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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James Richards
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James Richards

I have been discussing with my students as to whether the HR function should be apart of the strategy team, or follow business strategy; so your article is very timely. But to my embarrassment I couldn’t answer the fundemental question my perplexed students asked: “why did they do it this way?” Surely if employees wanted to know a reason “why me” – private (and proper) counselling would have been the way to go.

Peter Zambelli
Guest
Peter Zambelli

In every restructure/downsizing I’ve been involved in (too many now) – someone – usually at least one senior manager – wants to “frog march” the people who are laid off. The reasons sound on the face of it like good governance – avoid the possibility of sabotage; prevent violence; stop theft of intellectual property; ‘make a clean cut’ and get on with business. However most of these reasons come apart under closer scrutiny – and the damage that “instant dismissals” do to people and the organisations they leave behind is well researched. When people are dislocated from their job without… Read more »

ian fenwick
Guest
ian fenwick

Class action for defamation? Was this a directive from Japan?

Bridget Hogg of HR Development at Work
Guest
Bridget Hogg of HR Development at Work

Its a difficult issue to manage, isn’t it? As an outplacement consultant I have been asked many times to be present while an employee is given their redundancy notice and asked to leave the premises. Often times, for safety reasons or to prevent an emotional outburst in front of clients, people are discouraged from re-entering their workspace. Their belongings are collected for them and returned to them. I have then witnessed the expression of hurt, anger, sadness and disappointment that follows with people saying “what hurt is that they didn’t even trust me” and “after all these years of loyal… Read more »

David De Santis
Guest
David De Santis

Hello there, I agree that Serge should have investigated the source of the decision further and also the part played by HR in the overall exercise. Thats if he could? If Toyota would allow it. But damage is also being done immensely in the operational part of Toyota as they are failing in a big way to honour readily their motor vehicle warranties as well. I have a number of friends/ relo’s who have had extremely bad experiences with new toyota vehicles and trying to get remedial work done under warranty. Sufficient to say they are hunting for a dealer… Read more »

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
James Richards
Guest
James Richards

I have been discussing with my students as to whether the HR function should be apart of the strategy team, or follow business strategy; so your article is very timely. But to my embarrassment I couldn’t answer the fundemental question my perplexed students asked: “why did they do it this way?” Surely if employees wanted to know a reason “why me” – private (and proper) counselling would have been the way to go.

Peter Zambelli
Guest
Peter Zambelli

In every restructure/downsizing I’ve been involved in (too many now) – someone – usually at least one senior manager – wants to “frog march” the people who are laid off. The reasons sound on the face of it like good governance – avoid the possibility of sabotage; prevent violence; stop theft of intellectual property; ‘make a clean cut’ and get on with business. However most of these reasons come apart under closer scrutiny – and the damage that “instant dismissals” do to people and the organisations they leave behind is well researched. When people are dislocated from their job without… Read more »

ian fenwick
Guest
ian fenwick

Class action for defamation? Was this a directive from Japan?

Bridget Hogg of HR Development at Work
Guest
Bridget Hogg of HR Development at Work

Its a difficult issue to manage, isn’t it? As an outplacement consultant I have been asked many times to be present while an employee is given their redundancy notice and asked to leave the premises. Often times, for safety reasons or to prevent an emotional outburst in front of clients, people are discouraged from re-entering their workspace. Their belongings are collected for them and returned to them. I have then witnessed the expression of hurt, anger, sadness and disappointment that follows with people saying “what hurt is that they didn’t even trust me” and “after all these years of loyal… Read more »

David De Santis
Guest
David De Santis

Hello there, I agree that Serge should have investigated the source of the decision further and also the part played by HR in the overall exercise. Thats if he could? If Toyota would allow it. But damage is also being done immensely in the operational part of Toyota as they are failing in a big way to honour readily their motor vehicle warranties as well. I have a number of friends/ relo’s who have had extremely bad experiences with new toyota vehicles and trying to get remedial work done under warranty. Sufficient to say they are hunting for a dealer… Read more »

More on HRM