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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Trevor Spence
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Trevor Spence

I think Serge should have investigated the actual structure and decision-making at Toyota before expressing an opinion based on supposition. Equally I think Serge needs to recognise the Legal/HR requirements to:
– Select employees fairly for redundancy,
– Maintain transparency and confidentiality,
– Sustain the business for the future.

Cristian
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Cristian

So where was HR when all this was happening? Is it too much to expect that they would have had all the appropriate governance arrangements in place to manage this process? Is it beyond them to facilitate the development of the executive so this situation didn’t occur in the first place? To suggest that just because the executive did not engage with HR suggests to me that its okay for HR to be a disconnected onlooker. To heap blame on “Someone in a critical planning role” is to avoid the obvious and that is that HR should have been that… Read more »

Sally
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Sally

I don’t belive the blame can be solely placed at either exective or HR but joint failings. As a HR professional this case has had many friends and family ask me ‘how could someone like you do these things to people’ or ‘you HR people are so cold’ as if being a HR person brings responsibility for others mistakes. To me not only has this case treated redundand workers poorly, damaged the reputation of Toyota but has tarnished HR as a profession across the country. Lets all learn a lesson of ‘what not to do’ from this.

Sally
Guest
Sally

As a HR professional this case has had many friends and family ask me ‘how could someone like you do these things to people’ or ‘you HR people are so cold’ as if being a HR person brings responsibility for others mistakes. To me not only has this case treated redundand workers poorly, damaged the reputation of Toyota but has tarnished HR as a profession across the country. Lets all learn a lesson of ‘what not to do’ from this.

Kathy
Guest
Kathy

I think at times you can give all the good HR advice you want to executives, managers and CEO but they will not neccessarily listen and do what they think is right.

More on HRM

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
Leave a reply

avatar
100000
  Subscribe to receive comments  
Notify me of
Trevor Spence
Guest
Trevor Spence

I think Serge should have investigated the actual structure and decision-making at Toyota before expressing an opinion based on supposition. Equally I think Serge needs to recognise the Legal/HR requirements to:
– Select employees fairly for redundancy,
– Maintain transparency and confidentiality,
– Sustain the business for the future.

Cristian
Guest
Cristian

So where was HR when all this was happening? Is it too much to expect that they would have had all the appropriate governance arrangements in place to manage this process? Is it beyond them to facilitate the development of the executive so this situation didn’t occur in the first place? To suggest that just because the executive did not engage with HR suggests to me that its okay for HR to be a disconnected onlooker. To heap blame on “Someone in a critical planning role” is to avoid the obvious and that is that HR should have been that… Read more »

Sally
Guest
Sally

I don’t belive the blame can be solely placed at either exective or HR but joint failings. As a HR professional this case has had many friends and family ask me ‘how could someone like you do these things to people’ or ‘you HR people are so cold’ as if being a HR person brings responsibility for others mistakes. To me not only has this case treated redundand workers poorly, damaged the reputation of Toyota but has tarnished HR as a profession across the country. Lets all learn a lesson of ‘what not to do’ from this.

Sally
Guest
Sally

As a HR professional this case has had many friends and family ask me ‘how could someone like you do these things to people’ or ‘you HR people are so cold’ as if being a HR person brings responsibility for others mistakes. To me not only has this case treated redundand workers poorly, damaged the reputation of Toyota but has tarnished HR as a profession across the country. Lets all learn a lesson of ‘what not to do’ from this.

Kathy
Guest
Kathy

I think at times you can give all the good HR advice you want to executives, managers and CEO but they will not neccessarily listen and do what they think is right.

More on HRM