Toyota Culture: The Heart and Soul of the Toyota Way

CORE VALUES
SUPPORTING THE TWO CRITICAL VALUE STREAMS: PRODUCT AND PEOPLE The Core of Toyota Culture Is Not Negotiable Toyota has kept its identity as a company, including its philosophy and principles, remarkably consistent for many years. Its values of trust and continuous improvement permeate its commitment to long-term thinking, developing people, standardization, innovation, and problem solving. It is a learning organization that literally thrives on its people engaging in identifying and solving problems together and achieving results that will benefit everyone. The Toyota Way culture is the critical ingredient in the company's organizational DNA, and it allows for constructive local adaptation of a global company at the same time that it avoids the potential pitfalls of diluting the Toyota Way. The culture at a Toyota plant in Georgetown, Kentucky is not identical to that of a Cambridge, Ontario, plant, nor is it the same as the culture in Jakarta, Indonesia. Each plant has certain unique cultural elements based on its specific context, as defined by its history, locale, leadership, and people. However, while local culture certainly is a strong influence in the company's widespread global branches, Toyota has developed certain core principles that must be present in every Toyota operation regardless of location. In this chapter, we summarize the human systems model around which this book has been organized. At the center of the model is the people value stream, which is essential to understanding why the Toyota Way has met with such unprecedented success. We believe that the X-factor in Toyota's ongoing success is the way Toyota develops people to not only do their jobs but to think deeply about problems and become committed to the Toyota value system. The Missing People Value Stream The concept of a value stream has become a common part of the vocabulary of organizations that want to improve. "Value stream mapping" may be the most used lean tool, and it can have a powerful effect on a team's ability to understand how much waste is produced in the total process of converting raw materials to finished goods. In value stream mapping, the product's path is followed from raw material to finished goods, documenting both value-added processes and wasted steps. Value added is defined as when the part is physically being transformed to what the customer wants. Any activity that costs time and money and does not add value is defined as waste. Value stream mapping helps team members understand how the product flows and identify the wastes in the process. For example, is it being moved about from place to place? Is it sitting in inventory? Are there quality problems creating the need for rework? We can use this methodology on a conceptual level to understand the people value stream. In value stream mapping, there are process boxes in which value is added, and between these process boxes are inventory triangles that represent waste. It is typically found that the greater part of the life of a product is "waste" as it is being moved someplace or sitting in inventory. Imagine if you had the time to map a person's entire career, starting with when they first joined the company. For our purposes, value is added when the person is learning and being challenged. These periods are shown as the process boxes, while every hour spent not learning is represented by inventory triangles -- waste.

After all. They also learn more about safety and have the opportunity to become team leaders. feel safe in identifying the problem. and the product value stream and people value stream are literally intertwined in a system that makes up the DNA of the Toyota Way. All of these capabilities lead to the development of an entirely new set of advanced skills. since there is less than one hour of parts available before we shut down. The same is true for 5S. we will notice problems with those parts much more quickly and there will be immediate pressure to solve the problems. We put mutual trust at the center of [the Toyota culture] because it is instrumental in creating an environment that both encourages the identification of problems and motivates people to solve them. there will be a gap in any company's lean transformation. but for our people value stream. continuous flow. if the work does not contribute to learning and development. thus enabling the process of identifying waste-producing. problem solving is the code that connects the two. At Toyota. taking breaks. most of us spend a fair amount of time doing routine work. The interplay of these systems sets company standards. it forms the "Toyota culture. Standardized Work. out-of-standard conditions. a delay or quality problem will immediately shut down the process. It serves the very vital function of connecting the product and people value streams. . Toyota emphasizes that the tools of the Toyota Production System (TPS) are designed to highlight and identify problems within its organization. If the product value stream and the people value stream make up the organizational DNA of the company. the term "system" is used quite often. it will be classified as waste.A person's work may be productive. and Andon. We would probably expect that most of the careers mapped would exhibit a lot more waste than value-added development. and when it is observed. but we believe a significantly larger portion of time at Toyota brings to its members value-added learning and development. Even on the shop floor. Problem Solving Connects the Two Value Streams The importance of problem solving in the Toyota culture cannot be emphasized enough. and Just in Time all expose problems that one may not see otherwise. or sitting in ineffective meetings. Kanban. The out-ofstandard condition is observed more quickly." which makes it possible not only to implement but also to sustain the Toyota Way. but who also trust their supervising group leader. When these two value streams are connected and that DNA is reproduced. This requires team-minded people who are not only competent enough and well trained enough to identify and solve a problem. if we reduce the quantity of parts brought to the production line from one day's worth once per shift to one hour's worth every hour. Developing people into problem solvers takes waste out of the system and leaves a leaner system in place. We suspect this is true at Toyota as well. Without a practical and continuous problem-solving process that is used on a daily basis. Without the waste of inventory. and are motivated to solve it. They learn multiple skills such as problem solving and group development and practice these skills regularly. This means that problems surface quickly and thus challenge team members to respond to and learn from the obstacles that they encounter on the job. The key to success is to have a production system that highlights problems and a human system that produces people who are able and willing to identify and solve them. workers who perform routine production tasks spend a great deal of time in training where they are taught the higher-level skills of their jobs. the potential consequences are severe. For example.

and in the factory. employees are reluctant to admit to the existence of problems and learn that it is safest to hide them. if problems are hidden. In the Toyota Way 2001 document. Work Groups and Team Problem Solving -. sales. not an isolated office. problems will surface more quickly. but Toyota's history is rooted in learning by doing what is taught on the job by highly skilled mentors. 2. sharing the management point of view. Two-Way Communication and Visual Management -. Like Toyota. there is a sub-element called "promoting organizational learning. Learning is a continuous company-wide process as superiors motivate and train subordinates. Getting the right people together to solve a problem is the way much of the work gets done in engineering. "All of us are smarter than any of us. the organization takes corrective actions and distributes knowledge about each experience broadly. your company could implement a variety of formal mechanisms. In addition. This starts with a health and safety system that reflects company policy and compliance with laws and regulations.At Toyota the old adage. Many companies have taught problem solving and have groups that meet periodically to make improvements. Clean and Safe Workplace -. and guided by leaders who are there to support and teach: 1. in a clean and safe environment. One might think that developing team members is the function of the training department which puts together a schedule of classes.Leaders must articulate and reinforce their commitment to a healthy and secure work environment. and even hangs an andon light connected to a cord to stop the line. such as health and safety committees that respond within the same day that a health or safety issue materializes. as predecessors do the same for successors. . and encouraging team members to participate in team activities and share their ideas. leaders must promote preventive safety measures. There are a variety of mechanisms we will discuss for formal face-to-face communication." is truly practiced on a daily basis. The bigger issue is to put in place systems to prevent health and safety problems and then respond rapidly to health and safety issues and accidents. People-Supporting Processes and Daily Management There are many systems in place to support team members as they are developing to become committed members of Toyota. but Toyota has integrated this into the daily management system. Similarly throughout Toyota new hires are immersed in living the Toyota Way daily through involvement in work groups.Without trust in their employers. finance. but is the worker likely to pull the cord and identify the problem? Is the worker going to try and solve the problem or throw up her hands and say it is management's responsibility? On the other hand. taking problems as opportunities for kaizen. Now imagine a company that has not established mutual trust: A team from the front office value stream maps the process and then implements a kanban system here and some standardized work there. safety awareness and ergonomics awareness that alert team members to abnormalities with potential health and safety consequences. It is more of a craft-based system. and we will also emphasize the principle that all leaders should manage from where the work is done. 3. Rather than blaming individuals. with intense communication. Intimate daily contact is the way the apprentice is trained. People are organized into work teams with team leaders and review daily progress." which includes learning from mistakes: We view errors as opportunities for learning. the entire system of continuous improvement stops functioning and the lean systems lose their value. and as team members at all levels share knowledge with one another. What is likely to happen? If inventory is reduced.Toyota leaders work continuously to ensure open channels of communication throughout the team by emphasizing the key values of mutual trust and respect.

(2) Creating a mechanism for promoting constant and voluntary initiatives in continuous . Since then. Toyota's labor-management relations are based on mutual trust between labor and management. In other words.4. and this is reflected in the current Guiding Principles at Toyota Motor Corporation. providing training for required job competencies. they serve the team. Put the core value-added worker at the top and it is a better representation than the top-down structure we are used to seeing in most corporate organization charts. repeated discussions have led to deeper understanding and trust between labor and management. Mutual Trust Between Labor and Management The basic concepts of mutual trust between labor and management are: improvements in the lives of employees are realized through the prosperity of the company. scheduling regular team meetings for supplying timely information. Servant Leadership -. Toyota's organizational chart stands on its head. In the Labor and Management Resolutions for the 21st Century signed by labor and management representatives in 1996. mutual trust between labor and management was adopted as the foundation of labormanagement relations in the joint labor and management declaration concluded in 1962. See details on the Guiding Principles at Toyota Motor Corporation •Mutual Trust between Labor and Management •Labor and Management Resolutions for the 21st Century (Summary) Basic Principles of Personnel Management In order to create a relationship of mutual trust and respect between labor and management. assisting in resolving issues and ensuring earned recognition. mutual respect was added to mutual trust as a foundation of labor-management relations. and employees will cooperate with the company's policies in order to promote the company's prosperity.Compared to traditional organizations. management will take into consideration to the greatest possible extent stable employment and will continuously strive to improve working conditions. specifying and integrating team roles and job tasks. teach and support the members of the work force that are doing the valueadded work. personnel management is conducted in accordance with four basic principles: (1) Creating a workplace environment where employees can work with their trust in the company . Following a labor dispute in 1950. They do this by clarifying and reinforcing common goals. articulating standardized work. and labor and management thus share the same goal of company prosperity as a common value. Leaders coach.

In addition. gender harassment. in addition to promoting communication between employees of different rank within the company.to long-term management perspective and has made the realization and continuation of stable employment through all possible employment policies the fundamental basis of its management philosophy. Consequently. Based on the philosophy of "Respect for People. Toyota has also established a Toyota Creative Suggestion System and started QC circle activities. and (4) Promoting teamwork aimed at pursuit of individual roles and optimization of the entire team. but also hinders the spontaneous display of ability by employees. •Employee Awareness (Administrative and Technical) Employee guide to various hotlines Safety. Accordingly.improvements. to place safety . the simple disposal of human resources." and the fundamental policy that "Safety is management itself" and "it is everyone's responsibility. reasoning skills and creativity. (3) Fully committed and thorough human resources development. Toyota always takes a medium. is an important topic relating to the very foundation of a corporation. along with quality and the environment. The employee awareness survey conducted every year indicates that "pride in the company" and "employee satisfaction" remain high. Stable Employment Stable employment that avoids simple layoffs and terminations is a key pillar in the relationship of mutual trust between labor and management. Creating Good Workplace Environments In order to reflect the ideas and opinions of employees in corporate activities. not only damages the relationship of trust. the Toyota management system is based largely on bringing out to the greatest extent employee abilities. Toyota has established a number of hotlines for the fast and fair resolution of issues related to compliance. mental health and working conditions. from senior executives to every employee at the workplace. a major management asset.

Designated occupational diseases: Injury from dust and noise. contact with vehicles. Participation in lifestyle guidance meetings. and contact with heated objects) 2. falls. through these activities. including the strengthening of workplace teamwork and the improvement in the inherent safety3of equipment. 1. Toyota has developed a range of independent accident prevention activities. results have been achieved in terms of workplace management and environmental improvements. Toyota is conducting a lifestyle improvement campaign and recreational activities. through which it is making efforts to promote better health. falling short of the goal of 70%. electrocution." Toyota is making an effort to create a safe and energetic work environment. Safety and Health Beginning with development of activities which demonstrate assurance of zero accident record. however. including items required by law as well as its own items. Nonetheless. or musculoskeletal disorders 3. the percentage of completely healthy Toyota employees4 was only 55%. a lower percentage than the previous year. Although the number of STOP61-type accidents and designated occupational diseases2 in FY2002 were the fewest to date. contact with heavy objects. manufacturing industries and the automobile industry for 2002 are preliminary •Safety and Health Promotion Organization and Structure Building Good Health Toyota is conducting employee health checks. Inherent safety: Completely eliminate or reduce the risk of accidents associated with work or equipment so as to pursue intrinsic safety at the workplace at the equipment design stage •Industrial Accident Frequency (Frequency Rate of Lost Workday Cases) *The figures for all industries. one measure toward early recovery. Toyota also provided education and information to improve the awareness of each employee. the goal of zero was not reached.first. Completely healthy Toyota employees: Ratio of those with the A rank of . twice as high as that of the previous year. which is necessary to develop better lifestyles. As an activity to prevent lifestyle-related diseases. 4. STOP6: Safety Toyota 0 (zero accidents) Project 6 Activities to prevent six types of accidents which may cause death or disability (caught in machines. was 75%. In the future. In 2002. Toyota will employ the Meal Check System6 and begin instructing employees on how to improve their dietary habits and educating them thorough self-management. The ratio of Toyota employees whose health-related work restrictions were lifted5 to those who participated in the lifestyle guidance meetings was.

a technique of active listening Learning communication techniques at an active listening course . and workers' families. Active listening courses: Experiential training in methods of building good communication through understanding and sympathy for others' feelings and emotions. Meal Check System: A system for confirming and evaluating individuals' food consumption patterns. 7. and not receiving medical treatment) 5. Toyota is improving its follow-up system for people who are on leave. by strengthening ties among personnel. using data of their food and drink consumption in the cafeteria •Trend in Percentage of Completely Healthy Employees Mental Health Care Regarding mental health at the workplace. all of the newly appointed managers and supervisors undergo active listening courses7 that are effective in the prevention and early detection of mental problems. 810 newly appointed department general managers.health management ratings (no problems found during health checks. Toyota aims to create a workplace with better communication in the future. Regarding individual mental health care. The ratio of Toyota employees whose health-related work restrictions were lifted: Number of employees whose healthrelated work restrictions were lifted ×100 Number of participants in lifestyle guidance meetings 6. and others at Toyota received this training. Through these activities. the workplace. group managers. in addition to education in traditional knowledge. In FY2002.

Toyota has defined the required qualifications of "professional staff"1 for office and engineering positions. Professional Staff: Associates who can create added value on their own and contribute to society. In conjunction with the geographic expansion of business and the growth of business areas. and special knowledge and skill training. which were expressed by Honorary Advisor Eiji Toyoda. 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. these policies were advanced further with the adoption of the Toyota Way for individual functions. In October 2002. that previously had been implicit in Toyota's tradition. Genchi Genbutsu (go and see). Respect. Company-wide training is conducted based on employee qualifications. Kaizen (improvement)." the following five key principles sum up the Toyota employee conduct guidelines: Challenge. values and business methods. as well as utilize their strengths and exercise teamwork 2. undertaking global actions for the development of human resources has become a priority issue. •Key Principles of The Toyota in April 2001 Toyota adopted the Toyota Way 2001. Toyota's management philosophies. such as English language skills and operational knowledge (the crossbar of the "T") as well as highly specialized knowledge and experience in a particular field (the vertical bar of the "T") •Company-Wide Training to Support Professional Staff "Toyota — Developing People" booklet A Shared Toyota Way In order to carry out the Guiding Principles at Toyota Motor Corporation. an expression of the Way 2001 values and conduct guidelines that all employees should embrace. human resources. Fully Committed and Thorough Human Resources Development Toyota conducts systematic company-wide and divisional training and assignments for training purposes with an emphasis on on-the-job training (OJT) to ensure that associates can fully utilize their abilities. nothing gets started until we train and educate our people. Toyota believes that the development of human resources requires the handing down of values and perspectives. In order to promote the development of Global Toyota and the transfer of authority to local entities. Based on the dual pillars of "Respect for People" and "Continuous Improvement. language training. etc. Toyota is building both tangible (a new learning facility) and intangible (course content) structures relating to team member development that ensures a secure and steady flow of qualified human resources to conduct Toyota's global business in the 21st century. . and Teamwork. T Shaped Human Resources: Team members with a broad range of skills."Because people make our automobiles. accounting. including overseas sales. domestic sales. 1. were codified. and "T shaped human resources"2 who are able to perform day-to-day activities and expand their skills in technical positions. as well as specialized training for individual divisions. procurement." As seen in these words. Toyota seeks to develop human resources through the activity of making things. In 2002.

(2) Assist in women's career building." Through this. reviewing its arrangement with regard to female employees. based on the principle of respecting diversity and with the aim of reforming management throughout the company. with 16 full-time associates managing the business. one major task for increasing a company's competitiveness is to have management that can make use of human resource diversity. due to such factors as the globalization of business and social advances of women. and (3) Reform the working environment and employee awareness.Toyota Institute In January 2002. In 2002. Toyota aims to increase its employees' motivation and optimize the value of its human resources. as well as contribute to the creation of a global human network. The purpose behind the Toyota Institute's establishment is to promote the human resources development of global Toyota in order to promote true globalization and to realize the advancement of Toyota's core values. Toyota started a Diversity Project based on the concept expressed in Toyota's Global Vision 2010 of "promoting the creation of environments featuring people from around the world with various abilities and values who are given the opportunity to experience self-realization as individuals. Within the Toyota Institute. TMC President Fujio Cho is the Toyota Institute's first president. the Global Leadership and the Management Development Schools constitute the specific content of the training programs. the Toyota Institute was established as an internal human-resource development organization that aims to reinforce the organic integration of global Toyota companies by way of sharing the Toyota Way as well as to promote self-sufficiency. and taking steps to put a better environment in place. •System for Helping Employees Accomplish both Child Rearing (or Nursing Care) and Work •Trends in Number of Employees Taking Child Rearing Leave . In order to promote the creation of an environment more conducive to participation by motivated female employees. Toyota set its sights on women's participation. the Toyota Institute conducted training programs targeting global leadership candidates from TMC and overseas companies and for middle management personnel to enhance understanding of the Toyota Way. Toyota has made a threepronged effort to: (1) Help enable women to work and raise children at the same time. Toyota has also introduced flexible working arrangements and constructed child-care facilities at business sites. •Outline of Training Programs With the on-going changes in the labor market environment. In 2002. See the Global Vision 2010 Toward Promotion of Women's Participation In 2002. enable best practice sharing and drafting of action plans.

Human consideration is given to the conditions of their disability at the business sites and ways are devised to accommodate them in workplace facilities so as to create a workplace environment that is safe and easy to work in. Toyota had approximately 5.8% Legal Employment Quota. Toyota •Trends in Toyota's Disabled employed about 800 disabled People Employment Ratio people in many kinds of positions at various workplaces. •Trends in Ratio of Female Employees (Example of Administrative Positions) Employment of Disabled Persons As of March 2003. of the Disabled." private companies normally employing 56 or more employees are obligated to employ disabled people (either physically or intellectually disabled) at a ratio exceeding 1. exceeding the 1. accounting for 9% of the total workforce. Toyota's disabled employees ratio was 1. etc. and makes it a basic rule to have them work together with other employees.95%. Toyota believes in helping the disabled achieve autonomy within society.*A system similar to the child rearing system is used in the case of nursing care As of March 2003.800 female employees. As of the end of March 2003. but the number of women employed has grown steadily each year as female students' awareness increases.8% of their total workforce Career Design Forum .* *Legal Employment Quota: In accordance with the "Law for Employment Promotion.

With the objective of assisting women's career building. was opened so that all employees. The purpose was to help the women build a network within the company and to give them the motivation to create their own career visions independently and actively. the "Toyota Child Care Bubu Land. who wished to continue working while raising children could do so without worry." an on-site childcare facility (in Toyota City. so drop-off and pick-up are easy." . which include having a resident nurse on the staff and staying open until 10:30 pm. Facility to Help Child Rearing "Toyota Child Care Bubu Land" In March 2003. Head Office area). Toyota plans to enhance similar initiatives in the future. and I can continue working without having to worry if extra work should suddenly crop up. Toyota held the Career Design Forum in November 2002 for about 400 female employees. both male and female. One female employee using the facility (with a one-year-old child in care) expressed her sentiments in the following way: "It's located at the company. The facility has many useful features.

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