The Toyota Way Field Book Chapter 10 – Develop Leaders Who Live Your System from Top to Bottom I. Develop Leaders Who Live Your System from Top to Bottom -The difference between success and failure starts with leadership. This starts at the top, but ultimately the process is carried by those in the middle supporting the value-adding employees - Often people who assume these positions are looking at them as a “step up the ladder”, temporary or rite of passage on the way to more important or lucrative opportunities. - Many companies today view the front-line leader (middle management or supervisor) as “traffic cop” or “babysitter” -Toyota views them as crucial elements and they must live up to a much higher expectation than in most companies. -This chapter focus is on the neglected middle level “frozen middle” -The buck stops at this level, where leadership from the top is translated into action. II. Importance of Leadership Within Toyota -Toyota has a relatively flat org structure -The Toyota philosophy is to disperse responsibility to the lowest level possible. -Often companies focus on developing leadership “duties” or “responsibilities” rather than expectations. This is similar to attempts to implement lean tools rather than lean philosophies. -Team and group leaders have three basic responsibilities: 1. Support for operations 2. Promotion of the system 3. Leading change - A Leader’s effectiveness is based on four key performance results: 1. Safety, including ergonomics, reduction of injuries, and improving work-place design. 2. Quality, including training, process improvement and problem solving. 3. Productivity, which encompasses consistently satisfying the customer demand and managing resources. 4. Cost, which means satisfying the three other criteria while controlling and reducing total cost. - Need to focus on desired outcome, not daily tasks of leaders. Signs of effective leadership include: high morale and consistent achievement of objectives within the group. III. Toyota Georgetown Production Leadership Structure (Georgetown facility had 7000 total employees at one time, the largest facility in North America). - - Toyota uses an “inverted pyramid” model for leadership, where the leaders of the organization are pictured at the bottom to support the majority of the organization (versus the traditional top/down chart) Production Employees are assigned to groups of 20-30. Group Leader is responsible for one of these groups. Typically has the greatest number of direct reports. Group Leader is considered the first level of management. Team Leader – within the group are smaller teams, generally 5-7 people. Each of these teams have a Team Leader. The Team Leader reports to the Group Leader. Team & Group Leaders have direct responsibility for all production-related activities in the plant. - - - Assistant Managers – responsible for 4-6 Group Leaders. They have direct responsibility for production activities. Spends much of their time on the floor. Large issues: major failures or shortage to customer. General Manager – has responsibility for “functional area” (all vehicle production, engine plant, staff functions, etc). The number of Assistant Managers reporting to them varies according to the function. Not involved in daily activities, but encouraged to prowl the floor looking for opportunities to teach and coach. Vice presidents and one president. IV. Toyota Georgetown Staff Leadership Structure - Office and engineering position structure is similar to production structure, except there are usually no group or team leaders. - Assistant Staff and Associated Staff have responsibility for non-technical jobs. Specialist is a title used for more technical jobs including: production engineering, facilities maintenance, safety, environmental, accounting, and human resources. - Small teams of Assistant Staff and Specialists report to an Assistant Manager and several Assistant Managers report to a Departmental Manager. - Some departments with a lot of technical support may have a separate manager for staff employees. V. Requirements for Leaders 1. Willingness and Desire to Lead A person need not possess all of the following characteristics when they first get the job. They only need to have the desire and willingness to learn and develop the other skills. The leader must want to motivate and inspire people to achieve great things. 2. Job Knowledge Leaders should be knowledgeable about the materials, machines, tools and production steps in their area. Must know the process and correct way each operation should be performed. This requirement is often missing from leaders outside Toyota, with the implied assumption that general management skills can overcome a lack of in-depth job knowledge. 3. Job Responsibilities A leader must know his/her role. Leaders must understand the policies and procedures and be able to communicate them to their team members and ensure that they are followed. 4. Continuous Improvement Ability A leader must constantly analyze the work looking for ways to improve the process. The major part of a leader’s role is to encourage his/her people to develop continuous improvement in thinking and action. It is more important to have many small daily improvements than to have few major improvements. 5. Leadership Ability A leader must be able to “translate” the overall company objectives into specific activities that their team must perform in order to be successful. They develop the game plan and assist the team in how to carry it out. They must provide support, training and coaching to ensure success. 6. Teaching Ability Primary duty is to teach others. If skill and knowledge is not passed on to others, the organization will not grow and prosper. - Some are born leaders, others can learn the skills. The only element that cannot be taught is the desire to be a leader. VI. Group Leader Responsibilities on a Typical Workday - (For production Group Leaders) workday broken down to three phases: 1st Phase – at least 30 minutes prior to the start of the shift. Ensure readiness of all resources: people, machines and material. 2nd Phase – is the actual activities and responsibilities to be performed during production. 3rd Phase – end of production and after-shift activities Table 10-1 shows examples of possible activities for all groups/phases. VII. Creating a production Leadership Structure - - - - Staff levels traditionally established to meet production needs. Within that plan there is “excess” to cover for planned & unplanned absences and other issues which create the seven wastes. When a person is absent there is a reduction of available labor time and production suffers When the operation is fully staffed the available labor exceeds the actual requirement and the operation is able to “catch up” from the previous shortage. Because the operations are not standardized its usually possible to move people around and do without certain operations when an absence occurs. Overtime hours worked are often used to determine whether its necessary to add people. This is a false assumption because in a non-standard operation each person is not fully utilized (each person is likely to have 10-25% available time). Lack of standardization makes it impossible to capture this extra time. Toyota-style leadership can only be implemented AFTER working on the operation – stabilizing, creating flow, standardization, etc. After waste is removed (using 20% extra available time model) for every 4-5 people, there could be one “extra”. Through the power of waste elimination and standardized work, you can consolidate the waste and create opportunity. VIII. Selecting Leaders - In Japan, Toyota employees have a slow gestation period when moving from Team Member to Team Leader to Group Leader – usually 10-15 years in each job category. - In US typically college graduates placed in leadership position with little training and mentoring. Fairly quick turnover-time (average=2 years). Each new leader must “learn the ropes” and develop methods for handling day-to-day issues. - Promoting from within can be challenging to find capable, willing candidates because they’ve seen the challenges of the position. - Group and Team Leader positions must be valued and viewed as more than stepping-stone positions. - Extensive testing and interviewing may be used to identify candidates with the specific skills and behaviors needed. A lot of discussion is focused on past experience as past behavior will be good indicator of future performance and ability. IX. Developing Leaders - Development of leaders is not significantly different from training operators. The first step is to define the job and necessary skills. Standardized work for leaders can be developed based on core competencies. - Each individual skill, activity or duty must be identified and placed on a matrix. The leader’s ability/capability in each area is assessed and gaps are identified. - Training plan is then created for leader utilizing internal, external and mentoring resources. - Leaders should be working continuously to develop his/her people, always preparing for the eventual need for additional leaders. - If you Fail to Plan, you Plan to Fail! X. Succession Plan - Leadership development process should be based on succession plan. Every leader should develop subordinates so there is always a smooth transition when leadership changes are made. - The primary reason for developing subordinates is to strengthen the system and have each person capable of their highest potential. - For overall strength of the company it is wise to have at least two people at each level with the necessary skills and ready for advancement at any time. - All people interested in leadership development should be considered. It may be wise to at first work with those who have the fewest gaps in ability so that at a minimum someone is ready to step in. Always, give all individuals opportunity for development over the long term. - Once immediate need is fulfilled, continue working with others to develop new leaders.