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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Bridget Hogg of HR Development at Work
Bridget Hogg of HR Development at Work
11 years ago

Its difficult isn’t it? and (in my experience as an outplacement consultant) this happens frequently. Clients wish to protect healthy and safety and their image with customers so they do what they can to prevent an emotional outburst in the workplace by not letting the individual return and collecting their belongings for them. The emotional impact (and repercussions) can be great. In Adelaide we will be discussing this with an employment lawyer on May 3rd in a free meeting for all HR folk. We will consider what can we do on the day to show respect and preserve dignity, demonstrate… Read more »

HRBeat
HRBeat
11 years ago

I agree with Trevor Spence…how HR is structured in Toyota should have been researched first. In my opinion though, it doesn’t really matter whether HR is at the strategic table or not. It’s all about HR leadership, influence, and informal power. What matters most is if HR is respected in the company, has credibility and influence, rather then where HR sits. HR can sit at the strategic table, but without the trust, respect, and influence with other people sitting at the table, there will always be a limit to HR contribution. It’s important to take accountability…the situation reflected bad HR,… Read more »

Jacqueline Fitzgerald
Jacqueline Fitzgerald
11 years ago

Thank you!

Brian Peters
Brian Peters
11 years ago

I think it is an extremely sad day for all of us in HR when the CEO of AHRI chooses to directly criticise a company without being in full possession of the facts. I’ve been involved in numerous restructures in my career and the one thing I can vouch for is that facts that are ‘discussed’ are very often incorrect. Until somebody in Toyota chooses to explain a confidential decision making process and all the discussions that surround those decisions, then the whole thing is open to conjecture. Yes it is very sad that 350 have been made redundant. It… Read more »

Patrick Endycott
Patrick Endycott
11 years ago

Well, from what I have seen in the media it appears as though the redundancies were handled with a ham-fisted approach, but like a lot of you have experienced it is also hard to sugar coat the redundancy of 350 people. I agree with Brian Peters though. I learnt quite a while ago, that you do not jump to conclusions until you have investigated the facts and certainly refrain from making statements, particularly public statements. We all should know how the media treats such stories and how milage is made by various political interest. I will keep my opinion to… 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

Subscribe to receive comments
Notify me of
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28 Comments
Inline Feedbacks
View all comments
Bridget Hogg of HR Development at Work
Bridget Hogg of HR Development at Work
11 years ago

Its difficult isn’t it? and (in my experience as an outplacement consultant) this happens frequently. Clients wish to protect healthy and safety and their image with customers so they do what they can to prevent an emotional outburst in the workplace by not letting the individual return and collecting their belongings for them. The emotional impact (and repercussions) can be great. In Adelaide we will be discussing this with an employment lawyer on May 3rd in a free meeting for all HR folk. We will consider what can we do on the day to show respect and preserve dignity, demonstrate… Read more »

HRBeat
HRBeat
11 years ago

I agree with Trevor Spence…how HR is structured in Toyota should have been researched first. In my opinion though, it doesn’t really matter whether HR is at the strategic table or not. It’s all about HR leadership, influence, and informal power. What matters most is if HR is respected in the company, has credibility and influence, rather then where HR sits. HR can sit at the strategic table, but without the trust, respect, and influence with other people sitting at the table, there will always be a limit to HR contribution. It’s important to take accountability…the situation reflected bad HR,… Read more »

Jacqueline Fitzgerald
Jacqueline Fitzgerald
11 years ago

Thank you!

Brian Peters
Brian Peters
11 years ago

I think it is an extremely sad day for all of us in HR when the CEO of AHRI chooses to directly criticise a company without being in full possession of the facts. I’ve been involved in numerous restructures in my career and the one thing I can vouch for is that facts that are ‘discussed’ are very often incorrect. Until somebody in Toyota chooses to explain a confidential decision making process and all the discussions that surround those decisions, then the whole thing is open to conjecture. Yes it is very sad that 350 have been made redundant. It… Read more »

Patrick Endycott
Patrick Endycott
11 years ago

Well, from what I have seen in the media it appears as though the redundancies were handled with a ham-fisted approach, but like a lot of you have experienced it is also hard to sugar coat the redundancy of 350 people. I agree with Brian Peters though. I learnt quite a while ago, that you do not jump to conclusions until you have investigated the facts and certainly refrain from making statements, particularly public statements. We all should know how the media treats such stories and how milage is made by various political interest. I will keep my opinion to… Read more »

More on HRM