Kiyoshi “Nate” Furuta, a former Toyota human resources executive and CEO of Toyota Boshoku America, spent a 40-year career establishing problem-solving cultures at operations outside Japan during a period of rapid globalization. In this excerpt from chapter two, he reveals his three go-to ways that you can use for motivating people to improve themselves and the organization: quality circles, suggestions systems, and, most of all, incentives and job security.
A quality circle (QC) usually consists of a small voluntary group of problem solvers who meet occasionally to tackle large problems. Because employees discuss and analyze problems as a group, they are more likely to find a solution than if they had to go it alone. In addition, QC members have a common interest in the problem (shared value) and work at the problem for their own satisfaction.
In a kaizen culture, QC members enjoy being challenged by the problems they select…Kiyoshi “Nate” Furuta
QC members select their problem to be solved and the target to be achieved as a team, and they assign a role for each member to play. One individual may gather data, another track progress of the process, another solicit opinions at the gemba, another test countermeasures, etc. Through periodic meetings, they find facts, drill down to a root cause through cause-and-effect analysis, and conduct trial-and-error experiments. They eventually come up with a solution to their selected problem and implement it to their satisfaction. Because participation in a QC is voluntary, members can drop off if they are no longer interested in the problem. That usually only happens once a problem has been solved.
In a kaizen culture, QC members enjoy being challenged by the problems they select—as opposed to being challenged by a superior or working in an organization where their ideas and input are not valued. The problem-solving activities also offer them an opportunity to interact with leadership and other departments, furthering their learning about the company, its vision, and its systems, and getting them recognition as potential leaders.
A group initiative, like quality circles, is not for everyone. Some employees prefer an opportunity to contribute as individuals. For this reason, a suggestion system should be used to solicit individual ideas to improve operations.
To make the system work, you must generate enough interest to get as many ideas as possible. In baseball lingo, many of these ideas may be singles or just advance a runner, but with more ideas, the odds are greater that someone will hit a home run. To generate sufficient interest requires both monetary and nonmonetary incentives.
The first, critical nonmonetary incentive is acceptance of insignificant ideas. When an individual has a complaint about their job, allowing them to come up with suggestions and ideas to resolve their own complaint may release their frustrations. For example, a member had suffered from back pain when installing parts into a car body. He suggested a safety improvement, such as a sliding chair, to support his posture. The supervisor thought the idea was silly and ignored it. The worker was disappointed, never suggested another idea, and later filed a workers’ compensation claim for back pain.
We eventually took the sliding chair idea seriously and expanded upon it. Maintenance and production workers developed various types of sliding chairs to make many operations easier. As the result of easy access to vehicles and improved posture across the assembly line, we reduced injuries, improved productivity, and the quality of parts installation.
A well-promoted and closely monitored suggestion system can transform people’s negative energy of a problem into positive energy to create a solution.Kiyoshi “Nate” Furuta
A well-promoted and closely monitored suggestion system can transform people’s negative energy of a problem into positive energy to create a solution. Management must encourage workers to offer up small ideas, regardless of how significant the improvement or impact may be. Don’t immediately look for big ideas when the suggestion system is implemented. The first step is to have a successful system, which should be judged by the number of suggestions received, not the cumulative benefit of suggestions.
Another nonmonetary incentive is quick implementation. We observed that if a member suggested an idea that their supervisor accepted but was not implemented within three months, the member lost interest in the suggestion system. When an idea is implemented quickly, it makes an employee proud of the change and they tell colleagues of the contribution.
Management must set aside time—their own, as well as for maintenance, engineering, administration, etc.—to promptly facilitate and implement ideas. You may think this will be too time-consuming, but it adds value by building trust and respect, and it pales in comparison to the time you would spend addressing grievances instead.
A suggestion system can be 90% successful with these two nonmonetary incentives—acceptance of insignificant ideas and quick implementation. A monetary incentive can deliver the final 10%. Setting the precise payout from savings that suggestions deliver is a challenging decision and unique to every organization.
At Toyota, we did not think that bigger was necessarily better because, as noted, we encouraged small suggestions to improve the level of employee participation and dilute negative energy and complaints. But too small of a payout can discourage or anger workers and send the wrong message. Get employee input and clarify the payout-calculation formula in advance of implementing your suggestion system to get it off to a good start and to avoid any disputes that could arise, including who holds patent rights for ideas suggested.
Rewards and Recognition
Are workers naturally inclined to find the problems and solve them for improvement?
The answer is “no” for a majority of workers because they do not initially see what’s in it for them. The obvious reason is that if members initiate problem-solving and improve productivity, surplus workers will be cut.
Workers need incentives to change and to find and solve problems. We believe the most important incentive is job security. No one should be laid off as the result of improvements.Kiyoshi “Nate” Furuta
Workers need incentives to change and to find and solve problems. We believe the most important incentive is job security. No one should be laid off as the result of improvements. This statement should be voiced before kaizen of any operation at any time, reassuring workers of their importance to the organization. Regardless of the type of improvements your organization seeks—productivity, quality, safety—regularly communicate that no one will lose their job because of an improvement.
Some managers—maybe even you—will question why a company would invest time and money to improve an operation and then refuse to remove labor from that operation when it is no longer required. Indirectly, Toyota does shed labor: as improvements occur that require less staff, extra workers are transferred to new businesses or busier operations, or placed in open positions when someone quits, or in areas with problems that require more staff.
In the Georgetown, Kentucky, Toyota plant, we took this no-layoff approach further. We created a kaizen team policy, which stated that a manager should have a kaizen team to absorb extra workers as the result of productivity improvements. This was a team of offline workers to further improve operations, who returned to a line job when an opening occurred. Workers enjoyed the offline work, accumulated kaizen experience, and further developed their problem-solving skills.
Managers appreciated the extra help to improve their operation and were pleased they did not have to go to their boss for support. Furthermore, managers were able to recognize good performance by placing capable workers on the kaizen team.
This became a virtuous cycle of kaizen and kaizen culture-building. In addition, workers who landed on the kaizen team frequently showed leadership capabilities and were good candidates for team leader roles.
Even with systems in place to drive problem finding and improve performance, the majority of managers and workers will eventually lose interest in continuous improvement because they do not want to do the additional work without a real, tangible reward. Call it “gainsharing” or “distributing cost savings” or whatever works in your culture.
Toyota Japan developed productivity-based cash allowances for everyone. The allowance was not based on an individual’s performance but group performance. Members in a group were paid equally and the incentive promoted teamwork. In North America, we introduced monetary incentives, which reflected companywide performance for productivity, safety, quality relative to targets, and individual attendance. We allocated up to 15% of pay for the reward, which was paid out biannually as a lump sum.
The effects of the North American incentive system were not as clear as those in Japan, due in part to multiple key performance indicators (KPIs) in North America compared to one KPI (productivity) in Japan. In North America, team members appreciated the payout and retained a positive attitude toward problem-solving and continuous improvement. There were always a few people who simply wanted a traditional worker’s role, and they benefitted from the incentive system without contributing on par with other employees.
But promotional opportunities were not offered to those who simply wanted a traditional worker’s role. This incentive worked favorably for those with a positive attitude toward problem-solving and continuous improvement. Every new assignment should initially be harder for them to perform than their prior role. Management and employees will want to learn more in order to succeed in these new roles. Thus, an endless cycle of personal improvement will occur alongside the path of operations improvement.