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“CHANGE MANAMGEMENT

AT TOYOTA FINANCIAL
SERVICES”
An MCOE report submitted in partial fulfillment of the
requirements

For the award of the degree

Of

POST GRADUATE DIPLOMA IN MANAGEMENT

Approved by AICTE

2009-11
(Equivalent to MBA)

Submitted To: Submitted


By:
Prof. Anita Singh NISHI SHUKLA-9245
Chairperson HR AVANEE TAYAGI-9054
IMS (GZB) MOHSIN ALI-9111
MADHUBALA SHARMA-9099
PRASHANT PRIYADARSHI-9145

INSTITUTE OF MANAGEMENT STUDIES


GHAZIABAD
DECLARATION

I hereby certify that we has successfully completed our report on STUDY OF


CHANGE MANAGEMNT IN TOYOTA FINANCIAL SERVICES, USA. This is
also to certify that this report is an original product and no unfair means like copying
etc have been used for its completion.

NISHI SHUKLA -9245


AVANEE TYAGI -9054
MADHUBALA SHARMA -09099
PRASHANT PRIYADARSHI -9145
MOHSIN ALI -9111

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ACKNOWLEDGEMENT

For the preparation of this report and for all the personal insight into the study of
“Change Management Systems and Processes of TOYOTA FINANCIAL
SERVICES, USA”. I would like to take this opportunity to extend my sincerest note
of gratitude to PROF. ANITA SINGH (CHAIRPERSON HR) without which our
learning’s and insights would not have taken place.
This report would have been incomplete without our acknowledging the immense
contribution and encouragement of my project guide, who has been instrumental at all
important stages of knowledge-assimilation and report-preparation of this period.
I would like to thank you for providing us with this wonderful opportunity and
guidance.

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TABLE OF CONTENT

DECLARATION 2
ACKNOWLEDGEMENT 3
TABLE OF CONTENT 4
EXECUTIVE SUMMARY 5
OBJECTIVE 6
COMPANY PROFILE 7
INTRODUCTION 9
TYPES OF PMO 11
TFS PMO DESIGN 13
HISTORY OF PMO 15
ORGANIZATIONAL INFLUENCES 18
CHANGE AND CULTURE 24
CORE STRATEGY 27
MAPPING THE WAY 28
LESSON LEARNED APPROACH 31
LIMITATION 32
CONCLUSION 33
REFERENCES 34
ANNEXURE 35

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EXECUTIVE SUMMARY

The increased recognition of project management as an effective means of completing


large and complex efforts has led to a proliferation of projects within a company. This
has increased interest in developing Program Management Offices (PMOs) to
coordinate projects across the organization. Developing and implementing a PMO
within an organization can be difficult. While executives are ready to accept the
benefits a PMO brings, some project managers have difficulty accepting a loss of
control.

In 2001 Toyota Financial Services made the decision to implement a PMO. There
were three areas that provided particular challenges to the process: managing a
complex process change, the high percentage of contractors in the workforce, and a
collaborative Japanese culture populated by more individualistic Americans.

Leadership In Action is an excellent value and an indispensable tool for improving


your leadership and your organization. By uniting the insights of top scholars and the
experience of working executives, each issue provides the best strategies for
confronting such critical issues as leading a diverse workforce, maximizing the
effectiveness of teamwork, stimulating creativity in the workforce, and more.

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OBJECTIVE

To study the impact of organizational change management in TOYOTA Financial


Services, USA. More specifically to study the :

• Implementation of PMO (Program Management Office).

• Implementation of Leadership in action at TFS, USA

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COMPANY PROFILE

Since opening its doors in 1983, Toyota Financial Services has grown from a small
company with eight associates to one that currently employs approximately 3,300
associates nationwide with managed assets in excess of $81 billion.

The Toyota Financial Services brand identity was launched in December 1999. TFS is
a service mark that acts as an umbrella brand name used to market the products of
Toyota Motor Credit Corporation (TMCC) and Toyota Motor Insurance Services, Inc.
(TMIS). TMCC was incorporated in California on October 4, 1982, and commenced
operations in May 1983 by approving a finance contract for a used Toyota Corolla in
Denver, Colorado. The company provides retail and wholesale financing, retail
leasing, vehicle protection plans and certain other financial services to authorized
Toyota, Lexus and Scion dealers, Toyota forklift and Hino dealers as well as Toyota
Material Handling, U.S.A. dealers, affiliates, and their customers in the United States
(excluding Hawaii).

TFS is part of the worldwide financial services operations for Toyota Financial
Services Corporation (TFSC), which is a wholly owned subsidiary of Toyota Motor
Corporation (TMC) in Japan. TFS has three Regional offices, three Customer Service
Centers, 30 Dealer Sales and Service Offices throughout the United States, and an
affiliate financial services company in Puerto Rico.

Toyota Motor Credit Corporation (TMCC) is one of the largest consumer finance
companies in the U.S. and one of the highest-rated captive auto finance companies in
the world with AA/Aa2 long-term credit ratings by Standard & Poor and Moody's,
respectively.

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Originally known as TMCC Equipment Finance, Toyota Financial Services
Commercial Finance, a division of Toyota Motor Credit Corporation began operations
in November 1984. We funded our first wholesale flooring (dealer) transaction in
January 1985 and our first lease (customer) transaction in November 1985. Today,
TFS Commercial Finance offers financial services to support Toyota Industrial
Equipment and Hino Motor Sales dealers across the USA. Dedication to customers
and dealers has earned Toyota Financial Services a reputation for service excellence
in the commercial finance industry.

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INTRODUCTION

The Program Management Office

Program offices trace their origins back to the Project Support Offices (PSOs)
that cropped up in the 1960’s to help large, complex aerospace and
construction projects. As automated support tools such as the original Artemis
scheduling application started to appear and become more widespread, the
direction of program offices changed to include tools support to project
managers. The emphasis changed again during the 1990’s to include
coordination among multiple projects to ensure consistency in PM practices
and quantitative portfolio management. While individual projects may have
specific PSOs depending on the project’s size and complexity, more often now
the enterprise’s Program Management Office (PMO) provides support across a
variety of projects that the organization is involved in. The Meta Group
estimates that deploying a Project Office can reduce project failures by up to
80% [STANDISH, 1995].

While there is still confusion in the literature about whether such an office is a
Project Office, a Program Office, a Project Support Office, or a Program
Management Office, for the purposes of this article we will use the term
Program Management Office to specify a project-centered organization which
supports a variety of projects across the enterprise.

Leadership In Action

About five years ago, Toyota Financial Services (TFS) began an incremental process
of establishing a leadership strategy that reflects both an orientation toward
performance and a firm foundation for development.The strategic initiative
started when the CEO, George Borst, and the organization’s human resource
department (HR) realized that TFS needed to change the way talent was being
managed and developed. TFS also recognized that several things needed to occur to
accomplish this.When TFS began its initiative, it was already exceeding goals and

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expanding into new markets. But the CEO wanted to create an organization in which
leaders maximized their results by developing and growing the capabilities of their
people. Borst understood that this was a long-term investment that ultimately would
Strengthen TFS’s organizational capabilities. He also knew that key cultural and
infrastructure changes would be needed to sustain lasting change. The result was that
the CEO partnered with HR, giving that department the opportunity and challenge to
help lead TFS in this new direction— becoming a higher-performance organization.

For TFS, a higher-performance organization is one that values performance,


development of people, accountability for results, and strong leadership—and that is
always ready for change. (The word higher in the term higher-performance
organization was deliberately chosen to imply that even after the organization
becomes better than it is today, there will always be room for more improvement.)
Although TFS had many attributes that supported achievement of its objective,
several key cultures are needed to be addressed.

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TYPES OF PMOS

Given that PMOs will oversee multiple projects, what types of things should a PMO
do? The answer depends as much on the organization’s needs as it does on anything
else. There is not one right way to design a PMO. There are a variety of services and
products that a PMO can offer an organization, and which ones the PMO will have
when it is deployed depends on the specific needs of the organization.

At the very least, a PMO can profitably serve to support a single function, such as a
repository for historical project information or a location for project coordinatrs to
live. As a historical repository it can gather the results of previous projects and of
lessons learned and make them available for project managers to search through
before they begin new projects. This becomes the corporate knowledge repository so
that experience gained is not lost when people leave.

At the high end, a PMO can change the PM culture [BLOCK 1999] and provide:

• Enterprise-wide project coordination and consistency.

• Set standards and methodologies for all projects in the enterprise

• Do quality audits of the projects.

• Help the management and executive teams select projects that support
strategic goals.

• Help the executive team track the entire portfolio of projects in work by
developing metrics and measuring all projects against those metrics.

• Identify the resources that are available to work on upcoming projects.

• Support the project managers and project teams with training mentoring, and
career development.

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• Collect and archive the documents from completed projects and analyze them
for trends.

• Provide a knowledge management system that gathers all project-related


information.

• Makes it available in a readily accessible and useful format.

The way the PMO is designed in any one-organization will usually lie somewhere
between these two extremes, with the specific functions chosen according to the needs
of the organization. At a major utility in California, the PMO in their Infrastructure
Organization is referred to as the “Nerve Center” for the organization. Within Toyota
Financial Services (TFS), the PMO has a strong emphasis on strategic project support
and portfolio management.

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TFS PMO DESIGN

Toyota Financial Services is a relatively new company, having separated from Toyota
Motor Sales (TMS) in 2000. At the time of the separation, TMS was assessing its
project management capabilities. This assessment continued after the companies
separated. The results of the analysis indicated that the best way to increase the
abilities of TFS to deliver projects on time while meeting all of the business needs
would be to institute a PMO. Experts were hired as contractors and the PMO
organization structure shown in Figure 1 was developed based on TMS’s needs.

This is a true enterprise-wide PMO. It supports the executive branch, giving them an
objective oversight into the current status of all projects as well as a project selection
process that is oriented towards the TFS strategic goals. It also supports the project
managers, providing them best-practices methodologies and processes as well as
administrative help in managing project schedules and, in the future, project costs.

A major driver to the PMO design was that there were almost three dozen projects in
work and more in the queue. The executive-level Governance committee managed
this portfolio of projects, but they had very little factual data to base their decisions on
when it came time to selecting and prioritizing projects or even understanding the
current status of projects. Inputs were given them by the project managers who would
sometimes gloss over problems on their projects and report that everything was going
well even when it wasn’t.

There were several projects that were reported as being in work, even though no
resources had been assigned to them beyond the project manager. There was one
particularly important project that had a requirements analysis done, a project
manager assigned, and no resources given it for almost two years after it had been
started. This was the environment the PMO was designed in.

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The structure of the PMO was developed over a period of months and coordinated
among major stakeholders. As the implementation process develops further, the
specific structure may change as the needs of the organization change.

It may be noticed that a project auditing function is built into the PMO. This will
provide an independent quality control audit of each project, ensuring that the project
managers are following the processes that have been approved by the corporation.

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RECENT HISTORY OF PMOs AT TOYOTA

THE TMS PMO

This is not the first attempt at a PMO that has been developed. In discussions with
employees at Toyota Motor Sales, it was revealed that a PMO was created several
years ago to address the project management problems that were evident at that time.
The development was done internally using existing project managers.

With the advantage of historical hindsight, the developers did almost all of the right
things to create a strong PMO. They developed methods and processes, they worked
with the Human Resources department to create skill requirements for project
managers, and they studied and examined best practices to design the PMO.

The one thing they did not do as well as they could have been to understand the needs
of the project managers themselves. If they had, they would have readily seen that
there were a number of organizational issues, unrelated to project management
practices that were making it difficult to manage projects. As a result of the PMO
developer’s not gathering requirements, the PMs had no input into the effort.

The first few processes that were implemented did not address the specific needs of
the PMs and were therefore ignored. This created a climate where the remaining
processes were also simply ignored by the PMs and never resulted in any long-lasting
improvements. The PMO was killed during 2001.

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THE TFS PMO

The development relationship between Toyota Financial Services and Toyota Motor
Sales was a complex one and is still in the process of evolving. Project managers
could come from either organization, but the development staff for software products
was in the TMS IS group. The development problems affected both organizations.
TMS already had a PMO at the time of the separation, so TFS determined that in
order to ensure their projects got managed, as efficiently as possible they also needed
a PMO.

At one point each organization had a separate project manager assigned to the same
projects, both of them being told they were in charge. When it became apparent that
dual managers was not a workable solution the decision was jointly made that it
should be the business that manages the overall effort and not the technical group.
Currently the project manager comes from the part of the organization that origina ted
the initial request, from the business side if it’s a business product being developed or
a regulatory-mandated change and from the technical side for a technology upgrade.

The PMO at TFS started out small. Because it was created at a relatively low level in
the organization, its primary effort was gathering project financial data and reporting
it to a mid-level financial officer. As the need for a full PMO became apparent during
the project management assessment, the decision was made to create a fully
functional enterprise-level PMO and to move the office organizationally so that it
reported directly to the CIO. Because a PMO will impose significant changes to the
project management process, it gains authority by being positioned as high in the
organization as possible [Miller, 1998]

In consideration of the organizational issues surrounding the separation of the


business side from the technology side of the company, the design of the PMO and
development of the PM methodology very carefully separated project management
from any specific product development methodology.

Thus the project manager is responsible for the overall management of the project,
while the technical lead is responsible for selecting the software development

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approach. At TFS the development group is implementing the Rational Unified
Process (RUP) for much of the work and kept a more traditional waterfall approach
for mainframe development work. The project management methodology design was
made flexible so that the PM could adapt to whatever approach was chosen by the
development lead.

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ORGANIZATIONAL INFLUENCES

Depending on the level of project management maturity within the organization and
the functionality desired from the PMO, implementing a PMO can be a highly
complex and difficult undertaking, equivalent to implementing a full Enterprise
Resource Planning (ERP) package. It involves significant change to how project
managers, development staff, and project sponsors perform their work.

While designing the PMO architecture can take only a few months, implementing it
across the organization in a way that makes it both acceptable to employees and
efficient in its processes takes a lot longer. It can take three years before everyone
involved in project management buys into the changes and the product development
process becomes consistent and efficient. It can take another two years before the
efficiencies recover the initial costs and the PMO becomes cost effective. This is a
long-term commitment that requires significant buy-in from the top of the
organization.

In many organizations where there are no standard processes that everyone accepts,
there was a sense of doing whatever was necessary to do what you wanted to do.
Within one particular group, the feeling was that many of the existing processes were
cumbersome and not designed to support the type of work they did.

They discovered that efforts of less than 100 man-hours were considered maintenance
work and therefore were not expected to follow project management processes. As a
result, this group designed virtually all of their projects to be less than 100 hours,
thereby avoiding much of the formality associated with developing new products.

At TFS, there were three issues that needed to be dealt with during the
implementation planning phase:

1. Organizational change management issues.

2. The “Minimal Employees” approach.

3. A Japanese-style consensus-building culture.

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ORGANIZATIONAL CHANGE MANAGEMENT

Because one of the primary emphases of the PMO was to develop a consistent set of
methodologies (including processes, tools, and templates), it would significantly
change how the project managers would manage projects. Without a standardized
approach the project managers were free to manage their projects in any way they
wished, with no specific reporting requirements or controls. Because of the poor
experience with previous attempts to implement a PMO, the project managers were
not immediately ready to support this effort. In addition to the project managers,
project sponsors were also not completely ready to support the changes because it
would remove some of their authority over the project and make it obvious to
everybody which projects were having problems.

It is often said that when you introduce a change into an organization,

• 20% of the people will support the change because they are either unhappy
with the existing state or they’re so new they have no investment in the
existing culture.

• 20% of the people will resist the change no matter how beneficial you say it is
to them. They have so much invested in the existing process that they see no
reason to change.

• The remaining 60% are waiting to see how beneficial the change is and how
serious upper management is about instituting the change. They will become
unsupportive if they feel this is just another quick-hit so that someone can say
we created this improvement. But they will become supportive if they see that
the change is successful and to their benefit.

When we developed the implementation plan for the PMO we were sensitive to these
numbers. As we developed new processes, forms, and templates, we reviewed them
with both the project managers and the project sponsors. During the review cycles it
became obvious that many of the changes we were getting simply moved the changed

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processes back to where the old processes were and de-scoped the new processes so
that the net result was very little change. It required a great deal of consensus building
in order to convince many of these people that the changes would be to their long-
term benefit and much of the approval was given with a “we’ll wait and see”
mentality.

Because the PMO has a variety of functions in different areas, the implementation
was prioritized with the effort going into the most critical areas first. The first area to
be developed was the creation of a set of consistent project management
methodologies (including processes, templates, examples, and forms). Once this was
completed the next area was to provide an infrastructure to support the project
managers with help in project schedule tracking and project initiation. The last effort
to be implemented will be the strategic support to the executives so that they have a
consistent approach to managing the entire portfolio.

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THE “MINIMAL EMPLOYEES” APPROACH

Both TFS and TMS are required to keep down the quantity of full-time employees,
presumably so that if the economic conditions deteriorate there will not be a need to
lay people off. However, the amount of work that must be done grows as more
products are sold. Without being able to hire employees the organizations turn to
hiring contractors and consultants to fill the gap. Because the work is not necessarily
simple, the contractors can be there for several years, a situation that is not
uncommon in many companies.

This use of contractor labor, in some parts of the organization 30% of the total labor
force, has several effects. While many American companies have justified the use of
contract labor as saying it gives them more flexibility because they can rapidly obtain
the newest skill sets, the problems created by having a high percentage of contractors
may outweigh that slight benefit.

One major side effect is that much corporate knowledge resides with people who can
leave at any time. While this is true of employees also, the turnover rate among
contractors is higher because they are constantly aware of better opportunities outside
the firm. Also, critical skills may be lost from the company. Operations of the
mainframe computer system has been contracted to an outside firm. While the firm is
well established and well-known, if they decide to cancel their contract Toyota no
longer has the skills necessary to run their own mainframes. Additionally, there is an
increasing gap between the skills needed to compete in today’s environment and the
skills of the employees. When skills can be hired on a temporary basis there is little
incentive to invest in employees’ developing these skills.

Within the PMO we were very sensitive to the fact that many of the project managers
used by TFS were consultants. Our feeling was that project management should be
considered a core competency of the organization and should be done by employees.
Successful project managers have many soft skills that are necessary to consistently

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deliver projects and that are specific to the organization they work in. If these people
leave after a project is completed those skills leave with them and any new project
managers brought in must relearn the same skill sets. Relearning how to be successful
when those skills are already known is an unproductive way to spend time.

Another side effect that we had to deal with in implementing the PMO was the fact
that with so many contractors, much of the real power in the organization was
concentrated in the hands of a relatively small number of middle managers. These are
the people who own the business resources and they have the ability to slow down or
kill any effort they choose not to assign resources to. Any change that occurred in the
organization had to be filtered through them and approved by them.

This was the group that provided the greatest amount of resistance to the PMO
implementation. They saw themselves as giving up a significant amount of power to
this new organization. When the PMO was elevated during the implementation
process to reporting directly to the CIO some of this problem was mitigated because
people saw that the PMO was being taken seriously. Prior to that a large amount of
time was spent working with and coordinating with this management tier. As
documents were routed for coordination many of the comments were designed to
return the processes to the old way of doing things.

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JAPANESE-STYLE CONSENSUS BUILDING CULTURE

What was most challenging about working within the TFS culture was not the fact
that it was originally modeled on the Japanese management approach of coordination
and consensus building. What was most challenging was that we have a Japanese
culture populated by Americans, many of whom came in with a typically American
attitude that I’m going to do whatever it takes to get this job done.

The result was a set of clashes between people who had been with the organization for
several years and were comfortable with the culture and people who were relatively
new and were more at home with a style that recognized individual initiative rather
than slow and careful consensus building.

This provided challenges during the implementation of the PMO. Both the people
who wanted rapid improvements and the middle-tier of managers who wanted to
spend several weeks reviewing every change and assessing its impact had to be
accommodated for the rollout.

A two-fold approach was taken to ensure that buy-in was obtained from both groups.
We worked with the project managers to identify where their biggest problems were
and identified quick fixes to those problems. The quick fixes were designed to resolve
the problem with as little impact to other areas as possible.

For example, when the project managers complained that there were too many
documents that they had to generate and that they were never aware of what all the
documents were, the PMO team created a checklist showing which documents were
required for the different phases of the project, who was responsible for those
documents, and provided templates to assist in generating the documents.

Once the project managers saw that what we were doing was actually helping them,
they were more receptive to the other changes, like quality audits, that were also
being rolled out. We found that many of the project managers had the “can-do”
attitude that focused on completing the project.

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At the same time we had to deal with a layer of middle management that did not want
to see changes made to their organizations. We found we had to spend a lot of time
building consensus among them in order to roll out many of the more far-reaching
changes such as implementing a budget management process.

A management review process was created where the changes were sent to the
managers for review and approval. However, the changes were first coordinated with
the project managers so that they could give a positive recommendation to their
managers. This gave the managers an input into the process changes, but with the
understanding that their employees were supportive of the changes.

This did not completely resolve the problem of having managers make changes that
would return the new processes to shadows of the existing processes, but the team felt
it reduced the frequency and severity of the complaints from managers who wanted
things to stay the way they were.

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CHANGE AND CULTURE

Merely acknowledging that an organization needs to change rarely leads to deep and
fundamental change. Fundamental change requires a large amount of preparation and
work. That is why TFS’s approach has taken years, not months, to implement. For
every two steps TFS took forward, it took one step backward. It is no exaggeration to
say that without extensive efforts to prepare the organization for change, TFS’s
initiative could easily have failed. Organizational change begins with the
organization’s culture, whether that culture is approached directly or indirectly. Some
attributes of TFS’s culture are:
• A high respect for people and relationships (very associate focused).
• A focus on improving quality of life and supporting the communities in which we
live.
• Zero tolerance when it comes to issues of integrity.
• The pursuit of kaizen, a philosophy of continuous improvement. TFS is always
striving to be better. This translates into placing a high value on performance and
results.
Changing the way management and associates thought about TFS’s value of
performance required a delicate balance—honoring the parts of TFS’s culture that
would serve as the foundation for change while redefining other aspects. In essence,
what TFS needed to do was create a culture in which leaders could:
• Hold associates and managers accountable for performance, and align rewards and
consequences accordingly.
• Differentiate based on performance, and develop associates differently based on
their individual needs.
• Produce strong managers who value the development of people.
• Provide regular and honest feedback to associates to help them maximize their
performance.
These changes may seem simple. But they fundamentally affect every aspect of the
work experience, including leadership expectations, hiring decisions, performance
management, compensation, talent management, succession planning, and associate

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development. They require much more than simply rolling out new HR tools or
training programs, key drivers for career advancement.

Changing the way management and associates thought about TFS’s value of
performance required a delicate balance—honoring the parts of TFS’s culture that
would serve as the foundation for change while redefining other aspects. In essence,
what TFS needed to do was create a culture in which leaders could
• Hold associates and managers accountable for performance, and align rewards and
consequences accordingly.
• Differentiate based on performance, and develop associates differently based on
their individual needs.
• Produce strong managers who value the development of people.
• Provide regular and honest feedback to associates to help them maximize their
performance.

The focus was on leader- ship skills rather than technical skills. The senior managers
needed to sup-
port and lead these changes through their daily actions and decisions. HR redefined its
own performance expectations and capabilities and how it held itself accountable for
performance. The changes included:
• Acquiring and developing stronger analytical, strategic, and consultative capabilities
• Reshaping HR consulting teams, and locating them geographically with the
department’s business partners
• Creating an organizational development team to infuse stronger organizational
design and development capabilities
• Enhancing the recruitment function to respond more effectively to the need for new
talent.

TFS also did the unprecedented and filled some executive leadership positions with
outside candidates. This helped introduce new skills, knowledge, and ideas into the
organization, illustrated that the changes touched every level of the organization, and
sent a clear message that in the future, getting ahead at TFS would be more about the
leadership skills and knowledge necessary to move TFS forward.

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These efforts to prepare TFS for change were slow, deliberate, and often difficult—
but they were essential. They validated that things were changing and that the
organization was moving in the right direction. Many organizations miss or quickly
pass over the importance of readying an organization for change.

Instead they focus on introducing new programs or tools, assuming that these will
create the change. TFS believes that leaders must own and drive change, using the
appropriate tools. At TFS, the initial steps set the stage for change and began to create
experiences for managers to use as anchors as TFS continued to move forward.

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CORE STRATEGY

How do you get people to make required significant changes in behavior and mind-
set? From some perspectives, the solution is fairly clear :

• Conduct a study of competencies as they relate to business goals.

• Design and roll out a performance management system, using the


competencies as abase for performance measurement.

• Integrate the competencies into the recruitment and compensation systems.

• Create or align the compensation process.

• Conduct coaching workshops to support more effective communication during


performance discussions.

The steps TFS took were very similar to these. However, TFS wanted an organic
process that would adapt to the organization as it grew. And it wanted a specific focus
on transferring accountability and ownership to the business leaders. TFS believed
that without such a shift, the tools would just be tools. TFS firmly believed that
leaders, not tools, make leaders.

TFS’s core leadership strategy is built on two fundamental levers : accountability and
differential investment. In a performance-based organization, managers and associates
much hold themselves accountable and think of themselves as owners. TFS decided to
differentiate how it invested in associates, based on performance. Rewards and
consequences were more strongly linked to performance and results. TFS wanted to
tailor how it developed and rewarded associates to maximize results.

To implement its leadership strategy, TFS needed to integrate the concepts of


accountability and differential investment into every existing and future HR program,
including performance management, development and succession planning,
compensation, and recruitment.

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MAPPING THE WAY

TFS began with performance management. This decision was based on the belief that
a performance-based organization needs to have a practical and credible assessment
and measurement system so associates can be accurately differentiated and held
accountable. At TFS, this program is called Maximizing Associate Performance, or
MAP.
It provides the foundation for all current and future HR programs. TFS also needed a
common language for describing its expectations for associates and their work. In
2005, TFS defined core competencies by band or grade level across the organization.

Evaluation on these competencies constitutes half of a person’s overall performance


assessment; assessment of results makes up the other half. The competencies
described how TFS wanted managers to act. It then was necessary to create the
conditions that would encourage them to act in the desired ways to engaged in
coaching and development.

The two important competencies- performance accountability and coaching and


development were shifted to the “results”section of the managers’performance
appraisal. This sent the message that meeting or exceeding traditional results was not
enough and that focusing solely on these results created a short-term view for the
organization—which also was not enough. In the past, managers had felt conflicted
about which was most important—immediate business results or development. They
tended to focus more on these results because more weight tended to be placed there.

Now managers were being told that developing associates was as important as results
and that they were accountable for current performance and for investing in
expanding capabilities to achieve long-term profit growth. Another change came in
the way performance was managed. The focus shifted away from documenting
performance only at the end of the performance period. This meant

29
• Accepting that performance management is an ongoing process that occurs
throughout the performance period, not just at the end
• Establishing clear expectations at the start of the performance period
• Providing honest feedback frequently and with an emphasis, when needed, on
performance changes that could be made
• Tailoring feedback to each per- son, and providing developmental direction based
on that person’s current performance level.

The conceptual shifts were from managing performance to maximizing performance,


from assessment to action, from annual appraisals to ongoing feedback, and from
compliance to commitment. The data that emerge from performance management are
essential to how associates are rewarded and developed. There are many opportunities
in this modal to build effective leadership development processes.

Concurrent with the establishment of MAP, some changes were made to the
compensation programs. This was to reinforce differentiation based on performance.
More focus was placed on rewarding higher-performing associates, to ensure they felt
valued and recognized. MAP performance ratings were also used as the primary
driver of compensation programs, to further reinforce the link between pay and
performance. Additionally, TFS expanded its talent review process, using the new
competencies and focusing developmental and promotional conversations on
leadership capabilities. The CEO also initiated leadership strategy conferences at
which the elements of strong leadership were reinforced. Borst led many of the
discussions and used these conferences as an opportunity to broaden the perspective
of members of his leadership team and to clarify his expectations of them as leaders.

These additional steps served to drive home the fact that TFS was following up its
words with actions communication was developed to keep associates up to date on
MAP activities and to ensure that MAP stays at the forefront of managers’ minds. The
CEO played a significant role, using oral and written channels to reinforce his support

30
by communicating that MAP is a top priority. Managers incorporated messages about
MAP at the departmental level via meetings, town halls, and other forums.

As a result of TFS’s efforts, performance management and leadership development


planning are now an integral part of the organization’s annual planning calendar. But
the work is not yet done. Measurement and accountability systems continue to be
built, the reward system is being modified, and the leadership development strategy is
extending downward into the organization as the succession process develops. Talent
reviews are being used to identify those who exhibit leadership abilities as well as
those with high potential to do so. Some people at TFS are adapting to performance
management and MAP more easily than others.

In keeping with the Toyota culture, the HR team will ensure that the performance
management process is accomplishing what it was intended to do. HR will
incorporate changes that make sense for the business and ensure that the new system
remains practical for facilitating good coaching and development discussion. It’s too
soon to tell whether TFS’s leadership strategy will be successful. Success will largely
depend on how well these concepts continue to be embraced and owned by the
business leaders.

31
LEASON LEARNED APPROACH

TFS’s leadership effort began slowly and progressed incrementally, using a lessons-
learned approach. The focus was on building understanding and creating a shift in
mind-set. Three primary elements figured in the design and implementation of the
effort: strategy (where the organization is going), culture(what the organization
values and how it behaves), and readiness(leaders’ willingness to embrace and lead
these changes). Working to create an accountable organization means rethinking how
business decisions are made to ensure that the elements of TFS’s organizational
design are aligned to support an accountable culture. Specifically, accountability
levels should be consistent with levels of control and influence. Leaders will resist
being held accountable for areas over which they have little or no control. This will be
an important area for TFS to focus on if it is to sustain an account- able culture.

As a result of TFS’s efforts, performance management and leadership development


planning are now an integral part of the organization’s annual planning calendar. But
the work is not yet done. Measurement and accountability systems continue to be
built, the reward system is being modified, and the leadership development strategy is
extending downward into the organization as the succession process develops. Talent
reviews are being used to identify those who exhibit leadership abilities as well as
those with high potential to do so.

32
LIMITATION

Limitation of our project are as follows :

• Study is based on secondary data, since TFS Change Mangaement that we


have studied are based on TFS situated in USA.

• There is no use of statistical data, hence conclusion is more subjective (which


is not generally more reliable and accurate).

• Many changes have occurred time to time in TFS but we have only studied
two changes.

33
CONCLUSION

Once the need to have a PMO became obvious, the most difficult task of doing it was
to implement it into an organization where many of the employees were not initially
supportive of the large changes that were being made. They had seen PMOs
developed before and cancelled. While the implementation effort is still in its early
stages, the initial successes, while small, have changed many peoples’ minds about
how beneficial the PMO can be.

The stakeholders were coordinated with during the design effort and the PMO was
designed to satisfy the organization’s major project management issues. By
identifying where the most pain was and quickly fixing some of those, we obtained
support from the project managers who began to see that this could be highly
beneficial to themselves and not just another set of changes.

The full implementation is expected to be a three-year effort that began in late


summer of 2001. At the present time it appears to be on track. It has been a somewhat
frustrating experience for the development team who expected to being implementing
the PMO as soon as it was designed and approved by upper management. Instead they
had to learn how to deal with a recalcitrant organization who changed very slowly and
only with a great deal of coordination and consensus building. Some people at TFS
are adapting to performance management and MAP more easily than others. In
keeping with the Toyota culture, the HR team will use the kaizen philosophy to ensure
that the performance management process is accomplishing what it was intended to
do. HR will incorporate changes that make sense for the business and ensure that the
new system remains practical for facilitating good coaching and development
discussions.

It’s too soon to tell whether TFS’s leadership strategy will be successful. Success will
largely depend on how well these concepts continue to be embraced and owned by the
business leaders. It’s too soon to tell whether TFS’s leadership strategy will be
successful. Success will largely depend on how well these concepts continue to be

34
embraced and owned by the business leaders.

REFERENCES

• Block, T.R., 1999, The Seven Secrets of a Successful Project Office. PM


Network, April, 1999: 43-48.

• Miller, J., 1998, Project Office – One of the Fastest Growing Segments in
Information Systems, Proceedings of the 29th Annual Project Management
Institute 1998 Seminars and Symposium, published by The Project
Management Institut.e

• STANDISH, 1995, The CHAOS Project Management Research Study,


published by The Standish Group.

35
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