Organisations & Management of Toyota Company Leader - Case Study Example

Organizations & Management 'Toyota’s tough boss' Introduction For every organization leadership is one of the most important factors. In different companies the leadership style is different. A leader should have an authority that allows him to influence people and encourage them to reach different goals. In order to achieve an authority a person applies the features of his character, knowledge and proficiency. A powerful position in the company allows the individual to manage processes and supervise people, but it can’t turn him into a real leader. A leader is one who is able to make people want follow him. The given paper will explain the significance of leadership, its theories and define the style of leadership of Toyota Company’s leader Hiroski Okuda. The leadership style of Hiroski Okuda. Scientists investigated leadership analyzing the behavior of different leaders in order to define the peculiarities of their behavior. After long investigations researchers defined three styles of leadership. The first of them, authoritarian, is inherent in people who prefer to make decisions themselves and want their subordinates just to follow them. It does not mean that such style of behavior is inherent in unfriendly people and bad communicators, but it does not imply any participation of employees in the decision making process, while all of their steps and actions are fully controlled and criticized by their leader (Miner, 2005). Democratic leadership style implies that decisions are made collectively by the team of employees and the role of their leader is simply to help them choose a right variant of actions. Prior to taking actions, the way of implementation is determined by the team and leader’s recommendations. Employees have alternatives and jointly settle on the distribution of tasks during the implementation process.  Appreciation and disapproval is usually objective and not necessarily presented by a leader, but by another employee who does not take part in a process. Laissez faire climate in its turn creates free team environment where team members define the strategy independently without their leader’s decisions and advices. He/she is usually involved in decision making process only when asked to help (Miner, 2005). The experience of different companies shows that democratic leadership style is the best to be applied. Really the laissez faire climate seems to be risky and the authoritarian style can be used only by the most mature and successful leaders. Hiroski Okuda is one of them as his leadership style is authoritarian. When he considered as right the way of actions disapproved by employees, he implemented it and won: Okuda moved ahead at Toyota by taking jobs that other employees didn't want. For example, in the early 1980s, the company was trying to build a manufacturing facility in Taiwan, but the Taiwanese government's demands for high local content, technology transfer, and guaranteed exports convinced many at Toyota that the project should be scrapped. Okuda thought differently. He successfully lobbied for the facility in the company, and it's now very profitable for Toyota. As Okuda noted, "Everyone wanted to give up. But I restarted the project and led it to success." ( Robbins, SP, Bergman, R, Stagg, I & Coulter, 2003, p. 513) Crisis and radical change in leadership Due to rapid global changes, modern business world faces high competition and the only way to continue to exist for many organizations is to implement necessary changes in order to meet requirements of a quickly altering environment. Opposition to alteration is like a blind alley for the company, its leaders and employees. In new changing conditions clients do not only want to have perfect service, they want it to be better than perfect. If the organization is not able to provide the customers with what they need, it will fail. Companies change in order to satisfy the needs of their clients (Miner, 2005). The companies’ leaders understand that their policy must be flexible and innovative. It is necessary for the leader to implement the alterations timely and efficiently. In order to do that a leader must be able to predict the consequences and do that quickly and timely that is very important in the changing environment. There must be a tactic for making the necessary alterations. This tactic should include making employees move in the right direction, even if this direction was not used and planned before (Blake, 1964). When the company is in crisis employees are usually appear at a loss and could not choose a right direction. Even in the companies with democratic and laissez faire climate it is the time for the leaders to act. In the conditions of a crisis the situation is changing so rapidly usually becoming worse every day and only rapid change, a right step can help. This step is usually made by a leader of the organization and in order to implement it, it is necessary to change the leadership style to authoritarian to make people follow the leaders’ decision and to save time. This was done by Hiroski Okuda when the company Toyota was in difficult situation - one rapid decision changed everything: When Okuda ascended to the presidency of Toyota in early 1995, the company was losing market share in Japan to both Mitsubishi and Honda. Okuda attributed this problem to several factors. Toyota had been losing touch with Japanese customers for years. For example, when engineers redesigned the Corolla in 1991, they made it too big and too expensive for Japanese tastes. Then, four years later, in an attempt to lower costs significantly, they stripped out so many features in the car that the Corolla looked too cheap. Competitors, on the other hand, had also done a much better job at identifying the boom in recreational vehicles—especially the sport-utility market. Toyota's burdensome bureaucracy also bothered Okuda. A decision that took only five minutes to filter through at Suzuki Motor Corporation would take upwards of three weeks at Toyota ( Robbins, SP, Bergman, R, Stagg, I & Coulter, 2003, p. 513). Okuda's leadership style: (a) charismatic, (b) visionary, and (c) culturally consistent with Japanese practices? (a) A great number of leaders apply a charismatic style, because they want to make more people follow them. They gain people’s trust through impression they make by their words and actions, not applying force or any other kind of influence (Miner, 2005). During three decades Toyota Company preferred to have the members of the company founder’s family as heads of the organization. However, when Tatsuro Toyoda was appointed in 1992, the company needed urgent change already by 1995. The company chose Hiroski Okuda. He did not belong to the founder’s family, but was a charismatic leader who had necessary knowledge to implement a rapid change. Being a charismatic leader Hiroski Okuda applied a lot of methods to maintain his authority. He gains people’s trust by implementing changes that work for the benefit of the company: Okuda also worked with the company's vehicle designers to increase the speed at which a vehicle went from concept to market. What once took 27 months was shortened to 18. And now the company is making a custom car within five days of receiving an order (Robbins, SP, Bergman, R, Stagg, I & Coulter, 2003, p. 513). Perfect rhetoric skills also helped Okuda make people follow him. Many of his phrases became famous and cited by different people in the world of business. (b) Visionary Leadership raises effectiveness of the company processes by making stress on the possible consequences of the decisions made. The responsibility is too high, therefore in visionary leadership environment the control is usually limited. The employees can make decisions independently without any pressure from the side of a leader. They usually do their best to get more skills in order to make right decisions. A visionary head usually sets reachable purposes, understandable tasks and implies the participation of employees in decision-making and implementation processes.  The visionary leadership can be present in democratic and Laissez faire climate (Blake, 1964). As we defined, Hiroski Okuda had authoritarian leadership style. He made decisions himself without the participation of other members of the company. He just wanted other people to follow him and implement his ideas. Notwithstanding that the he applied charismatic style, his behavior sometimes was even aggressive. This could not but led to the opposition of other members of Toyota Company. Finally they did their best to replace Okuda: Unfortunately, some of Okuda's actions may have backfired. Speculation that he overstepped his boundary at times by his blunt demands for change and his refusal to bail out other members of the Toyota keiretsu may have offended the founding Toyoda family, leading to his removal as president of the company in June 1999. However, even though he was no longer president of the company, his strategic leadership helped him to be appointed to the chairman's job ( Robbins, SP, Bergman, R, Stagg, I & Coulter, 2003, p. 513). This testifies that the leadership of Hiroski Okuda was not visionary. His authoritarian leadership style led to employees’ opposition that resulted in his removal. (c) The outstanding characteristics of Japanese business leaders, their ability to make employees reach the best results aroused the great interest of many countries all over the world, Japanese methods and leadership styles were researched carefully and the following principles were defined: - Japanese companies prefer to employ people for a long period of time, in order to make an employee interested in company’s success; - Employees and managers are almost equal and have the same benefits inside of the company. Managers do not have any noticeable privileges; - Workers are shown that they are valued by the company; - The companies do their best to create friendly relations between supervisors and workers. In order to do that the leaders learn about the needs of the employees and try to made the working conditions more suitable for them. This approach make workers respect and value the leaders and the organization; - All the workers feel responsible for the company’s achievement; - The leadership style is founded on the high moral values; - In order to get a higher position a person should work for some years on the lower in order to gain an experience. There is a strict order of positions’ appointment; - The company takes care about every employee and his well-being; - Japanese companies prefer teamwork and collective decision making (Blake, 1964). Having listed the principles of Japanese leadership, it is possible to make a conclusion that Hiroski Okuda’s style was contradictory to main Japanese principles. He appointed new leaders without any order: In his first 18 months on the job, Okuda implemented some drastic changes. In a country where lifetime employment is consistent with the culture, he replaced nearly one-third of Toyota's highest-ranking executives. He revamped Toyota's long-standing promotion system based on seniority, adding performance as a factor. Some outstanding performers moved up several management levels at one time—something unheard of in the history of the company ( Robbins, SP, Bergman, R, Stagg, I & Coulter, 2003, p. 513). . The behavior of Hiroski Okuda is considered to be atypical for Japanese leaders. The radical changes he made, his aggressive behavior, self-decision-making – everything testifies about the style atypical for Japanese companies. Finally, this led to the removal of the leader. Conclusion The authoritarian leadership style of Toyota Company’s leader Hiroski Okuda led to his removal. However, the change of leadership he implemented in the conditions of a crisis, the changes he made, the urgent decisions he took saved the company. That is why Okuda holds a position of a chairman: Hiroski Okuda isn't afraid to speak his mind or impose radical change in an organization. And because of these traits, he is memorable at Toyota Motor Corporation, where he is the chairman of the board. Prior to becoming chairman, Okuda served as Toyota's president—the first nonfamily member in over 30 years to head the company. He also is unusual among other Japanese executives because, in Japan, executives are supposed to be unseen. Okuda justifies his outspoken and aggressive style as necessary to change a company that had become lethargic and overly bureaucratic ( Robbins, SP, Bergman, R, Stagg, I & Coulter, 2003, p. 513). . Bibliography Robbins, SP, Bergman, R, Stagg, I & Coulter, M. Management, 3rd edn, Prentice Hall, Frenchs Forest, 2003: p. 513.  Blake, R.; Mouton, J. The Managerial Grid: The Key to Leadership Excellence. Houston: Gulf Publishing Co, 1964 Miner, J. B. Organizational Behavior: Behavior 1: Essential Theories of Motivation and Leadership. Armonk: M.E. Sharpe, 2005 Read More