Case Study: Toyota Motor Philippines Corporation (TMP)

1. Company Background

• Toyota Motor Philippines Corporation (TMP) is one of the largest automotive companies in
the Philippines.
• It operates under Toyota’s global philosophy (“Toyota Way”) which emphasizes respect for
people and continuous improvement. Course Hero+[Link]+3APEC+3
• TMP has received recognition from the People Management Association of the Philippines
(PMAP); it was awarded Employer of the Year in 2011. [Link]
• As per its sustainability report, TMP is committed to building a diverse, inclusive, and
engaged workforce. Toyota Philippines+[Link]+2

2. Recruitment and Selection Policies

a) Philosophy & Strategy

• TMP adapted its HR system from Toyota Motor Corporation in Japan, but “customized … to
suit particular needs and local culture.” APEC
• The company places high value on long-term employment, alignment with company values,
and cultural fit (e.g., respect for the Toyota Way). [Link]
• Line management (supervisors) play a role in HR decisions, reflecting a partnership between
HR and business units. [Link]+1

b) Recruitment Sources & Methods

• TMP uses both internal and external sources when hiring. According to general Toyota HR
practices, they rely on external advertising (job portals, public agencies) as well as internal
talent pools. Scribd+1
• Candidates are assessed not only for technical competence but for alignment with Toyota’s
core values. [Link]
• There is an induction/onboarding program to familiarize new hires with Toyota’s culture,
norms, code of conduct, and operations. [Link]

c) Selection Criteria

• TMP uses a competency-based appraisal system, where competencies align with Toyota’s
values. APEC
• Performance targets (Hoshin) are set for individuals, and the selection process may also
consider candidate potential to meet these targets. APEC
• They also use feedback in the appraisal process, which helps in assessing if a candidate is
likely to succeed long-term. APEC

d) Challenges / Considerations

• Because TMP emphasizes both “competency performance” and “Hoshin performance” (i.e.,
how well one meets targets + how one works), recruiting requires a careful balance between
skill and attitude. APEC
• The HR function must carefully engage line managers in recruitment so that hired talent
aligns with business goals and culture. [Link]
3. Compensation & Benefits

a) Structure and Philosophy

• TMP’s compensation package is highly competitive; they benchmark their pay against
industry standards. APEC
• Bonuses and incentives are part of the package; TMP rewards both individual performance
and organizational performance. Toyota Philippines+1
• They have a two-level benefits structure: base-level benefits plus supplementary benefits that
employees can choose based on their needs. APEC

b) Types of Benefits

From TMP’s sustainability / corporate reports: Toyota Philippines+[Link]+2

• Medical: Group life insurance, HMO, coverage for chronic/critical illness, daily
hospitalization.
• Insurance: Disability / invalidity coverage.
• Allowances: Transportation, medicine.
• Financial Assistance / Grants: For events like death, calamity, marriage, maternity/paternity.
• Longer-term incentives: Service loyalty incentive, “car plan” (vehicle acquisition), perfect
attendance incentive. Toyota Philippines
• Retirement: They have a retirement plan. Toyota Philippines
• Leave Policies: Beyond mandated leaves, TMP provides special leave benefits (e.g., for
parental leave) to support work-life balance. Toyota Philippines

c) Equity & Inclusiveness

• TMP reports a 1:1 ratio of basic salary between men and women for all employee categories.
Toyota Philippines
• They support parental leave and note high retention after employees return (100% return rate
12 months after parental leave, per their report). Toyota Philippines
• They introduced a Diversity, Equity & Inclusion (DE&I) policy to further strengthen
inclusive workplace culture. Toyota Philippines

d) Effectiveness / Risks

• Competitive compensation + flexible benefits help TMP attract and retain talent.
• The supplementary benefits structure gives employees agency over what benefits they value,
which can boost satisfaction.
• However, managing personalized benefits can be complex and administratively costly.
• Benchmarking has to be updated regularly to remain competitive, especially in a changing
labor market.

4. Retention and Motivation

a) Retention Strategies

• Long-term employment culture: TMP’s HR system, inherited from Toyota in Japan, fosters
long-term employment and loyalty. [Link]
• Performance-based rewards: Since compensation is tied to both individual and company
performance, high performers are motivated to stay. APEC
 • Recognition mechanisms: TMP uses reward systems (e.g., “employee of the month”) to
motivate and recognize employees. Scribd
• Labor relations: TMP supports formal mechanisms for employee voice: there are two labor
unions (one for rank & file, one for supervisory), plus a Labor-Management Council for non-
union employees. Toyota Philippines
• Work-life support: Parental leave, health benefits, and other allowances help employees feel
supported in balancing work and personal life. Toyota Philippines

b) Motivation and Culture

• TMP’s values are deeply rooted in the Toyota Way, which emphasizes respect, continuous
improvement (kaizen), and team collaboration. [Link]
• Performance feedback is built into appraisal, enabling constructive conversations about
development and improvement. APEC
• Employee engagement is supported via labor unions and formal HR channels, giving team
members a voice and influence. Toyota Philippines
• TMP invests in diversity and inclusion, which can boost belonging and motivation. Toyota
Philippines

c) Challenges / Risks

• In managing unions, there may be tensions between management goals and employee
demands.
• Highly competitive pay must be sustained; if TMP falls behind, retention may weaken.
• Personalization of benefits might create inequality in perception: if not managed well, some
employees may feel less valued.
• Continuous improvement culture demands continuous feedback; poor feedback processes
may demotivate rather than help.

5. Training & Development

a) Strategy & Philosophy

• TMP considers human capital central to its success and invests significantly in training.
Toyota Philippines
• Their training programs cover technical roles, operations (production), as well as leadership
and management development. [Link]
• They use On-the-Job Training (OJT) as a core method to develop production and operations
staff. [Link]

b) Specific Programs

• TMP conducts learning sessions to refresh employees on corporate policies, code of conduct,
and human rights. [Link]
• They run a Responsible Reporting Program (TRRP) to encourage ethical behavior and
provide due process; training is provided for this. [Link]
• Their performance appraisal includes “competency performance,” so training is aligned to
reinforce core competencies. APEC
• Management and supervisors are also trained in performance feedback, communication, and
coaching to support their subordinates. (implied from performance management system)
APEC+1
c) Outcomes & Benefits

• Training ensures employees understand Toyota’s systems, culture, and what is expected of
them.
• OJT helps transfer tacit knowledge, especially in manufacturing.
• Leadership programs help build a pipeline of future managers who are aligned with Toyota’s
philosophy.
• Ethics and human rights training support a respectful, compliant workplace.

d) Challenges

• Measuring the ROI of training can be difficult.

• Balancing production demands versus time for training (especially in a manufacturing
environment) can be challenging.
• Ensuring all employees (e.g., rank-and-file, part-time) receive equal development
opportunities.

6. Performance Management, Evaluation, & Appraisal

a) Performance Framework

• TMP uses a dual performance assessment system:

1. Competency Performance – evaluates how employees demonstrate core competencies
(linked to Toyota’s values). APEC
2. Hoshin (Goal) Performance – evaluates achievement of individual targets / key
performance indicators (KPIs), including both results and processes (i.e., how work is
done). APEC
• Appraisals are not just top-down: there is built-in feedback, discussion, and dialogue between
supervisors and subordinates. APEC

b) Review & Feedback

• Performance feedback sessions provide forums for clarifying expectations, discussing

behavior, and laying out development plans. APEC
• Results of appraisal influence compensation (bonuses, incentives) as well as non-monetary
recognition (e.g., “employee of the month”). Scribd+1
• Underperforming employees are given development support: retraining, coaching, or
performance improvement planning. From reports: if someone does not meet standards, HR
identifies training needs rather than immediately terminating. Scribd

c) Continuous Improvement

• The performance management system supports continuous improvement (“kaizen” spirit),

reinforcing Toyota’s culture of learning and quality. [Link]
• Appraisal cycles are regular, and performance reviews are a basis for future goal-setting.
Scribd
• There is a “gain-sharing” philosophy in some Toyota operations: employees share in
improvements / gains that come from better processes. [Link]

d) Challenges & Risks

• Aligning individual targets (Hoshin) with business goals can be complex; goals must be
meaningful, realistic, and well communicated.
 • Feedback is only useful if managers are well trained in giving it; otherwise, sessions may be
superficial.
• Overemphasis on targets might lead to “gaming” the system or ignoring important but non-
measured behaviors.
• The dual system (competency + goal) requires careful calibration: if weights are wrong,
either values or performance may be undervalued.

7. Critical Analysis and Discussion

Strengths of TMP’s HR Practices:

1. Strategic Alignment: HR is clearly aligned with Toyota’s global philosophy (Toyota Way)
and local business strategy.
2. Comprehensive Compensation: Competitive pay, diversified benefits, and performance
incentives make TMP attractive and supportive.
3. Employee-Centric Culture: Commitment to respect, safety, well-being, and inclusion fosters
a loyal, motivated workforce.
4. Robust Performance Management: The blend of competency and goal-based evaluation
encourages both “how” and “what” employees deliver.
5. Investment in Learning: OJT, ethical training, leadership development — TMP invests in
developing its people.
6. Labor Relations: Having both unionized and non-union mechanisms gives voice to a broad
segment of employees.

Potential Weaknesses / Risks:

1. Administrative Complexity: Customizable benefits, dual appraisal, and regular feedback can
be resource-intensive to manage.
2. Goal Alignment Difficulty: Ensuring individual goals match business priorities requires
continuous calibration.
3. Training vs. Production Trade-off: In a manufacturing environment, pulling people for
training could impact operations.
4. Sustainability of Compensation: Keeping compensation competitive requires constant
benchmarking.
5. Retention Variability: Even with good pay and benefits, some high-potential employees may
still leave for other opportunities (especially in tech or rapidly growing sectors).

8. Lessons / Implications for Other Companies (Especially in the Philippines)

• Companies can benefit from benchmarking compensation and benefits to remain competitive
in talent markets.
• Having a dual performance management system (competency + goal) can help balance
values and execution.
• Investing in training and development, especially OJT, fosters both skill-building and
cultural alignment.
• Employee voice mechanisms (unions, councils) are valuable in creating trust and
engagement.
• Flexible benefits give employees agency, but require strong HR systems to administer
effectively.
 • Strong labor-management relations can improve retention and minimize conflict, but need
continuous nurturing.

9. Discussion Questions (for Students)

1. How well does TMP’s recruitment and selection policy align with its organizational values
(Toyota Way)?
2. Is TMP’s compensation strategy likely to remain competitive in the Philippines? What
threats might it face?
3. How effective is TMP’s performance management system in motivating employees? What
improvements, if any, would you suggest?
4. Considering TMP’s labor relations framework (unions + labor-management council), what
are the pros and cons from both the company’s and employees’ points of view?
5. How can TMP measure the return on investment (ROI) for its training and development
programs? What metrics should they use?
6. If TMP wanted to expand its operations in the Philippines, how might its HR policies need to
change to support that growth?

Conclusion

Toyota Motor Philippines Corporation provides a rich and well-documented example of strategic HR
management in a Philippine private company context. Its HR policies across recruitment,
compensation, retention, training, and performance management reflect a mature and holistic
approach. At the same time, its practices highlight challenges that any company — especially in a
developing economy — must navigate: balancing cost and personalization, aligning individual and
organizational goals, and sustaining a culture of continuous improvement.