Today’s Wall Street Journal features an article that highlights a subtle but interesting difference in management style between Toyota Motor Corp. and Detroit’s Big Three. Toyota in the U.S. currently finds itself with excess capacity for models such as pickup trucks. Rather than paying its workers but not requiring them to show up when they are not needed on the factory floor — as the big U.S.-based auto companies often do — Toyota is, yes, paying those workers not needed on the production line – but is using the down time to send them to classes to improve their productivity and quality skills and generate new ideas for improving production. For example, during this down time, one assembly worker has developed a Teflon ring that may help avoid damage to vehicles’ paint that can occur during one phase of production.
The article brings to mind an essay by MIT Sloan School professor Thomas Kochan in the Summer 2006 issue of MIT Sloan Management Review. Kochan argued that U.S. companies face a choice. One option is what he called “taking the managerial high road” and investing in becoming a “knowledge-based, high-trust organization — which requires training and empowering employees and harnessing their full motivation and talents to generate innovative solutions that drive productivity and service quality.” The alternative? Focusing on controlling labor costs. Kochan cited Toyota as an example of a company that has competed successfully by taking a cooperative approach to working with its U.S. workforce.