The Toyota way of recruitment

Executive Summary

This assignment is based on recruitment and selection and performance management, two of the most important areas in human resources management. For the better illustration of these management concepts, Toyota Company is selected, since its human resources practices portray a vivid picture of the human resources concept under discussion.

The assignment discusses both principles and practices in recruitment and selection and performance management in strategic approaches.

The section of recruitment and selection covers the areas such as importance of recruitment and selection, its theoretical background, and finally, application of these theories for the selected organization.

The second half of the assignment is concerned on the performance management systems. It covers the topic of importance of performance management for an organization, its theoretical background and finally its application on the selected organization.

Based on the analysis of Toyota Company, the conclusion is arrived, which is basically that the success of Toyota depends on its wise decision of selecting best suitable recruitment and selection processes and performance management for its operations.

The selected company – Toyota 

Toyota Motor Corporation is selected for the purpose of completing this assignment. The reason behind selecting Toyota Motor Corporation is its strength of workforce and global human resources practices. 

Toyota Motor Corporation is a multinational automaker and the headquarters is located in Japan. The capital value of Toyota is 397.05 billion yen and it has employed 317,716 employees. Main business activities of Toyota are that motor vehicle production and sales but it has diversified the business to housing, financial service, e-TOYOTA business, marine, and Biotechnology & forestation (www.toyota-global.com, accessed April 2012). The main competitor of Toyota is General Motors and Volkswagen. The total market share of Toyota is 11% (www.toyota-global.com, accessed April 2012). The Toyota Way (TTW) was introduced in 2001 with the philosophy of continues improvement and respect to people (www.toyotauk.com, accessed April 2012). This philosophy allowed Toyota to implement many human resources strategies to gain the competitive advantage through its human resources. This assignment is based on the human resources practices of Toyota Motor Corporation.

Being a multinational competition and a one of largest employers in the world, Toyota is practicing best and innovative human resources management. Eiji Toyoda expressed that "Because people make our automobiles, nothing gets started until we train and educate our people"(www.toyota-global.com, accessed April 2012). This statement of Eiji Toyoda indicates the whole Human Resources policy of Toyota. According to these words Toyota believes that people drive their business. Also they believe values and perspective of people are essential for the development of human resources. Further, with the vast geographic expansion of Toyota’s business, human resources development has become a priority issue of the company. Thus, Toyota has had to develop both tangible and intangible structures in order to conduct Toyota’s global business in the 21^st century. The recruitment and selection process and performance management process of Toyota has been designed to face these challenges in this highly competitive business world.   

Task 1. Recruitment and Selection

1.1 Why recruitment and selection vital in today’s turbulent world? 

In the today’s turbulent world, many organizations are struggling to gain competitive advantage. This competitive advantage can be gained through many ways. Human resources of an organization are one of the critical factors for gaining competitive advantage. Effective usage of human resources will increase the productivity of an organization. Finally, this superior productivity will help to gain superior profit or performance of an organization. Employees’ talent and capabilities are more important to achieve profit or performance of an organization. Thus, recruiting talented and capable employees to the organization is vital. Because of this competition for talent, recruitment has become more important for managers. On the other hand, many companies are keen on recruiting most talented personnel to their business entities, especially when compete in the international market. In that case, managers have to think internationally when they recruit employees to their firms. Thus, in the today’s turbulent business world, recruitment and selection is more important for managers since it is the beginning of talented and capable workforce.  

On the other hand selecting wrong individuals to the company will create many operational problems. Multinational companies like Toyota are very keen about the recruitment of right employees to their organization. Basically wrong recruitment and selection will create two main problems to the company. The first problem is that these employees cannot perform up to the standards of the organization and it will directly make negative impact to the day-today operation. The second problem is that wrong recruitment and selection is a cost to the company. The company has to expend more money to select an employee again.       

 

1. 2 Theoretical background of recruitment

Recruitment can be defined as “the process of locating potential individuals who might join an organization and encouraging them to apply for existing or anticipated job openings” (Snell, 2010: p188). Today, recruiting is sometimes referred to as talent acquisition to reflect the importance of the human factor in the organization’s success (Draft, 2010: p318). According to these definition, organizations have take necessary steps to aware applicants about two main areas (Snell, p188). Those are,

Ø  Qualification which need for particular job

Ø  Career opportunities which offer by respective organization.

The recruitment process will either internal or external (Leopold, 2009: p185). The internal recruitment can be defined as “recruiting employees within the organization” (Draft, 2010: p318). Internal recruitment has two major advantages. The first advantage is internal recruitment is less costly than external recruitment. The second advantage is that it generates higher employee commitment, development, and satisfaction because it offers opportunities for career advancement to employee rather than outsiders (Draft, 2010: p318). Many scholars have introduced many methods for identifying qualified candidates within the organization. After proper analysis, these methods can be summarized as inventorying management talent, job posting and bidding, identifying talent through performance appraisals and using assessment centers (Snell, 2010: p204). Inventorying management talent involves new technology. Some organizations use information systems which allow organizations to screen its entire workforce to find suitable candidate to fill an internal job opening. These systems help organization for internal promotions and succession planning. Job posting and bidding is posting vacancy notices and maintaining list for employees looking for upgraded positions (Snell, 2009: p202). Some organizations effectively use their executive support systems for internal job posting. Further, some organizations use their performance appraisal system to identify talented employees for internal recruitment. In this system quarterly or annual performance appraisal system is used to identify the performance rating of employee. Employees who have higher rating for performance are identified to the further talent pool. The finally identified internal recruitment method is assessment centers. By this system, employees are tested under series of situations and are selected most talented employees accordingly.

The external recruitment is different from the all above systems. The external recruitment can be defined as “recruiting newcomers from outside the organization” (Draft, 2010: p318). The main advantage of external recruitment is it allows organization to welcome new blood to its operations. New employees will come with new technology, new ideas, new systems and finally with fresh energy. These attributes will help organizations to achieve competitive advantage through its employees. External recruitment methods can be mentioned as advertisements, unsolicited applications and resumes, internet recruiting, employee referrals, executive search firms, educational institutions, professional associations, labour unions, public employment agencies, private employment and temporary agencies, and employee leasing (Snell, 2009: p190). Organizations use these methods as per their requirements. One of the most common methods is advertisements. This method is used worldwide for external recruitment. For this method newspaper, magazines, posters, e-mail, radio, television, etc. can be used. Also, unsolicited applications and resumes are commonly used. Many employees receive applications and resumes and most of them maintained job banks for these applications. Further, internet recruiting is becoming more popular. With the development of information technology and networking, many candidates are used to apply through internet and on the other hand, many organizations are maintaining online job banks. The duty of executive search firm is to find right candidates for their client employers. This is often called “headhunters”.  Some educational institutions and professional associations directly introduce professionals for firms. Finally, public employee agencies and employee leasing companies provide employees for firms where necessary.    

1.3 The Toyota way of recruitment           

As at 31^st March 2011, Toyota’s total workforce is 317,716 (www.toyota-globle.com, accessed April 2012). Thus, recruitment activities are vital. The best human resources strategies and best technology are to be used for the recruitment activities to compete with other major competitors like General Motors and Volkswagen. The Toyota’s human resources policy is “in-house grooming” (www.toyota.co.za, accessed April 2012). The essence of this policy is that employees should grow with the company. According to that Toyota recruit many trainees to their company and allow them to grow with the company. Learning and development opportunities are provided for their development. Because of this policy, Toyota’s graduate recruitment programme is very important. Thus, the Toyota graduate recruitment programme will take as an example to identify the recruitment procedure of Toyota. The main fields of recruitments are engineering, HR, marketing and IT. As explained above, at the theoretical background they use the recruitment method of “educational institutions” for this programme. In this method Toyota invite students of various universities to make applications for this programme and it is coordinated by local career centers. The below activities are carried out to attract students for this programme (www.toyota.co.za, accessed April 2012).

Ø  Career exhibitions – The main purpose of career exhibitions is to facilitate for students of universities. In these career exhibitions facilities have been given for students to inquire about the graduate recruitment programme.

Ø  Toyota representative – A representative from Toyota has been appointed to discuss the programme with interested students.

Ø  Interested student can apply for this programme at the career exhibition itself.

Apart from the above Toyota recruit many employees from director level to conservancy labour. For these recruitments Toyota is using many recruitment methods for these recruitments. (Kelly, 2008: p39-40). These recruitment methods can be summarized as advertisements, unsolicited applications and resumes, internet recruiting, executive search firms, public employment agencies. The most common method among these are advertisements and internet recruiting (Kelly, 2008: p39-40). Toyota uses many advertisement methods to attract employees to their company. News papers, magazine and social media are very popular among them. Also internet recruiting is widely use as a recruitment method. Candidates can log to the Toyota web site and submit their resumes. This is a very effective and widely used method at Toyota. Apart from above Toyota received thousands of thousand unsolicited applications and resumes. These applications are carefully reviewed and maintained in a job bank for future requirements (www.toyotauk.com, accessed April 2012). Further executive search firms are playing major role for the recruitment of Toyota. Especially key positions are recruited through executive search firms. Because of the extensive competition of the job market, this method is very important for Toyota. Public employment agencies are also important for the recruitment process of Toyota. In this method candidate can register at a public employment agency and when a vacancy arise Toyota can recruit employees through these public employment agencies.            

Further, Toyota has an equal opportunity policy and it is described that at the recruitment stage no candidate will be unfairly treated according to their gender, age, marital status, disability, sexual orientation, race, religion or belief, ethnic or national origin, or nationality (www.toyotauk.com, accessed April 2012).

1.4 Theoretical background of selection

Selection can be defined as “the process of choosing individuals who have relevant qualifications to fill existing or projected job openings” (Snell, 2010: p254). Some scholars have comment that selection is the most important topic in human resources management. The argument behind this comment is that organizations success or failure depends on the talent on its employees. Thus, selecting right person is vital.

There are two main areas which need to analyze before start the selection process of an organization. Those are person-job-fit and person-organization fit (Snell, 2010: p255). Job analysis is done to identify the competencies of employee which need to perform a job. These competencies are; knowledge, skills, abilities and other factors that need to perform the job well. Selection methods are used to measure these competencies of employees. This is referred to a person-job fit (Snell, 2010: p255). On the other hand, organizations are very keen on whether applicants fit to their values and culture (Snell, 2010: p255). Many selection methods are used to check this suitability and often it is referred as person-organization fit. The whole selection process is depending on these requirements.      

Many scholars have defined selection process as an ongoing process. After proper analysis, the selection process can be identified as completion of application, initial interview in HR department, employment testing, background investigation, preliminary selection, supervisor/team interview, medical exam/drug test, and finally hiring decision (Snell, 2010: p256). For the purpose of completing this assignment the selection process is divided in to four (4) main areas and analyzed. These main areas of selection are sources of information about job candidates, employment test, the employment interview, and reaching a selection decision (Snell, 2010: p259). Many sources of information will be checked to prove the reliability and validity at stage of sources of information about job candidates. To prove this application forms, biographical information, background investigation, polygraph tests, honesty and integrity tests, graphology, medical examinations and drug testing will be used (Snell, 2010: p270).

The next step is employment tests. Employment test generally use to gauge a candidate’s competencies compare to others. These employment tests are generally classified into two main categories. Those are aptitude tests and achievement tests (Leopold, 2009: p185).  The aptitude test will measure a person’s capacity to learn or acquire skills (Snell, 2010: p272). On the other hand, achievement test will measure what a person knows (Snell, 2010: p272). The next step is the employment interview. The methods of interview can be identified as nondirective interview, the structured interview, the situational interview, the behavioral description interview, the personal interview, the computer and virtual interviews, video, and digitally recorded interview (Snell, 2010: p282). The final and most important step is reaching a selection decision. At this step managers can accept or reject applications. Also summary forms, reports, checklist, etc. will be used to take the final decision.

1.5  The Toyota way of selection

The selecting process of Toyota is comprehensive since it determines the future talent pool of Toyota (Burgess-Wilkerson, 2008: p100-102). Also Toyota has two major competitors in the world market and to compete with them in an effective manner, it is essential a good selection process. Further, the future of Toyota will be depended on its selection process. The process is started with the source of information about job candidates. At this stage source of information of the candidate will be checked. This process is called screening process. The most common tool at Toyota for source of information is background checks (Burgess-Wilkerson, 2008: p100-102). At this stage reference check is very important. Toyota checks all references regarding the pervious employers of candidates. At the next stage candidate test is conducted. For this purpose both aptitude and achievement test are used. Some jobs at Toyota are highly technical. Thus, these tests are very important at the selection stage. At the aptitude test person’s capacity to learn or acquire skills are tested. The Toyota Way describes continuous improvement. This continuous improvement is not only for the production but also for the continuous improvement of the human resources. Thus, company expects continuous learning and acquired skills of its employees. On the other hand, achievement test will measure what a person knows. Skills and knowledge are important to perform at Toyota. The next step is interviews. The interview process of Toyota is so comprehensive. It involves many steps. Also, interview method is totally depended on the nature of the job. Almost all interview methods, which include nondirective interviews, structured interviews, situational interviews, behavioural description interviews, personal interviews, computer and virtual interviews, are used as per the nature of job. Some candidates are gone through many interviews according to the nature to job. For an example some managers will go through structured interviews, situational interviews and behavioural description interviews before they arrive to a final decision. The final step is reaching the selecting decision. The Toyota human resources policies will not allow to select any candidate who does not match with the Toyota culture (Burgess-Wilkerson, 2008: p100-102). Thus, selecting decision is taken after many considerations. But once they reach to the selecting decision it communicated to the candidate very fast. By that method they build first impression about the company.  

Task 02 – Performance management

2.1 Why performance management is important?

The main purpose of performance management is to maintain and enhance the productivity of employees. It will finally pave the way for superior productivity. In the today’s turbulent world, superior productivity is essential to gain competitive advantage. Many of organizations have same kind of human resources to lead their business. But some organizations perform while others fail to perform up to standards. Further, some organizations make high profit while others making losses with same human resources. The main reason behind this superior performance of employees is effective performance management systems.

The performance management can be defined as “the process of creating a work environment in which people can perform to the best of their abilities” (Snell, 2010: p362). According to this definition there are two main areas of performance management. Those are creating a work environment which helps employees to perform and this work environment should help employees to perform to the best of their abilities.

Many scholars have argued about the elements of performance management. After reviewing of these arguments, the elements of performance management can be identified as performance measurement, target-setting, competency frameworks, 360⁰ appraisal, personal development plans, performance-related pay and techniques for dealing with ‘problem’ staff (Leopold, 2009: p221). These all areas can be summarized to the cycle of performance management (Leopold, 2009: p222). At the cycle of performance management, ‘planning’ is very important. At this stage objective setting is conducted. The organizational strategies should be included employee objectives. The second stage of performance management cycle is regular discussion of objectives. The set objectives should be discussed throughout the year. If necessary, they should be corrected. The final and most important stage of performance management cycle is assessment stage. At the assessment stage, performance appraisals take place. Further, it is a tool to identify employee strength and weakness. Also, by this assessment, training and development needs can be identified. Further, it will help to develop succession plans and personal development plans of organizations.

2.2 The Toyota way of performance management        

Toyota since a large employer, who has employed 317,716 employees, has effective performance management system. The Toyota way of performance management is unique to Toyota Motor Corporation (Mcphaul, 2005: p32).

The performance management process of Toyota is started with planning process. At this stage, the chairperson of Toyota gives his objective for the financial year. It is clearly indicated what he wants to achieve during the year. Also these objectives may include long term plans of the organization. Further, these objectives are selected from the corporate strategies of the company. These objectives are followed by the next level of hierarchy. Accordingly top management to operational level these objectives are followed. These all objectives are properly documented. Hence, at the beginning of the year all employees are well aware about their objectives for the next financial year.

The second stage is regular discussions of objectives. Toyota has effective methods for regular discussions. Those include guidance programmes, critical incident books, midyear review, etc (Thun, 2010: p18). At the guidance programme employee can discuss their shortcoming and line-up again to achieve company objectives. Also critical incident records are maintained by managers to analysis the performance of their respective employees. Further, midyear review is a good tool to analyze whether employee are in correct tract.

Then assessment stage is critical. At Toyota, all compensations, promotions, career development plans, succession plans, and training and development activities are depended on the performance assessment of respective employees (Mcphaul, 2005: p32). Normally end of the financial year the performance assessment is conducted but it is an ongoing process. During the year employee performance are measured by using deferent methods. For these measurements both qualitative and quantitative methods are used. Finally, at the end of the year these all results are summarized and compared with the year-end results. The rating obtain by respective employees are very important. Firstly, their salary increments, bonuses, and any other compensation depend on the rating, which they obtained throughout the performance management process. Also, their promotions are depended on assessment rating. By that method, company has assured to minimize the mistaken promotions. The costs of wrong promotions are very high. Thus, this method has help Toyota to select best talent and maintain their competitiveness. Further, succession plan is done according to the result of end year assessments. By this method, best talented employees will be identified to develop as future leaders. Also, training and development is a vital area of Toyota. The investment for training and development is huge and management is more concerned about the productivity improvement through training and development. At the assessment stage, all training and development needs are identified. These identified training needs are amalgamated to the next year training plan of the organization. Thus, all training needs are address by a very systematic way. Toyota use many ways as assessment tools. Those tools are depended on the level of management. A most commonly used method is 360⁰ evaluation. By this method stakeholders will comment on the performance of employees.

The Toyota’s performance management system is very critical to the organization. Further, it has helped organization to achieve superior profit in a highly competitive environment.                           

Conclusion

Recruitment and selection and performance management are most crucial aspects of the field human resources management today. Hence, companies pay an immense attention for these aspects. The company’s ultimate goal is to achieve the superior profit or performance. To achieve these superior profit or performance, many organizations effectively use of their human resources. To gain this competitive advantage through human resources, recruitment and selection policy of the organization and performance management policy are crucial. Thus, these two areas are vital for any organization.   

Toyota is one such company that has given the due consideration for these human resources areas. The result is that, Toyota is able to reach its peak of success in today’s business arena. Among many success factors, selecting appropriate recruitment and selection processes and also utilizing effective performance management systems hold upmost positions. Further, Toyota indicated its success consecutively beside major competitors like General Motors and Volkswagen. Toyota achieved this competitive advantage through its best human resources practices like recruitment and selection and performance management.      

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