good article. If HR does not fundamentally change, HR will always be viewed as the wimpy paper pushers that only find the health insurance or create policies. I for one, am tired of the incessant whining of my HR comrades. Be the change you want to see. (I don’t know who said that , but it came to mind)
    I love the “I break for Toyota’s’ that is funny.

  10. Here’s the bottom line:

    HR isn’t going to be able to change the world, or its own organization . . . until it changes itself.

    Just a few months ago, everyone was utterly enamored by Toyota’s “lean” manufacturing processes.

    In fact, consider how many recent HR articles have been about being “lean” and trying to duplicate Toyota’s approach. I guess the cat is out of the bag.

  11. P.S. My advice – go buy some Toyota stock . . . right now. Think like an investor and not another sheep trying to blame everything wrong in the world on HR.

    Build some wealth and have some fun sipping Martinis on the beach with your family while everyone else points fingers.

  12. I beg to differ here. HR can train, retrain, hire, fire etc…but it looks like the article is written from the standpoint that HR is the sole unit that ’caused’ this error. The failure in Toyota’s manufacturing was a cumulative problem- and its not just HR’s! And over the past few days, I have watched them communicate with their customers in very encouraging ways- through several mediums and I think its very commendable!!

  13. @Susan: they are communicating in encouraging ways and it is commendable. It just is too late. I have not seen it in any stories, but Audi had a similar problem in the late 80’s with sudden acceleration. It turned out that they were correct in saying that it was human error – people hitting the wrong pedal. Then, when it would not go away, they started talking to their customers, not about them. But, by blaming the customers in the first place, they lost the ability to make it up. In this case, Toyota was too late in talking about fixes, etc.

    And, I continue to contend that they are being singled out and the hype is way out of proportion to the problem. And that this is, by design or not, of benefit to US socialized auto companies.

  14. @David- David, I agree with both your points….and I truly believe the issue is blown out of proportion. I’m not sure if thats the general way that our society handles these kind of issues- but that’s simply what I see in most cases. Whether it’s the lead issue in toys from China, or product recalls. One thing is certain though – that there is clearly a huge difference between awareness and sensationalism!!

  15. I’ve owned a dozen Toyotas since 1988. I’m completely done with them. The last two I bought (LandCruiser, Tacoma) are far worse quality than the earlier models they replaced.

    I got an email from the President of Toyota. He “Wanted me to know the exact recall status of my vehicles.” Sounded nice, except the email said to go to Toyota.com and figure it out myself. What, exactly, was the NEW info in that email? Absolutely moronic to waste my time with that email. It did not evidence concern; it evidenced laziness and ineptitude and discourteousness.

    Like I said, I’m done. No more Toyotas. Ford trucks, Honda or Acura cars.

  16. Lots of good comments here. Todd hit the key point- Toyota HR had basically zero input at suppliers of fully integrated subsystems, unless hiring execs who decided on suppliers, but by then, EVERY orgazational problem experienced by human beings is an HR problem.

    Robert, don’t be so sure about Honda- they are nice when new, but they are cunningly engineered so that every system fails at once at the end of it’s life. You dont want to own a very old Honda- you don’t see that many around. You see a lot of old Jeeps, Benz models, and Ford trucks.

    David you are probably closest to the truth- most plane crashes have multiple causes, any one of which had it been altered would have prevented the accident. Toyota got hit with a bunch of bad luck at the wrong moment, made some bad decisions, and the rest is history.

    And as regards Bear and Lehman – very few actors thought they were doing anything wrong at the time. The systems were deeply flawed, but beyond the capacity for individuals to really comprehend because the bad stuff had been normalized. Likely same with Toyota- the actors probably all went along as they had many times in the past, but this time, the situation was different.

  17. Toyota PR should have been prepared because the same thing (unintended acceleration) happened to Audi in the early 90s. Audi stalled and blamed driver error and ironically they were proven right. Unfortunately, “60 Minutes” did a hit piece on them and their market share plunged, resale values plummeted and the brand needed a decade to get back to its former sales volumes. Dr. John– as usual– stakes out an extreme position to cause thought and discussion and once again has succeeded. Toyota responded slowly and seems culpable of actively trying to hide the truth from dealers, customers and the government. One could argue that this behavior is a failure of HR as Dr. John has, but one could also make the case that it is the failure of QA not to demand the highest standards; the failure of design and engineering not to test everything rigorously; or the fault of finance & accounting to focus on cost at the expense of safety and long-term brand equity. In the end, all share the blame and all must come together to resuscitate the brand as Audi has done. Perhaps Toyota HR can lead the way in making that happen and write a new chapter on the strategic value of HR.

  18. @Mark… This is what I was getting at by not so much agreeing with this article, but rather looking at it as motivation for HR folks to recognize a perfect opportunity to step up, take some responsibility and help be part of the solution. (shocking concept, I know!)

    In order to do that, however; HR must be willing to at least share the responsibility for the mess in the first place even if they aren’t directly at fault. Too often, HR isn’t involved in the business because they don’t understand it and so yeah, in that case – HR is going to continue to not be a player, in the good or the bad of the company.

    However, ANYTIME you are dealing with “HR issues” the likelihood that you are dealing JUST with the HR Department is not realistic… And to your point, anytime you are dealing with a break-down of any magnitude within a company, you likely aren’t dealing with just one department either

    (*and yes, it’s likely in smaller organizations that HR may have been shut down (different issue), but not in an organization the size of Toyota…)

    Recognizing the areas that he outlined in this article gives the HR professionals a great springboard to say “how did what we do or not do in this instance “contribute” to this situation” and “What can we do better/different to take some responsibility and help make sure something similar doesn’t happen again?”

    Easy win for those who are bold enough to take on the challenge. As an HR professional, how could you not garner some respect in this situation by your business counter-parts when you raise your hand, offer to take some of the responsibility as well as come to the table with solutions?

    We all know the definition of insanity… when you keep doing the same thing over and over and expecting different results. HR has an opportunity to do something different in this situation and similar others… seize the opportunity to take advantage of the sensationalism and watch your own personal stock increase as a result.

    Even if you fail the first time out, the experience you’ll gain will be invaluable and give you that much more to work from if ever presented another situation or an opportunity to contribute on a higher level before you have another PR disaster on your hands.

  19. Having worked in the automotive supplier industry for nearly 20 years and owning multiple Toyota vehicles during that time I have experienced first-hand what the underlying problem is. The relentless drive to reduce costs and put the entire burden of these reductions solely on the shoulders of the suppliers is the real root cause. These problems originated by actions at the very top and when they surfaced, they were taken to the very top to decide how to react. To say they are related to HR is ridiculous. If some strong HR leaders from outside supplier ranks were put in charge of the auto companies 30 years ago, the entire automotive mess could have been avoided and everyone in the industry would be thriving right now.

  20. Carrie the thing is this: people make mistakes, and when they work in groups, the groupthink can be wrong, and even when that happens, sometimes there is simply no blame to pass around nor opportunity for anyone to advance.

    In hindsight, plane crashes, housing bubbles, etc. appear to be inevitable and plain as day to anyone who would have looked, but before they happen, the “ídea space” just is not there. Often one or more individuals were clued-in, but until the idea space expands, there would be no way to really change anything unless the insightful person were in great power, in which case nobody would ever realize what happened.

    Corporations love to ignore these basic facts and pass blame- heads roll and all that, and indeed, when something bad happens to the ship, the captain is expected to go down with it….

    But look at the two space shuttle accidents- where budget was bascially unlimited, where the best minds at every level were brought to bear, where everyone knew the risks….it’s totally obvious now that we need to look the hull over before re-entry to make sure everything is intact, but prior to Columbia, it was not obvious, so it was not done.

    No car maker will ever again allow a pedal assembly that is not as fail-safe as man can make it, and future cars will probably have some kind of emergency kill switch just in case the electronics go haywire; for years, every motorcycle and snowmobile has required one by law.

    The unintended acceleration idea space has now grown, and it will be addressed, but blaming HR or suggesting that HR could have advanced itself on the failure of imagination does not seem to be very productive.

    Maureen, as always a great point.

    We had a thread on here not long ago discussing where HR belonged in the organization- I suggested operations- and I think it remains the real question: do we even need a seperate HR function anymore ?

  21. Martin, I don’t disagree with you – but I think you are missing the context of my post.

    This is a think piece and I’m simply suggesting that situations like this are an opportunity for HR to take a different approach at getting involved and potentially making a difference as part of the solution. That doesn’t mean it will always be successful, but too often, they don’t try – or as someone indicated earlier, aren’t allowed.

    I’ve been in dysfunctional companies in which mistakes happen – some that are almost impossible for people to predict or avoid and others in which the mistakes are glaring but people (often at the leadership levels) choose to overlook them for the sake of cost containment, high output, etc… and of course in the situations where it wasn’t as obvious, hindsight is invaluable.

    That is exactly why I posed the question in my last comment for HR to analyze what they “may or may not have done to have contributed to this situation” but I’m speaking in general terms. I’m not familiar enough with the Toyota example to have an educated opinion about who exactly contributed to what in this exact case.

    I’ve watched group think cause entire departments to internally implode, however, it’s not about “assigning blame” so much as it is diagnosing what went wrong when something does happen. As humans, our tendency is to want to point fingers – but you don’t have to blame a person or a group (i.e. HR) to solicit input or insight into what went wrong and ask the question of “what can we do differently moving forward to make sure a similar situation doesn’t happen again?”

    There are ALWAYS opportunities to learn. It’s not about advancement in and of itself – but advancement is more likely to be a residual benefit of HR being more involved in “the business.”

    I don’t think you are suggesting HR has less of an opportunity to be more respected in business by staying out of what makes the business and continuing to stay in their bubble?

    I’ve been in HR long enough and in business long enough to realize that there never is that simple solution…. but challenging people to look outside of their standard HR comfort zone(or any comfort zone for that matter) to get involved in the company, willingly take some responsibility for the business and offer to get involved in the solution is much more likely to be an effective strategy as opposed to so many HR people who wear their blinders are clueless about the operations of the organization who huddle in networking groups, scratch their heads and ask, “I wonder why no one takes us seriously.”

  22. The realm of HR responsibility in this seems to be more in putting the responsible parties on 30 day notice to begin termination procedure. Then on rewriting job descriptions to include more focus on customer safety and upstream communications, and embarking on a recruiting effort to replace anyone involved.

  23. True Todd… as long as your HR department is simply the role of the compliance officer and staffing, then you’re correct. HR should know their place and certainly shouldn’t have any involvement in the business. Right? Kind of like a woman in the 50’s…

  24. Dude, sorry… that one cracks me up though. You’re right that HR is nothing more than the Office Manager in many companies with truly clerical responsibilities – but that’s not the case in larger organizations, hasn’t been for many years and does so much more than just write job descriptions, fire people and recruit.

  25. Of course. As mine was, but I know I can come across kinda snarky sometimes if people don’t know my sense of humor!

    (Said while wearing my pearls, in my dress, and vaccuuming my floor waiting for Mr. Beaver to come home)

  26. Like I said, for many organizations, HR should just go away.

    Operations should do recruiting and onboarding, there should be a compensation group, and the legal department should handle all compliance, including licensing and offboarding.

    Operations should also do training and development- it would probably be a healthy and cost effective evolution to connect operational decision makers to the actual recruitment, training, and development environments.

    In these days of pervasive outsourcing, lean manufacturing, resident suppliers, and the whole panopoly of the flat organization, why should HR have a seat at the table, when every seat at the table should have an HR component ?

  27. Culture, specifically the Japanese culture, was likely a major cause of this fiasco. And it is important to note that HR can work to set a culture but the company culture is ultimately set by none other than the CEO — and in the best case, by the full Executive Team. In the Japanese culture that I have observed, without regard to what HR leaders might have suggested, the CEO would have made the decision to keep information quiet. That is why some Japanese companies are failing….

  28. @John: There is a great deal of quality information in this article. It’s really astonishing to see that HR was accountable behind the Toyota’s crisis. The proactive strategy for acquisition and retention of a talent is highly crucial, to save the company form emerging bottlenecks.

  29. HR can very much have a hand for the reason of a company’s decline as people are its core and most valuable asset. Toyota, and this goes for all the companies with HR problems, needs to adopt improved recruitment and hiring methods. In fact, supporting Saleem’s point, there are pre-employment testing companies that have made the life easier for the recruiters in selecting the right talent.

  30. Chalapathi, you are correct that the issue is the culture, but this is easy for us to point out when looking through our own frame of reference.

    Having lived in Japan (and Okinawa), I can tell you that the Japanese society is quite heritage-driven and, for the lack of a better term, hierarchical. Respect for Elders is paramount, and normally, you would report to someone elder to you that is your boss. Questioning your Elders (and authority, for that matter) is frowned upon in Japanese culture. That’s not saying it’s a closed society by any means – its’ not China . . . but it’s not as open as the United States, either.

    The larger issue, to me, is that globalization has led markets to be more and more disparately fragmented; highly decentralized, if you will. Serving them means thinking and establishing yourself in a decentralized manner, not a centralized one (command-and-control hierarchy). Not only do most Boards of Directors not reflect their customer bases (a bunch of 50-yr old+ white guys rarely reflect most target markets), most organizational structures don’t reflect the decentralized traits of their customer segments, either. You can’t see the entire spectrum of color when looking through rose-colored glasses.

    When your organizational structure begins to seriously lag your fragmenting consumer/customer base, it’s only a matter of time before the Cobra bites you. Better put, when the rate of external change exceeds the rate of internal change, your days of operating on cruise control are numbered.

    P.S. Six-Sigma is part of the problem. Not only did those (6) 9s’ reliability let us consumers down (how many deaths reported at this point?), but Six-Sigma, TQM, Process Improvement, etc. completely ignore the social component of organizations . . . both internally (i.e. informal networks that drive how work ‘really’ gets done) and externally (i.e. consumer markets and their differing behaviors, such as North America versus East Asia versus West Africa, etc.)

    P.S.S. I say again – HR can’t change its organizations until it changes itself. “You must be the change you want to see in the World.” – Ghandi

  31. Interesting that the matter of culture becomes paramount; Toyota’s CEO announced today that they are hiring more QA people….even though its probable that an army of QA people would not have detected a fault they were not looking for…..

    And say what you will about Japanese culture, a very similar situation developed in that most American of cultures at NASA.

    I suggest to all that one of the best business books you will read is the Columbia Accident Investigation Board’s summary volume- it has it all: suspense, high-tech education, amazing detective work, heroes and villians…..and the parallels with this Toyota situation are direct.


  32. HR isn’t a noun, it’s a verb. A verb that’s owned by Leadership not by some staff function. Bill and Dave had it right – Managers are responsible for people, not HR.

  33. Same problem exist today, SUDDEN UNINTENDED ACCELERATION. Electronic defect which causes Toyota and Lexus suddenly acceleration without any input from the driver.

  34. The synced information was carried out throughout the company which resulted to a companywide problem as it is real time and wrong inputs did risk the business standing. It is best to have a reliable HR software to be provided in the business. One that could check these mistakes and possibly prevent such from occurring.

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