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Toyota To Dramatically Cut Japanese Management

Posted in auto industry, News, Toyota by Kurt Ernst | February 14th, 2011 | 2 Responses |

Toyota's headquarters, Toyota City, Japan.

In my business career, I worked for the Japanese on two separate occasions, for a total of six years. I also spent four years managing business in Japan for a third company, so I have an understanding of the way Japanese companies operate. I’m not calling myself an expert, but nothing about last year’s Toyota recall debacle surprised me. Japanese companies tend to be very layered, with substantial overlap is responsibilities. The Japanese are also polite to a fault, and no one would dare claim ownership of something that doesn’t clearly belong to them. Their inaction on the floor-mat-entrapment and sticking-accelerator recalls was not due to malice, but due to a clear lack of ownership of the problem. That’s changed in America, and it’s about to change in Japan.

Bloomberg is reporting that Toyota will cut their management board from 27 to 17, in an effort to streamline the decision making process. Cuts will range from the executive vice president level on down to the director level, but no firm decisions have yet been made on who stays and who goes. The Toyota shareholders meeting is held in June, so the changes are expected to be implemented in advance of the meeting. The reductions are part of what Toyota is calling their “2020 Vision” plan, which is meant to return the company to profitability levels enjoyed before the 2010 recalls and fines. It’s not the first time that Toyota has cut back on senior management; in 2003, Toyota reduced the management board from 58 members to the current 27.

Source: Bloomberg

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2 Responses

  1. Lee says:

    Soon it will be a dictatorship…

    • Kurt Ernst says:

      That’s not too far off the mark for some of the Japanese companies I worked for. The President / CEO says “jump” and the rest of the company says, “yes, sir, we will jump if you tell us the height required.”