Hire Competence? Or Cultivate It?

Fujio Cho Vice Chairmen of the Board of Councillors, Nippon Keidanren President, Toyota Motor Corporation

Different approaches to securing human resources are a defining distinction between Japanese and U.S. management traditions. I discovered that distinction when I became president of Toyota's vehicle production subsidiary in Kentucky in the 1980s.

Our Japanese-style emphasis on cultivating skills and attitudes internally helped us attain high product quality quickly. On the other hand, we also benefited from the U.S.-style approach of recruiting skilled professionals in midcareer. That enabled us to secure professional capabilities that we needed immediately, for example, in finance, purchasing and human resources management.

Here is an incident that occurred during my tenure in Kentucky that illustrates how our multicultural approach can work constructively:

After our plant had been operating a while, defects suddenly occurred in 80 vehicles on account of an error in using adhesives. I headed straight to the process where the error had taken place as soon as I heard the news. I could see right away how problems could happen easily. The places for storing different adhesive materials lacked clear indications. And some of the adhesives were of similar appearance.

The American manager responsible for the process came to deliver his report about the problem. He looked like he feared that his career at Toyota was about to come to a premature end. I asked him why the problem had occurred and what steps he was taking to prevent its recurrence. The manager provided a convincing explanation of the fundamental cause of the problem, and he described well-conceived measures for preventing the problem from occurring again.

My response to the manager was swift and brief. I told him that his proposed countermeasures sounded excellent, and I encouraged him to get on with the work. Having been half-certain that he would be fired, the manager was startled at my response.

I learned later that the manager had received some coaching from a Japanese general manager at the plant. The general manager had told the despondent manager that I would be mainly interested in (1) fundamental cause and (2) preventive countermeasures. Still believing that I would be more interested in seeing heads roll, the manager prepared and delivered his report as advised. And he was happily relieved to discover that the general manager had been right.

People learn and grow through the kind of experience that our American manager had with the adhesives. Simply firing people after mistakes would be a terrible waste of valuable experience and of equally valuable learning opportunities.

Successful globalization for any company depends on transferring the company's core values to each nation where it operates. That is what we at Toyota have done in our universal emphasis on cultivating human resources internally. Globalization, however, also requires flexibility. As I have noted, we have been prepared to recruit midcareer professionals to help get operations up and running quickly.

The emphasis at Toyota and other Japanese companies on fostering human potential is a theme that transcends individual companies and industries. This is an important and characteristically Japanese contribution that we can make to the world. Let us make the most of that contribution.