Case Study Toyota crisis
Case Study Toyota crisis
Organizational Crisis negatively effect organization’s name and image, as well as adversely impact employee by instilling doubt, insecurity and distrust (Tahmicioglu, 2010). Employees are directly effected by the crisis, as they are the primary stakeholders (Obston, 2014) and brand ambassadors of the company. Thus, to ensure wellbeing of employees, especially in time of catastrophe, they should be well informed and fostered under the guidance of company’s leaders.
Leaders at Toyota should take an immediate action; start with early internal crisis communication, take accountability and show their commitment to resolving the crisis. Male (2004) suggests, being proactive and transparent lessen doubt and distress among employees. It will be beneficial if a live talk is set up with the employees. Live podcast will personalize the message, and will allow employees to directly hear compassion and empathy in the leader’s voice. Establishing an active feedback loop is also very effective (Miller, 2014), an online forum on company’s intranet will be a great way to facilitate two-way dialogues between employees and executives. The forum will be pivotal in giving direct feedback to employees’ questions and concerns, and for consistently providing updated information. Along with starting communication, hotlines dedicated for crisis should be provided as part of employee assistance program; employees should be encouraged to actively use the services to get professional help they need for dealing with crisis.
Lack of immediate dialogue leads to speculation (Miller, 2014), and when the magnitude of the crisis is as big as Toyota’s recall, consistent media scrutiny and amplification of negative news can further fuel anxiety and uncertainty among employees (Cole, 2011). Therefore, its imperative leaders eradicate uncertainty by giving timely crisis communication that precedes external news and provide continuing support to employees.
An early two-way dialogue is a good start to lessen the chaos among distressed employees. However, in addition to continuing practice of honest internal communication, for the long run, leaders will need to establish processes specific to employees’ welfare to restore lost trust. Organizational strategy needs to improve to rectify behaviors that effected employees’ welfare in past.
Toyota’s work philosophy which Liker (2004) described as “The Toyota way,” was known for continuous improvement and people development; however, aggressive focus on rapid growth (Cole, 2011) resulted in detrimental practices, such as, reward system based on cost control versus quality control, poor training, declining working conditions and work overload (Sullivan, 2010; McNeill, 2013; Cole, 2011). These practices were not only damaging to employees trust, but also clearly violated psychological contract (Rousseau, 1995) of Toyota employees.
To rebuild eroded trust caused by the violation of contract, leaders need to validate employees wellbeing is not compromised again. Gillespie and Dietz (2012) recommend implementing a strategy that will safeguard against future untrustworthy actions. This can be done by articulating and enacting a system instilled with high ethical standard, clearly communicated processes and better working conditions. Providing flexible working hours, manageable workload and regular training programs will prove leaders mean well; consistently incorporating employees voice will assure their role is imperative in recovery of company image. Lastly, proactively engaging in regular evaluation of processes will result in improved performance and ultimately recapturing the reputation.
1. Cole, R. E. (2011). What Really Happened to Toyota. MIT Sloan Management Review – The New Business of Innovation. 2. Gillespie, N., & Dietz, G. (2012). The recovery of trust: Case studies of organisational failures and trust repair. Institute of Business Ethics: London. 3. John, S. (2010). A think Piece: How HR caused Toyota to Crash. Retrieved from http://www.ere.net 4. Liker, J. (2004). The Toyota way 14 Management Principles from the World’s Greatest Manufacturer. McGraw-Hill 5. Male, B. (2010). How to handle a product recall. Retrieved from http://www.businessinsider.com 6. McNeill, D. (2013). Cover-up: Toyota and Quality Control. The Asia Pacific Journal, Vol 11, Issue 36, No. 1, 7.
Miller, J. (2014). 4 Tips to help leaders communicate during a crisis. Retrieve from http://smartblogs.com 8. Obston, A. (2014). 5 ways to communicate with employees during a crisis. Retrieved from http://www.ragan.com 9. Tahmicioglu, E. (2010). Surviving your company’s mistake. Retrieved from http://www.nbcnews.com 10. Rousseau, D. (1995). The psychological contract: Violations and Modifications. The Organizational Behavior Reader. 8th ed.