Work Practices



“We place the highest value on actual implementation and taking action. There are many things one doesn’t understand and therefore, we ask them why don’t you just go ahead and take action; try to do something? You realise how little you know and you face your own failures and you simply can correct those failures and redo it again and at the second trial you realise another mistake or another thing you didn’t like so you can redo it once again. So by constant improvement, or, should I say, the improvement based upon action, one can raise to the higher level of practice and knowledge.?/font>

-Fujio Cho, President, Toyota Motor Corporation, 2002

“Godrej & Boyce is in the manufacturing business and we should look at the Company always in that perspective? The manufacturing sector owes a lot of current work practices to Toyota. Hence, let’s talk of some of the work practices at Toyota…”

-Takao Kasahara, Consultant

Changing and Growing
The Toyota Way

“I recommend you read The Toyota Way. You will learn a lot of work practices followed by Japan’s top automotive manufacturer Toyota,?said Takao Kasahara, in a matter-of-fact way. He is Consultant, Godrej & Boyce Mfg. Co. Ltd.

Kasahara has helped bring numerous improvements/changes in Godrej and believes in value-based, long-term philosophies, which aid organisations to prosper globally. Small wonder he recommended the University of Michigan professor of industrial engineering, Jeffrey K. Liker’s The Toyota Way for the very first principle of Toyota’s success in the book states Long-Term Philosophy.

Let’s look into the four basic principles or the 4P model of Toyota.

  1. Long-Term Philosophy: Toyota drives a long-term approach to building a learning organisation, one that can adapt to changes in the environment and survive as a productive organisation.

  2. The Right Process Will Produce the Right Results: Focus on process is built into Toyota’s DNA, and managers believe that using the right process will lead to the results they desire.

  3. Add Value to the Organisation by Developing Your People and Partners: The Toyota Way includes a set of tools that are designed to support people continuously improving and continuously developing.

  4. Continuously Solving Root Problems Drives Organisation Learning: Identifying root causes of problems and preventing them from occurring is the focus of Toyota’s continuous learning system. Tough analysis, reflection, and communication of lessons learned are central to improvement as is the discipline to standardize the best-known practices.

Toyota’s sales and market share rose last year in North America, Asia, Europe and every other region, helping push the company to No. 2 in global vehicle sales and production. New assembly plants are under construction or about to come on stream in Texas, the Czech Republic, China and Russia. Its cash balance of more than $14-billion (U.S.) is almost equal to the market capitalization of GM. The Company’s Chairman Hiroshi Okuda has taken the extraordinary step of saying he’s prepared to increase prices in the U.S. market in order to give the battered Detroit-based rivals some breathing room. Toyota is, in short, a juggernaut.

How did Toyota achieve such great heights of success?

Reducing Cost:
Toyota started good work practices in the end of 1950s. They were already working for nearly 13 years at the time and continue to be the best automotive performing company in the world. Finding low-cost and yet reliable alternatives to expensive new technology is just one of the ways Toyota improved production. According to most automotive critics, Toyota, over the next 20 years, would dominate the automotive technology. Toyota’s profitability is much higher than the total profitability of General Motors, Ford and Chrysler. “One good thing I see in the Toyota management is their humbleness,?says Kasahara. “The Toyota Chairman Hiroshi Okuda and President Katsuaki Watanabe as also its Past President Fujio Cho have never ever said we are number one in the business. They keep saying: ’We’re learning??/font>

Dare to Change
Even after achieving such good results, they still dare to challenge to reduce the cost of cars by 10 per cent in the next three years. They are materializing that. Toyota had started to manufacture and sells commercially a hybrid car called Prius in 1997. Explains Kasahara: ?i>Prius is one of the breakthroughs in car technology industry since the last decade. Its electric motor drives the car from the battery at low speed running through congested traffic in the town area. The tundem gasoline engine which has a computer control system, starts to work when the speed is increased. Furthermore, when the brakes are pressed, the energy is recovered by the battery.

Toyota plans to make the hybrid Prius in china and has an assembly plant under construction as part of Cho’s goal of capturing 10 per cent of that market by 2010. But simmering hostility toward Japanese companies still remains from the Second World War and has raised its head in recent months. That could stifle growth for Toyota in a market that is expected to boom during the next few years. Toyota could also be vulnerable to competition from low-cost Chinese manufacturers, although, according to Liker, it has undertaken a major cost reduction effort to make itself less vulnerable.

Ideas And Their Implementation
Toyota continuously improves by generating ideas and implementing them. Right from the top management to the shop floor worker, ideas are written down on paper by employees. Good ideas are adequately rewarded. Besides, good ideas don’t remain on paper. They’re implemented. Toyota has continued this practice for more than 45 years without stopping. “The Toyota culture is about pausing ?pausing to plan improvement and make progress,?says Kasahara.

In the beginning of the 1950s, workers went on strike against layoff. Toyota went almost bankrupt because of the recession after the World War II. After that experience, Toyota focused more on its employees working as a team, taking care of people properly which had been the culture of the company since its founder Sakichi Toyota invented the automatic loom. “In the manufacturing business no one person can produce everything by himself/herself. Many people have to work as a team to make a single product. But if people are segregated as executives, managers, engineers, operators…then there can be no good manufacturing,?warns Kasahara.

Japan has seen numerous strikes until mid 1970s. But, recently strikes are rare in that country. All depends on the way you build relationships between employees and with the Company that makes teamwork successful. The structure is the same everywhere. There are teams, team leaders and a supervisor. There’s always internal competition since, as a team, they have to show improvement. The team or team member who does not perform, is removed.

The Japanese Kaizen system says gives no power without responsibility. ?I have never heard of layoffs in Toyota. Toyota does not employ unnecessary people or create positions unnecessarily. But, once employed, the Toyota employee works for a lifetime,?says Kasahara. The level of job security runs high. But that does not mean that they continue with redundant people or that non-performers can stay.

On the other hand, John Shook, former Toyota manager and a life long student of TPS, described the system in Liker’s book as “responsibility without authority? “At Toyota, formal authority is typically one level up from the responsibility.?This, readers may feel is unfair, but not from the overall Company’s point of view. Liker continues: ”It forces the person responsible, who has no formal authority, to defend his or her ideas, work through other people, and convince the person with formal authority that the ideas are correct. The only defense for taking action is to present the real facts of the situation to the formal authority. This process forces managers to uncover the facts and develop a strong case for their position or to go out on limb and prove they are right through demonstrated success.?Irrespective of whether it’s kaizen or TPS, it would be interesting to note that while competitors—notably GM and Ford Motor Co.?are retrenching employees, the Japan-based manufacturer is building its seventh North American assembly plant near Woodstock, Ontario, boosting its production capacity in the world’s most competitive market even further. That represents a $ 600-million (Canadian) injection to the Ontario economy and the first new auto plant in Canada since 1995, when Honda Motor Co. Ltd. unwrapped plans for a new minivan factory in Alliston, Ontario.

To rise up to the Toyota management level, even a potential senior executive, while he/she is young, goes through the “Union?experience. The first thing he learns is that a company is an organisation where they come to learn new things. A company growing its own leaders and defining the ultimate role of leadership as “building a learning organisation?lays the groundwork for genuine long-term success. In Japan, most school graduates start their careers by becoming union members and then grow to become managers. They learn the organization’s culture by becoming union members and working as a team. This has strengthened Toyota. Adds Kasahara: “Soon after graduating in Tokyo, Past President Fujio Cho started to work on improvements at the Toyota shop-floor. Initially, I thought he was an engineer. I had read a couple of his articles. Later, I got to know that he had graduated in Economics! Before becoming President, he was in charge of the Toyota USA venture. He established the Toyota factory in Kentucky right from scratch?The new Toyota President Katsuaki Watanabe started his career in Human Resources. However, his first job was to improve Canteen operation! His efforts in running the Canteen were recognized by the company. Then he was put in charge of HR activities, then in charge of a Toyota factory and, before becoming president, he was in charge of Purchase. Thus, people who become part of top management are generalists, not specialists. They go through different roles in the Company and finally head the Company. Besides, a Company like Toyota with employees strength of 2,60,000 across the globe, specialists cannot head the Company.?/font>

Toyota factories exist all across the globe. Irrespective of the country they operate in, Toyota never comprises its values and principles. “That’s a big difference between Toyota and many companies in India. In Toyota and many Japanese companies, a person working at the shop-floor can grow to become manager and even to become manager and even to become the top executive. In this country, future prospects of growth are limited,?says Kasahara.

The Will To Change
Initially, Toyota employees showed a lot of resistance and were apprehensive of change. But gradually their ways of working and their thinking did change. They realized that only hard work and change would yield positive results. “The manufacturing environment is the watch of the society. The operators, engineers?come to the factory for eight hours and make their products. The environment of engineering is artificially created. Relationships with employees are also artificially created. What we have created artificially can be changed by thinking in the right direction. Many Godrej & Boyce businesses have turned around today and are growing. Employees who do not think and try to work in the same direction or who do not try to change their way of thinking are struggling,?remarks Kasahara.

In Toyota even the lowest level employee such as an Assistant Manager, thinks from the Company’s perspective and not just from his/her job point of view

Focus On The Job
Generally, big Japanese companies have a 5-day week with 8-hour work schedule. But the Japanese staff and management employees do work extra for two to three hours. Kasahara opines: “I personally feel that overtime is necessary from time to time when work is urgently required or to be done in a short span of time. But sitting late should not be a habit as you cannot work proactively and your health gets affected. This mindset is not just in India. It prevails even in Japan, that because the boss is sitting late, employees also have to sit late hours. More often than not, it is the individual is doing the right job not because the manager or the top boss is staying longer? Appraisals play and important role here. Whether you stay long hours or complete the job in time, he/she should be able to identify clearly that the appraisal is based on performance and not by the number of hours you work. Assessment should be based on real output.

By the way, in Japan bosses sit along with the staff members. They don’t have cabins because Japan doesn’t have enough space for cabins.

Good HR Practices
It would have been tough for Toyota to sustain such good performance for so many years, traversing generations and countries, had they not implemented the right practices. “They picked up the right people from each generation. That is very important. That I call as real Human Resources activity ?identifying good people and training them properly, grooming them and placing them in the right position?Hr needs to improve in many Indian organisations. In the HR field you are dealing with hearts of employees and not with administration. Administrative work can be taken care of with the help of computers. Two aspects are important: People Management and Job management. Good managers take care of both these aspects equally well,?remarks kasahara. Small wonder a common phrase heard in the Toyota is “Before we build cars, we build people.?/b>

Eliminating Waste
Kaizen is a cornerstone of the vaunted Toyota Production System other auto-makers have tried to copy. The Toyota Production System is usually seen as focusing on eliminating waste and improving efficiency, but it encompasses more than that. Says Liker, “The TPS is a total system of how you manage and think about people and technology and your processes.?The system has all but perfected, for example, just-in-time delivery of parts to workers on a vehicle assembly line, a practice that reduces inventory and means less wasted movement of workers fishing for the parts they need.

Just-in-time delivery is now standard throughout the auto industry. “That hasn’t stopped Toyota from striving to improve even upon that system, ?President Fujio Cho said in one of the presentations. “Engineers have developed a new assembly process in which the parts are delivered along the assembly line with the vehicle. That eliminates the need for parts shelves, simplifies vehicle assembly and requires less training of workers?

The major types of non-value adding waste in business or production are:

Waiting or time on hand.
Unnecessary transport or conveyance.
Over processing or incorrect processing.
Excess inventory
Unnecessary movement
Unused employee creativity.

Thus Toyota creates an ideal environment for implementing lean techniques and tools by fostering an atmosphere of continuous improvement and learning, satisfying customers and eliminating waste at the same time, getting quality right for the first time, grooming leaders from within rather than recruiting them from the outside, teaching all employees to become problem-solvers and growing together with suppliers and partners for mutual benefit.

There are several good practices, which Toyota had started in the past, are being followed by manufacturing companies as also the service industry. As Kasahara sums it up: “The manufacturing sector owes a lot of current work practices to Toyota.?/font>

Rashna Ardesher


1) Mode of working-1 Shift / 2 Shifts / 3 Shifts
Ans. - 2 Shift
2) Number of working days / year
Ans. - 250 days / year
3) Loss of mandays per year (accidents / strikes / unavaoidable circumstances, etc.
Ans. - None (negligible)
4) Percentage of bought out parts / components from vendors in total yearly production output (in monetary value).
Ans. - 70%
5) Revenue generation per year per unit factory area (consolidated or of major manufacturing unit).
Ans. - (yen) 244,000 / sq.m.
6) Average percentage utilisation of machines (idle time / planned working time).
Ans. - 85%
7) Fixed Assets employed per employed person.
Ans. - (yen) 31,900 / person
8) Percentage of exports in total yearly sales (monetary value).
Ans. - 53%
9) Research and development expenditure expressed as percentage of yearly sales revenue.
Ans. - 0.3%
10) Funds spent on training and education of employees as percentage of yearly sales revenue.
Ans. - 0.025%
11) Inventory turnover ratio (Inventory-raw material + Finished goods + Work in progress + Spares.) (base=Sales revenue).
Ans. - About 80 times/year

Indrapal Singh