Toyota as a “People Development Company” — Lean Blog

By Mark Graban On Jan 14, 2019 Last updated Jan 14, 2019

When I had the chance to go back to Japan last October with Honsha, there was a big focus on what the former Toyota people kept referring to as “a development company.” The meaning was that Toyota (and companies with similar performance) focus first and foremost on developing people.

Many companies try to copy Lean tools or practices, but they don’t have the mindset of a “development company.” Is that why these organizations struggle with Lean and sometimes give up? Can organizations shift from viewing employees as a cost (and a short-term cost, at that) and, instead, view them as a long-term asset that can appreciate over time?

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In our very first orientation discussion of the trip, Honsha’s Barry McCarthy used the term “development system.” He didn’t mean the “Toyota Product Development System.” He meant their people development system. Barry would know because he was a long-time manufacturing and HR manager for Toyota in Australia.

That’s Barry on the right, with me and the rest of the Honsha team members who were part of the trip and our learning:

I should say Barry (and others) were part of “HRD” because Toyota calls that department “Human Resources Development,” which says a lot. Here is a Toyota PDF document about HRD. It says, in part:

“Because people make our automobiles, nothing gets started until we train and educate our people.”

Eiji Toyoda, quoted in the Toyota PDF

The document adds:

“Toyota seeks to develop human resources through the activity of making things.”

Toyota document

The document also says:

“In October 2002, Toyota created the booklet “Toyota — Developing People” and distributed it to all associates to create a common understanding that “the source of Toyota’s competitiveness is human resources development” and to promote the creation of workplaces where personnel development takes place at all sites and at all levels.“

This kept coming up over and over during the week. The very best organizations that we visited got the praise of being a “development company.”

On the unfortunate flip side, how many organizations around the world are using employees instead of developing them?

Why do hospitals send nurses home early instead of investing in them and developing them through training and continuous improvement activities? Shouldn’t hospitals be “development organizations?” Do the best-performing and most-improving health systems merit that label?

I’ve often heard that Toyota places this priority on the outcomes of improvement activity, like “kaizen“:

First, people development. Second, the improvement itself.

I’ve heard it said that an improvement effort that results in learning, but not actual improvement, is not a failure — because people were developed. Does that mean Toyota doesn’t care about results? No, of course, Toyota cares about results… but they get better results over time through the emphasis on development.

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During the week, Barry talked about the sad process of Toyota shutting down its manufacturing plants in Australia. Before you criticize Toyota for that, realize that the other automakers had also pulled out of Australia, deciding it was more cost-effective to import cars than it was to build them there. With the industry hollowed out, Toyota alone couldn’t support the base of suppliers… they decided to leave too.

Barry talked about Toyota’s commitment to developing people up to the very end. They wanted the last car ever built to be the best one they ever made. That meant, of course, treating employees more than “fairly” — it meant treating them well.

Toyota paid for career development for new careers — including people who were going to become healthcare providers and at least one who was going to become a commercial pilot. Toyota wasn’t just kicking people to the curb (or however that would be colorfully said down under).

Here is an article about one plant closure:

Oh, what a feeling for 2700 axed Toyota workers

Toyota says more than 2200 employees have taken part in its job skills training program, which will continue for six months after manufacturing stops.

“Many employees have taken the opportunity to develop their skills to start their own small business, in areas as varied as nutrition, landscaping, brewing and photography,” the company said in a statement.

The article also talks about a Toyota supplier where, unfortunately, the employees weren’t getting much advance notice about their futures. It sounded like they might just get fired with minimal notice. Was that not a “development company?”

Toyota would certainly have an interest in their suppliers also being development companies since that means they would perform better for Toyota over the long term. We visited some Toyota suppliers in Japan who definitely seemed like development companies.

Barry also talked about how not all Japanese companies are “people development” companies. I’ve learned in previous trips that Lean is not the default culture or mode of operating in Japan. When people say “this would be easier if we were Japanese,” I don’t think that’s really true. Toyota has worked really hard to create this culture that many try to emulate as a “Lean culture.”

I’ve written about this as has Katie Anderson:

Andon Cords at the Toyota Takaota Plant — It Doesn’t Come Naturally?

Her post:

A reminder from a recent visit to Japan: Lean is not inherently Japanese

As a final resource on HRD at Toyota, here is a journal article that was written by Jeff Liker and Mike Hoseus:

Human Resource development in Toyota culture

You can download the full PDF.

As the HRD name would suggest, that group plays a big role in developing the human resources of the company… not just because it’s nice or respectful, but because it’s good for Toyota:

Liker and Hoseus write about how many companies try to copy Lean tools or have a program with a handful of improvement experts. What really matters is the culture, as they explain:

A company having a “5S program” or a “Lean Six Sigma program” that doesn’t address those cultural factors… why would they expect to get the results that Toyota gets?

Disclosure: I was invited to participate in the week’s tour by Honsha in exchange for some facilitation support and writing about the trip. I covered my own travel to and from Japan. All posts about the tour are my own, my own opinions, and are not reviewed or approved by Honsha.

Check out my new book, Measures of Success: React Less, Lead Better, Improve More.

Originally published at www.leanblog.org on January 14, 2019.