Ask Art: How Well Do Companies Follow Toyota’s ‘Respect for People’ Principle?

Not well, I’m afraid. But of course, no company would ever admit this, swearing up and down that their people are a top priority. How could they say otherwise? 

Unfortunately, few companies acknowledge that the traditional approach to running a business — a functional organizational structure and “batch” approach to production — puts the average worker at a tremendous disadvantage by completely ignoring their input. So, few workers in traditional work settings have any say in how they do their work, and when they try to speak up, nobody listens to them.

The standard command-and-control approach to management only adds to these structural problems, creating a “do as I say” culture where orders can come down from on high, but problems or issues can’t go up. These disrespectful practices are exacerbated by the “make-the-month” pressure from short-sighted bosses who don’t care about how you make the numbers. So, you could have ten people in a functional department making the same product with each using different processes. The only thing that counts is whether you make the number. In addition, command-and-control managers rarely give employees the tools and support needed to do their jobs.

I saw this flawed thinking as a group executive for The Danaher Corporation. We had made significant progress with lean in a couple of my group companies, creating the “President’s Kaizen” to disseminate it to the other 11 Danaher companies. Every six weeks, we would take all 13 division presidents to a facility to do a three-day kaizen event on the shop floor. 

The employees at each facility said they were impressed that Danaher would send all their presidents to help them make improvements. But they would also note that “we have been working here for 10 to 20 years and nothing much has changed, so what do you think you can do in just three days?” Their suspicions eased up when they saw that we were moving equipment by the late morning of the first day and, by the end of the third day, had achieved meaningful results such as going from 14 people to three to get the same output. The reaction of the workforce at the end of the kaizen event was invariably something like: “Hey, you’re not really going away and leaving us with ‘them,’ are you?

But what the President’s Kaizen did differently was only to listen to the people doing the work, implement their ideas, and solve their problems right away.

The “them” was their existing management team, the ones they had been asking for changes from while pointing out problems to for years without any response. But what the President’s Kaizen did differently was only to listen to the people doing the work, implement their ideas, and solve their problems right away. Because we only had three days, we had to act fast. The key was giving the employees the tools and support they needed to do their jobs. Then we created flow, established standardized work, implemented visual controls, and placed the proper tools where the worker used them. 

Perhaps the all-time best example of showing genuine respect for people is the New United Motor Manufacturing, Inc. (NUMMI) joint venture between General Motors and Toyota in Fremont, California. GM’s Fremont plant was the worst-performing plant in its system, with a 20% absentee rate and many labor disputes. GM had closed the plant because the prevailing culture of “us against them” was pervasive. Still, when they partnered with Toyota to reopen the plant, they agreed that Toyota could have and run the plant, but they had to hire back all the previous GM employees. While this scared Toyota, it took on the challenge. 

When Toyota launched this venture, the company took a lot of workers to Japan to learn the “Toyota Way” and then worked closely with the team members and the union leadership to set up the plant. They established flow and standardized work and gave the workers everything they needed to do their jobs well. As a result, in just over a year, the Fremont plant, now operating as NUMMI, went from GM’s worst plant to its best plant and stayed there.

Lean Management Requires ‘Respect for People’

When I started my lean journey in January of 1982 during my first general manager job at General Electric, we had never heard of Toyota’s respect-for-people principle. We only knew the term “Just in Time.” Later, when I became a group executive at Danaher in 1986, we learned about what was then called the Toyota Production System. Even the term “lean” didn’t become common until the publication of Womack and Jones’ 1996 book Lean Thinking. “Respect for people” didn’t become popular until at least ten years after that, so you could never say we tried to follow Toyota’s approach in that area.

And yet the other principles of TPS/lean made “respect for people” inevitable. We already knew that people were our most important asset, the only asset that appreciated over time. But our former functional batch structure made it challenging to make this principle a daily operational set of practices. In the old system, people were separated by function, made only a component of the final product, produced to a forecast, and never saw or felt the customer’s actual demand. We only changed when we moved to flow and pull, which forced a new way of thinking and doing everything. All our people had to change and learn how to function in the new “sell one, make one” environment.

The physical changes we made required us to radically shift the engagement and participation of individual workers. We had to move almost all our equipment to create flow lines that could make the product complete from raw material to in the box. And so, associates had to learn to run eight to 10 machines in a cell instead of the old “one man, one machine.” They needed to reduce setup times from two to three hours (or more) to less than 10 minutes. This required extensive input from setup operators who understood where the biggest wastes were.

Management’s role switched from giving orders to supporting those who did the work — giving them the tools necessary to do their jobs. 

We needed every associate to learn how to see waste and contribute ideas on removing it, which required every worker to be on multiple weeklong kaizen teams where the real learning took place. The focus was on the work, asking: How do you remove the waste and make every job safer and easier? We found that the best ideas always came from the associates that did the value-adding work. Management’s role switched from giving orders to supporting those who did the work — giving them the tools necessary to do their jobs.

These changes provided more than permission for individual workers to suggest improvements: they connected their work to customer demand and provided a baseline for improvement that didn’t exist before. A simple thing like creating standardized work changed the whole concept of how work should be done. 

Teaching people about working to takt time brought the customer’s demands directly to the shop floor where everyone could feel it. I suppose you could argue that work to takt time sounds like “make the number” that we mentioned earlier. It is not. The traditional approach builds to a forecast, so despite the “make the number” pressure, everyone knows that many of the products made today won’t be sold for six months or even longer. However, with lean’s “sell one make one” approach, everyone knows that there is an open order for every product they make. Production is driven by the pull of the customer and therefore is very critical. Everyone can feel the customer pressure.

So, while I had never heard of Toyota’s respect for people during most of my career, we were implementing this fundamental principle just by converting to lean. I always believed that management has a tremendous responsibility to its people. Your job is to support them and make sure they have the tools to be successful. As any lean practitioner knows, you never lay off anyone because of kaizen — which is just common sense. 

I always felt that, in addition, management had three primary obligations to its people:

1. Secure their jobs.
2. Improve their skills and value.
3. Give them a chance to share the gains.

Your workforce will create tremendous value if you give them the tools and support, so they should share in the gains.

The best job protection for any individual is to work for a healthy growing company — especially one that is gaining market share. This security is enhanced when that same company is cross-training and promoting people, which increases their value (even if you sometimes have to push people to learn a new skill). Your workforce will create tremendous value if you give them the tools and support, so they should share in the gains. At Wiremold, every employee participated in a short-term profit-sharing program. For the long term, we matched 401k contributions with company stock. More than 90% of our people joined this program, which paid off tremendously for them, as we increased our enterprise value by just under 2,500% over 10 years. The best part of that was that when we sold the company, the largest shareholder was the 401k program, i.e., our employees. They created the gains and shared the reward.