Toyota’s Organizational Change
For many companies, change has been proven to be one of the certain items because many challenges come the way of the organization most of the time. However, one of the biggest challenges that an organization has to face is overcoming resistance because most people do not get used to the change after a short time. Some of the main reasons that force companies to change are trying to overcome a crisis, the emergence of new technology, gaps in the expected level of performance in the company, competition from other organization that is offering the same services, the realisation of new opportunities that the company was changing needs to embrace. For Toyota Company, however, the main reasons for the change were the need by the company to make the process of decision making a bit faster than it was in the past as well as ensuring the strength of management oversight is increased. This paper tends to vividly address the change that the Toyota company embraced and critically analyze its outcome on the organization’s overall performance.
Toyota, a company founded in the year 1937 by Kiichiro Toyoda, is one of the companies that have been undergoing the most radical changes over the years. The company met its first change when its name was changed from Toyoda to Toyota because the latter contains eight strokes in the Japanese language and can, as a result, be translated to mean luck in some East Asian cultures (Brooker & Hayward, 2018). It’s important to understand that changes tend to happen in order to keep the company in a progressive way. The other significant change took place five years after the second world war when the Just in Time (JIT) model was introduced as a way of trying to save the company from getting bankrupt (Kawahara, 2012).
Even though the series of events that led to that need for change (layoffs of employees and reduction of wages which lead to strikes) were uncalled for, the results were seen to be positive. In the year 2019, Toyota announced that it had made a change in its organisational structure in a bid to change its function on organisation progress. The main reason for this change was the need by the company to make the process of decision making a bit faster than it was in the past as well as ensuring the strength of management oversight is increased (Toyota USA Newsroom, 2019). On top of that, the company wishes to boost innovation in the company and increase employment opportunities soon.
For Toyota as a company to make an efficient and effective way on running its daily routine. One of the central pressures that were working on the company to the extent of making there be a high need to make the radical change is economic forces. First and foremost, Toyota Company needed to plan for the reorganization and integration of business units that would be region-based. This action was done through the act of ensuring that Toyota NO. 1 and Toyota NO. 2 were reformed and integrated into a single business unit that would make the coordination of the various groups of the organization as a single united regional function.
That function would have its basis on in-house companies in the organization that will all be product-based. In terms of the management, the change in the organisational structure of Toyota in a bid to change it from a functionality of the organisation helped in enabling the in-house companies that were already product-based to get the full responsibility of completing most of the work in the company starting from the initial plan of the production of goods, the whole process of producing more commodities, revisions of the various functions of different structures as well as production engineering.
As such, the product-based in-house committees were of vital importance in determining the right amount of workforce that the company needed in its whole process of production (Pitsakis et al., 2012). On top of that, the pressure of having the concept of Just in Time utilized by the company implied that there was much need for the company to become product-based in order to allow the production of goods only when they are required (Cummings et al., 2019). During the process of its change, Toyota Company can be said to have been making good use of the model which mostly consist on unfreeze, the change itself and refreeze.
It was during the freezing phase that the company prepared for the change that was going to affect most of its senior-most manages as well as almost all of the other employees since it involved changing the company functionality in the organisation. During this stage, most of the employees are given time to prepare for the significant change that the company is about to experience. It enables them to be ready to undertake any measures that will be prompted by the management (Lewis et al.,2019). The employees are encouraged to adhere to changes in order to be in a position to achieve their target as a company. This stage is of vital importance because most people in many organizations tend to resist change, and it is during this time that every person is educated on the need for embracing the change.
The main critical issue here is to ensure that every person has received all the necessary information not only on the need for the difference that the given company is about to embrace but also the main reason that makes it essential for the enactment of the change to take place during that specific time. During this stage, it is also crucial for an organization to readdress the issues that it is facing and see whether the only way through which they can be solved is through enacting a change in the whole organization. As Toyota USA Newsroom (2019) indicates, the top management officials of the organization met to discuss the issue and analyze it to determine whether or not it was still worth the risk.
The stage of change is the one in which the real difference that the organization decided to enact happens. The process took quite a longer time than the management expected because most of the employees, shareholders and other key stakeholders took some more time to understand the change (Bakari et al., 2017). During this stage, good leadership was an important sector for the company since the leaders were able to convince most of the people who were involved in the importance of the whole process of change. In all aspects, communication was a vital trait that needed to be done accordingly. Information sharing helps in embracing change as one is given a valid reason why they are changes in the ways things run. Constant reassurance was also needed to ensure that nobody doubts what is going to happen in the long run. During the entire process, effective communication by the leadership of the company as well as patience as every person who was involved absorbed the change was vital.
The last stage of Lewin’s Change Management Model is the process of refreezing. During this process, everything in the company started going back to normal. The main reason for this was the fact that almost all, if not all, of the people who were affected by the change have finally accepted and embraced it. People had even finished implementing the difference in most of the areas where the implementation was critical. Now that everything about the process of changing Toyota Company to a product-based from a function based organisation had been finally over, it was now time for everything to go back to normal and have the company stabilise all over again (Tidd & Bessant,2018). The company starts working as before all over again and resolve any problems that may arise from the change. However, a short time after the enactment of the amendment, there were more conflicts from the people who had not yet understood how the organization entirely operates now as well as other problems that had not been planned for before.
The change that Toyota embraced had an impact on both the employees and the market at large. Since the change was just enacted less than a year ago, it is not easy to determine all of the impacts that it has already had on either the employees or the market over the long term. However, the short-term effects on the employees have mostly been filled with denial and shock since most of them were not ready for that. It is important to note that even if most of the employees had already been notified of the change that was about to take place in the company, some were not well informed since the organization has branches in various countries (Soliman,2016). Network sharing of information played a big role as information breakdown from the top management to the least staff and also from the headquarters to branches. Thus, even after the informed employees were already getting over the worry and shock about the future of the company, others were not yet informed.
However, in the long-term, most people are likely to accept the change and work towards making the company a success. As for the market, consumers are less likely to be affected because the decision was mainly aimed to make the process of decision making faster. However, in the long-term, the company is expected to start increasing its sales because of the improved organizational structure (Hyung-Deok Shin et al., 2020). The fact that the company increased its competitive advantage, thereby managing to increase sales and open more and more markets for their products. The gradual change led to structural and organization levels of management act effectively. Through a progressive view in the organization way of running things and innovativeness in the industry. It managed to create awareness for its customers; hence, more sales. The main goal for this change was the need by the company to make the process of decision making a bit faster than it was in the past as well as ensuring the strength of management oversight is increased. The key pressures that faced the organization included economic forces, the management as well as the pressure of having the concept of Just in Time utilized by the company. While enacting the change, Toyota Company made good use of the models in a short time to allow the change that will not have much impact in the marketplace but later may bring more success to the company due to that change.
Conclusively, it’s easier to acknowledge that Toyota has been one of the companies undergoing the most changes in the world. The fact that this paper has keenly addressed the difference that the company embraced and critically analyzed its outcome on the organization’s overall performance. The essay has done so through a thorough discussion of the background check on the organization’s roles and other performance that has greatly played the roles that led to the change, critical pressures that influenced it as well as the change model that the company followed. On top of that, this essay has critically evaluated the overall change and its impact on the company. Concerning the change, the essay has found out that it involved changing the organisational structure of the company in a bid to improve its organizational functionality.
References
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