Toyota: Was it bad HR, bad PR or just bad leadership?


There were plenty of good things that could have been said about the way Toyota handled its recent redundancies at the Altona plant in Melbourne.

First the company announced some months ago its intention to make job cuts and explained that the strong Australian dollar was the straw that was breaking the car maker’s back in what was an already tough market.  So, Toyota was upfront and transparent. All good!

Then, when it did make its announcement, the redundancy payout was four weeks’ pay for every year of service capped at 90 weeks when 75 weeks would have met legal requirements, and the company would be providing assistance for those affected to find another job.  In both areas, brownie points for generosity.

But instead of all these positives in what can never be a good news story, the nation was treated to a crude exercise in ponderous Orwellian behaviour by Toyota. The affected 350 workers were told to pack up their belongings and escorted to a reception centre where they were handed documentation that related to their redundancy that, astonishingly, included a score sheet setting out their personal failures in the areas of behaviour, skills and knowledge relative to their colleagues.

There was failure evident at Toyota, however.  Someone in a critical planning role had failed to join the dots.  If the company’s intention is to assist in getting 350 laid-off workers new jobs how, at the same time, can the company be saying publicly that they are no good?  What starts to reveal itself is a muddle-headed management malaise that raises a question about why so many workers had seemingly not come up to scratch.

Whatever else might be said, what happened was a disaster and damaging to the Toyota brand, a brand with a hitherto enviable reputation as a good employer. It suggests some serious flaws in Toyota Australia’s management and leadership were displayed publicly in the culling. The Human Capital online newsletter described the Toyota exercise as a “HR botch-job”. The Australian Financial Review headline called it “An unusual way to let go”, which was probably a nice way of saying “What a mess!”

A mess it was, but I would add that it was not necessarily a mess that can be dumped on HR professionals. What’s important to understand is whether the HR function at Toyota is structured in such a way that it can and does contribute to important strategic decisions. This is a perennial issue for many good HR practitioners. The HR function in many organisations remains largely impotent, often reporting into finance or other operational functions. If this was the case at Toyota then responsibility for this “HR botch-job” should be placed squarely with the Toyota executive team. We’ve been banging on for years that good HR can never happen without the support, respect and endorsement of the CEO. Good HR can never happen when it reports to the finance department.

I would suggest that it’s reasonable to expect that a company of Toyota’s size and resource-base would be able to deliver a coherent and coordinated communication of the key messages in a mass redundancy that could minimise the harmful effects on  workers and limit damage to the brand.  Neither of those two things happened and it’s not necessarily because HR bungled it.

The PR side to this exercise should have included credible and consistent narratives, one internal and the other external.

The internal communication needed to be directed at both the laid-off workers as well as those retained by the company.  People still working at the company are not stupid. They can see that if their colleagues are treated shabbily today, it might happen to them tomorrow.

The external narrative should not have included any information related to the reasons that workers were chosen in the cull that reflected negatively on those workers.  They are private matters and should have been communicated privately, if at all.  Without a doubt, communicators need to tell the truth –  but a mass redundancy is not a court of law.  There is no requirement to tell the truth, the whole truth and nothing but the truth to the entire world, especially if negative repercussions on the affected workers are likely to result.

There are many circumstances in a big company where the human resources and public relations functions need to be authorised to talk to each other.  In the Toyota case, it’s by no means evident they did.

Serge Sardo is the chief executive of the Australian Human Resources Institute

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Geoff Prior
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Geoff Prior

Well said Serge. The other disappointing thing is why they felt the need for so much security. I’ve been involved in a number of redundancy exercises and whilst mistakes were made, we never felt the need to call in a Security firm which seems to be a trend these days. I cannot see too many positives coming out of their involvement. Someone else may be able to comment as to why firms feel they are necessary. To me it basically removes any dignity from the process. I’d hate to marched out the door in front of my peers like a… Read more »

Robert Shaw
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Robert Shaw

Whilst I agree with Serge’s comments, the “score sheet setting out their personal failures in the areas of behaviour, skills and knowledge relative to their colleagues” appears to have HR ‘theorist’ finger prints all over it. As HR professionals we need to be much more astute at identifying appropriate timing for our experimentations with the workforce psyche. I have had indirect exposure to a number of similar staff divestments by large organisations in recent months and they have been very poorly handled – created a leadership and resource vacuum with very little apparent awareness of detailled implications of significant loss… Read more »

Kathy Dodd
Guest
Kathy Dodd

However HR is managed at Toyota pales into insignificance following this disgusting display of arrogance by management. The aftermath of this will be felt by the people removed and the people left behind for years to come. People need to be treated with respect and dignity when they are being made redundant. Its not about the long notice period (often worse to know that far in advance) or the financial payout, its about how you treat your fellow human being. In my HR career I have had to give this kind of bad news to hundreds of employees and close… Read more »

Greg
Guest
Greg

A great case study for Alternative Dispute Resolution practitioners. The left hand not talking to the right! I pity the mediators who will handle this mess. An experienced HR practitioner may have considered all angles in this matter, particularly the psychological barriers to effective mediation. People in reality make many decisions based on cognitive biases, causing them to depend on these previous experiences whilst dismissing information at hand and not focussing on the bigger picture resulting in poor decision making. ‘Executive’ made a unilateral decision with little regard for the psychological welfare of its employees. I bet this would not… Read more »

Tracey Fishlock
Guest
Tracey Fishlock

“Learn from the mistakes of others – you can never live long enough to make them all yourself.” – John Luther

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Toyota: Was it bad HR, bad PR or just bad leadership?


There were plenty of good things that could have been said about the way Toyota handled its recent redundancies at the Altona plant in Melbourne.

First the company announced some months ago its intention to make job cuts and explained that the strong Australian dollar was the straw that was breaking the car maker’s back in what was an already tough market.  So, Toyota was upfront and transparent. All good!

Then, when it did make its announcement, the redundancy payout was four weeks’ pay for every year of service capped at 90 weeks when 75 weeks would have met legal requirements, and the company would be providing assistance for those affected to find another job.  In both areas, brownie points for generosity.

But instead of all these positives in what can never be a good news story, the nation was treated to a crude exercise in ponderous Orwellian behaviour by Toyota. The affected 350 workers were told to pack up their belongings and escorted to a reception centre where they were handed documentation that related to their redundancy that, astonishingly, included a score sheet setting out their personal failures in the areas of behaviour, skills and knowledge relative to their colleagues.

There was failure evident at Toyota, however.  Someone in a critical planning role had failed to join the dots.  If the company’s intention is to assist in getting 350 laid-off workers new jobs how, at the same time, can the company be saying publicly that they are no good?  What starts to reveal itself is a muddle-headed management malaise that raises a question about why so many workers had seemingly not come up to scratch.

Whatever else might be said, what happened was a disaster and damaging to the Toyota brand, a brand with a hitherto enviable reputation as a good employer. It suggests some serious flaws in Toyota Australia’s management and leadership were displayed publicly in the culling. The Human Capital online newsletter described the Toyota exercise as a “HR botch-job”. The Australian Financial Review headline called it “An unusual way to let go”, which was probably a nice way of saying “What a mess!”

A mess it was, but I would add that it was not necessarily a mess that can be dumped on HR professionals. What’s important to understand is whether the HR function at Toyota is structured in such a way that it can and does contribute to important strategic decisions. This is a perennial issue for many good HR practitioners. The HR function in many organisations remains largely impotent, often reporting into finance or other operational functions. If this was the case at Toyota then responsibility for this “HR botch-job” should be placed squarely with the Toyota executive team. We’ve been banging on for years that good HR can never happen without the support, respect and endorsement of the CEO. Good HR can never happen when it reports to the finance department.

I would suggest that it’s reasonable to expect that a company of Toyota’s size and resource-base would be able to deliver a coherent and coordinated communication of the key messages in a mass redundancy that could minimise the harmful effects on  workers and limit damage to the brand.  Neither of those two things happened and it’s not necessarily because HR bungled it.

The PR side to this exercise should have included credible and consistent narratives, one internal and the other external.

The internal communication needed to be directed at both the laid-off workers as well as those retained by the company.  People still working at the company are not stupid. They can see that if their colleagues are treated shabbily today, it might happen to them tomorrow.

The external narrative should not have included any information related to the reasons that workers were chosen in the cull that reflected negatively on those workers.  They are private matters and should have been communicated privately, if at all.  Without a doubt, communicators need to tell the truth –  but a mass redundancy is not a court of law.  There is no requirement to tell the truth, the whole truth and nothing but the truth to the entire world, especially if negative repercussions on the affected workers are likely to result.

There are many circumstances in a big company where the human resources and public relations functions need to be authorised to talk to each other.  In the Toyota case, it’s by no means evident they did.

Serge Sardo is the chief executive of the Australian Human Resources Institute

28
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Geoff Prior
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Geoff Prior

Well said Serge. The other disappointing thing is why they felt the need for so much security. I’ve been involved in a number of redundancy exercises and whilst mistakes were made, we never felt the need to call in a Security firm which seems to be a trend these days. I cannot see too many positives coming out of their involvement. Someone else may be able to comment as to why firms feel they are necessary. To me it basically removes any dignity from the process. I’d hate to marched out the door in front of my peers like a… Read more »

Robert Shaw
Guest
Robert Shaw

Whilst I agree with Serge’s comments, the “score sheet setting out their personal failures in the areas of behaviour, skills and knowledge relative to their colleagues” appears to have HR ‘theorist’ finger prints all over it. As HR professionals we need to be much more astute at identifying appropriate timing for our experimentations with the workforce psyche. I have had indirect exposure to a number of similar staff divestments by large organisations in recent months and they have been very poorly handled – created a leadership and resource vacuum with very little apparent awareness of detailled implications of significant loss… Read more »

Kathy Dodd
Guest
Kathy Dodd

However HR is managed at Toyota pales into insignificance following this disgusting display of arrogance by management. The aftermath of this will be felt by the people removed and the people left behind for years to come. People need to be treated with respect and dignity when they are being made redundant. Its not about the long notice period (often worse to know that far in advance) or the financial payout, its about how you treat your fellow human being. In my HR career I have had to give this kind of bad news to hundreds of employees and close… Read more »

Greg
Guest
Greg

A great case study for Alternative Dispute Resolution practitioners. The left hand not talking to the right! I pity the mediators who will handle this mess. An experienced HR practitioner may have considered all angles in this matter, particularly the psychological barriers to effective mediation. People in reality make many decisions based on cognitive biases, causing them to depend on these previous experiences whilst dismissing information at hand and not focussing on the bigger picture resulting in poor decision making. ‘Executive’ made a unilateral decision with little regard for the psychological welfare of its employees. I bet this would not… Read more »

Tracey Fishlock
Guest
Tracey Fishlock

“Learn from the mistakes of others – you can never live long enough to make them all yourself.” – John Luther

1 2 3 6
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