Toyota Motor Company, located at 1, Toyota-cho, Toyota City, Aichi 471-8571, Japan, was incorporated in 1937 as Toyota Motor Co., Ltd. It is among the forerunners in passenger car manufacturing, and is today, one of the world’s largest manufacturers of automobiles in terms of both, units sold and net sales. Since the U.S happens to be one of its biggest markets, and the company has been able to almost double its sales in comparison to Honda Motors, it competes with other U.S car manufacturers; General Motors (GM) and Ford Motors for the premier #1 position (Toyoland, 2010). However, Toyota finds itself pushed on the back foot because of its employee retention issues. Dr. Sullivan (2010), in A Think Piece: How HR Caused Toyota to Crash reveals certain important issues that have affected Toyota today, most notably those of their HR policies. High turnover rate and insensitiveness to training new recruits have caused irreplaceable difficulties to the company. Their policy to plan/do/check/act has affected customer service to such an extent that, the organization has faltered in paying attention to employee training and operational inefficiencies, which can compromise vehicle safety. This can upset the company’s brand equity and cause huge legal entanglements and money. HRs need to focus on monitoring and managing performance to ensure that the company is back on track. They need to do this by creating a risk assessment team that will assess, monitor, and reward/promote employees to instigate quality enhancement.
The reputation of Research and Development (R&D) depends on its ability to recruit and retain high quality staff says, Saleh Rasam. It is because of this that Research and Development Centers (R&DC) seek qualified personnel with the expertise and the commitment to sustain, and improve the performance of organisations in an increasingly competitive environment. This is something that Toyota lacks. Good human resource management policies ensure that such areas are not ignored, and they devise programs that focus on positive employee retention practices within the organisations they work in (Ramlall, 2004). Since much importance is levied in employee retention, it goes without saying that organisations invests huge sum of money in retention efforts within organisations. It is therefore rational to identify, analyse and critique the many motivation theories underlying employee retention in organisations, concludes, Ramlall (2004). Employees are known to work tirelessly and in an efficient manner when they are given space to work in a positive work environment. Giving employees a stake in the company can instigate a positive work regimen. Such measures will not only help retain exemplary employees, but it will at a catalyst to motivate them to perform beyond their skill set. Key employee retention is critical in assessing and planning an organization’s long term benefits and success. HR managers will readily agree that retaining quality employees will ensure customer satisfaction, higher sales, and happy work environment. There are a number of methods HRs could incorporate to enhance employee retention within the organization. Some of these include, job design and enrichment, career planning, equal opportunities, training and development, developing employee relationships, and compensation packages, to name a few.
Job Design and Enrichment
In order to accentuate production through performance, organizations need to develop loyalty among its managers and workers. Only those managers with exceptional influencing capabilities can change the way an organisation runs. Organizational bosses must ensure that they are able to put in place visible and active policies of diversity and inclusion into their organisation’s operations and culture. It is important that all policy decisions taken by the management covers all personnel in the organization, and every person in the organisation must contribute to the welfare of the organisation. Equality at the workplace is important, just as much as flexibility in working time. A healthy work environment goes a long way in instigating quality work. The management must ensure that there is an increased and effective mode of cooperation between the men and women workers. One way of creating such an environment is by building different leadership styles and flexible work/career patterns. Both men and women can use a variety of flexible work options to support family and personal needs, allowing them to achieve the goal of work/life balance, contributing to greater productivity.
Employee turnover can be attributed to lack of growth opportunities. Unless employees perform diligently and effectively, organizations have limited scope for growth and expansion, and this will ultimately lead to stagnation and disintegration. According to Jiang and Klein (2002), “organisations that are unable to match their employees’ career desires most often relate to their organisational turnover, and emphasize on the need for them to develop their career plans to match their wants.” In another research that focussed on career planning, Miller and Wheeler (1992) found that organisations could improve the retention rate of women managers by adopting job enrichment programs that enhanced their career advancement opportunities. There is a popular belief that women in general, shy away from taking risks by moving from one job to another, and if they were offered the opportunity to grow in their organisation, they would only be happy to continue there. This just goes to show that employees would enjoy their work if they are offered opportunities wherein they could grow with the organization.
Offering equal opportunities is an excellent way to approach labour satisfaction. An organisation must bring legislation to curb discrimination against an individual or group in the name of caste, religion, color, economic background and creed. By encouraging such a culture, employees will be more than happy to work together with a single goal in mind. It is this environment that enhances healthy competition among employees, and brings unity. When employees work in an environment that encourages support and creativity, they tend to remain sincere to the organisation. Organizational heads need to understand that, any individual, whether old or young, black or white, male or female, have special talents in them, and if these qualities are harnessed, it will only benefit their organization. Therefore, employees must be encouraged and supported at all cost. The financial benefits of retaining employees cannot be disregarded. Every time an employee leaves an organization, it takes a lot of time and money to find a person who matches that person’s experience level. Once identified and selected, he or she will have to be put through the entire training process, which takes time. The time spent on sourcing, recruiting, and training a person to match the expertise of the person who has left the organization, is money lost by that organization on personnel development. Opportunities to climb the corporate ladder and lead by example are mutually beneficial, and organizations must strive to keep their employees happy. This will cement retention ideology.
Training and Development
For employees to perform at the highest level, training on a regular basis is necessary. Training and development of personnel is a continuous process and organisations that ignore such strategies were most likely to succumb, like in the case of Toyota. In a highly charged-up competitive world, success comes with innovation and technology. As organisations seek new methods and machinery to enhance production and quality, their employees must also be given enough time to acclimatize with the change. This is where training becomes important. Such training programs will remove the fear that some employees may have in performing in the same way, they did earlier. Also, by putting employees on different machines and tools, organizations can witness continuous growth, even if one or two employees were on leave. Training employees will not only lead to a healthy work environment, but it will also enhance productivity and lead to all-round development of employees and organisation.
Many organizations seek a mechanized relationship with their employees and shy away from creating long-lasting bonds. This is true in many businesses today, as outsourcing work to minimize overheads and cut labor is a common norm. This has curtailed employee relationships and continues to remain neglected in many other industries that still continue to employ workers to work in their shop floor. Employee relationships can be built only when there is a meaningful supervisory role in employee turnover decisions. According to Morrow et al (2005), the LMX theory suggests that the relationship between a supervisor and an employee develops as a result of positive work-related exchanges between them. The relationship can be characterised as of good quality (like reflecting trust, respect and loyalty) or poor in quality (like reflecting mistrust, low respect and a lack of loyalty). Employees are more likely to enjoy working for a company where managers attend to their needs.
Benefits and Compensation
Much has been written by researchers and experts on this subject, and this paper also covered a wide area of research on the effects and benefits of compensation in motivating and retaining employees in the organization. On employee benefits, Cascio and Bemardin (1981) stated that compensation was intended to maintain and improve the quality of life of employees and provide a level of protection and financial security. Package benefits have been also found to be related to employee stability.
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Jiang, J, and Klein, G, (2002), A Discrepancy Model of Information System Personnel Turnover, Journal of Management Information Systems, Journal, Volume 19 Issue 2, Number 2/Fall 2002, Pages 249-272
Miller, J, G, and Wheeler, K, G, (1992), Unravelling the mysteries of gender differences in intention to leave the organisation, Journal of Organisational Behaviour, 13(5), p.465- 478
Morrow, P. C, Suzuki, Y., Crum, M. R., Ruben, R, and Pautsch, G, (2005), The role of leader-member exchange in high turnover work environments, Journal of Managerial Psychology, 20(8), p.681- 695
Ramlall, S, (2004), A Review of Employee Motivation Theories and their Implications for Employee Retention within Organizations, Journal of American Academy of Business, Cambridge, 5(1/2): 52
Sullivan Dr. J, D, (2010, February 15). A Think Piece: How HR Caused Toyota to Crash, Ere.net, Retrieved April 10, 2014, from http://www.ere.net/2010/02/15/a-think-piece- how-hr-caused-toyota-to-crash/ Toyoland, (2010), Toyota History: Corporate and Automotive, retrieved April 21, 2014, from http://www.toyoland.com/history.html