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Performance & Reward Management of Toyota

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Saad Albalawi

on 25 September 2013

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Transcript of Performance & Reward Management of Toyota

Performance & Reward Management of Toyota
Performance & Reward Management of Toyota
Ashwina s2692022
Ibrahim s2635971
Simran s2862741
Apar s2846842

Structure of the Presentation
Toyota’s Objectives
Toyota in India
Toyota Management System – An Overview
Toyota’s Strengths and Weaknesses
Toyota Production System
Measurement Using PM Techniques
Toyota’s Assessment Methodologies
Toyota’s Key Performance Indicators (KPIs) functions
Toyota’s Objectives
To develop and provide innovative, safe and outstanding high quality products and services (TMC, 2006)

To achieve long-term stable growth (Hiroshu, 2003).

To motivate its employees

Toyota in India
Mission: To develop automotive industry, create employment opportunities and “Putting Customer First”

Collaboration of Kirloskar Limited

Competitors: Maruthi Suzuki, Hyundai and Mahindra
Range of models

Toyota Management System – An Overview
Vision: To satisfy Organisational, Managerial and Staff goals (Williams, 2002)

Goals: to improve the productivity of employees and the quality of products

Focuses on production and car supplies

Integrating effectiveness and cooperation(Werbel & Gilliland, 1999; Kristof, 1996)

Toyota’s Strengths and Weaknesses
Consistency of practice
Benchmark other companies
Employee reward management
Models in different countries cannot be reached
Individual incentive policy may effect the team efforts negatively
Permanent staff may lead to less knowledge sharing

Framework for TOYOTA’s Performance Excellence
Toyota Sales Figures (Globally)
Source: Road Reality,http://www.roadreality.com,viewed on 4thSep 2013.
Customer Satisfaction Graph (Globally)
Source: Road Reality,http://www.roadreality.com,viewed on 4thSep 2013.
Toyota Production System
Key Values

Toyota PMS Video
Toyota’s Productivity (1935 – 2010)
Source: Toyota group means productivity, www.leanzgroup.co.nz,viewed on 2 Sep 2013.

Toyota’s Assessment Methodologies

Three basic types of assessment are:
External assessment
Internal assessment

Assessment dimension and factors
Toyota Key Performance Indicators (KPIs) functions
To measure success on previously established goals

Toyota KPIs functions:
Developing and guiding function
Motivation function

KPIs in Sales, Service and Business Departments
Toyota is a multinational company having a wide range of models in automobile industry with high customer satisfaction globally.

The productivity of the company can be increased by 10-15% by using the Performance and reward management Techniques such as KPI and Performance management systems

KPIs in Service Department
Productive Staff:Non-Productive Staff
Technical efficiency TE(%)
Technical efficiency = Hours Sold/Hours Work (%)
Labor Utilization LU (%)
Labor Utilization = Hours Worked/Hours Attended (x100)
Overall Productivity OP (%)
Overall productivity = Hours Sold/Hours Worked Productively (x100)

KPIs in Business Department

Absorption = Aftersales direct profit/Total Overheads (x100)

Return on Sales (%)

Return on Sales = Net profit after interest/Company Turnover (x100)

KPIs in Sales department
Vehicle Gross Profit (Invoice Price of Vehicle – Cost price of Vehicle)

Gross profit (%) = (Vehicle Sales price–Vehicle cost price)/(Vehicle Sales Price)x100

Annualized sales per sales person (Annualized unit sales/number of Sales people)

Stock turn (Annualized unit sales / Units in stock)

The Productivity can be increased by Feedback Intervention Theory(Kluger & DeNisi, 1996) to increase the productivity which leads to performance improvement.

Task motivation.
By implementing the Meta-task aspects within the organisation the productivity can be increased to more than 10-15% according to the previous analysis.

Recommendation (Continued)
Using the Performance and Reward Management Techniques the productivity can be consistently increased.

Results-based individual incentives and Team-based Incentives can increase the productivity using the PM techniques.

By implementing Reward based pay system in the organisation to increase the productivity of the company.

Conclusion (Continued)
The productivity can be increased by using Team building and Reward management system in Toyota Organisation using Reward management policies such as Reward based pay incentives.

The production of Toyota company can be increased with employee satisfaction and customer satisfaction using Performance Management techniques.

Reference List
Bowen, D. E., & Ostroff, C. (2004). Understanding HRM-Firm Performance Linkages: The role of the “Strength” of the HRM system. Academy of Management Review, 29 (2), 203-221.
Boxall, P. ,& Purcell, J. (2003). Strategy and Human Resource Management. Hampshire: Palgrave MacMillan.
Donovan, M (n.d.) Performance measurement: connecting strategy, operations and action, viewed on Sep 11, 2013, retrieved from http://www.reliableplant.com/Read/140/performance-measurement
Hackman, J.R. and Oldham, G.R. (1976). Motivation through the design of work: test of a theory, Organizational Behaviour and Human Performance, 16(2), 250-279.
Kaplan, R. S., & Norton, D. P. (1992) The balanced scorecard – measures that drive performance. Harvard Business Review, 71-79
Kauhanen A. and Piekkola H. (2006) What makes performance-related pay schemes work? Finnish evidence, Journal of Management Governance, 10: 149-177.

Reference List (Continued)
Kerr, S. (1975/1995). On the folly of rewarding A, while hoping for B. Academy of Management Executive, 9(1), 7-14.
Latham, G. P., Almost, J., Mann, S., & Moore, C. (2005). New developments in performance management. Organizational Dynamics, 34 (1), 77-87.
Mumford, M.D. and Peterson, N.G. (1999), The O*NET content model: structural considerations in describing jobs, An Occupational Information Systems for the 21st Century: The Development of O*NET, American Psychological Association, Washington, DC, pp. 21-30.
Murphy, K. R., & Cleveland, J. N. (1995). Understanding performance appraisal: Social, organizational, and goal-based perspectives. Thousand Oaks, Calif.: Sage.
North American Environmental Report (2012). Data Center, viewed on Sept 19, 2013, retrieved from http://www.toyota.com/about/environmentreport2012/data_center.html

Reference List (Continued)
Organisational Chart of HR Company, Study Mode, Viewed on4thSeptember-2013. http://www.studymode.com/subjects/organizational-chart-of-hr-department-in-toyota-company-page3.html
Pesalj, B. (2006). Enterprise performance measuring, Traditional and Nowadays concepts, Faculty of Economy, Belgrade, 15-16.
Smart KPIs.com (n.d.). Toyota Motor Corporation and TPS – champions of performance improvement. Viewed on Sep 20, 2013, retrieved from http://www.smartkpis.com/blog/2010/10/25/toyota-motor-corporation-and-tps-champions-of-performance-improvement/
T&WCorporate File, Toyota productivity list, viewed on 10th September 2013.http//businessimprovement.org.nz/articles/2011/08/110-toyota-production-system-means-productivity-boost
Toyota’s CSR initiatives (n.d). viewed on Sep 15, 2013, retrieved from http://www.toyota-global.com/sustainability/report/sr/pdf/sr12_p04_p05.pdf
Toyota leads in Productivity, The Auto Channel, viewed on 6th September2013, http://www.theautochannel.com/news/2007/06/01/050165.html

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