Mike Hoseus, the author of The Toyota Culture and industry consultant, joins us for our second episode! Mike works with organizations to develop and implement various transformation initiatives. In this episode, he joins Joel to discuss working for 1000 people at Toyota, emulating Toyota culture and leadership in frontline industries, how his Toyota plant maintained less than 3% annual turnover, and how to create an army of problem solvers with your frontline employees.
Tell us about yourself how did you get started on this journey?
I tell people it was almost accidental or providential, I worked for Toys R Us out of college. My wife was transferred to a hotel in Lexington Kentucky where they happened to be building the new Toyota plant north of Lexington. The Japanese trainer told me to put my application in. I said, "Not a good idea, I know nothing about manufacturing." I came back the next week and she said, "They are exactly who you are looking for." So they want someone who knows nothing about manufacturing? Nothing about Cars? I can do that. I signed up and was fortunate to get hired as the 201st person at the Toyota plant in Georgetown, Kentucky where they sent 400 Japanese trainers to teach us the Toyota way and the production systems. As a supervisor, I was working for 20 people on the plant floor and 14 leaders and I had a trainer teaching me that. I grew with the company, very fortunate to be promoted to area manager, plant manager, working for 1000 people I had a plant manager from Japan and an executive coach, going into human resources. That's really where my eyes got opened to the people systems. I learned about the production system and it has been copied or emulated, but people were missing the people side of the system and I learned that on my journey into human resources.
You said you worked for 100 people, you worked for 1000 people, but you didn't have 1000 bosses, right? Can you explain what you mean?
Glad you picked up on that. I was one of those that said after my first promotion, I have 200 people working for me. My trainer overheard me and said, no good. Toyota had a standard on the behaviors of the people. If our thinking and behavior didn't match that, it was no good. He said to me, at Toyota you work for those people, let me teach you...meaning it's the upside-down pyramid, servant leadership. Not giving them what they want, giving them what they need. Sometimes it doesn't feel good to be corrected and developed but that's a respectful way to develop and grow someone.
Tell us more about the production system, what do you mean?
We started with the Toyota Production System and later they added The Toyota Way to make sure people weren't missing this cultural people side we've been talking about. Where ever we are or whatever we're doing, there's a process for that. Toyota talks about doing it with a higher quality, in a shorter amount of time, at a lower cost. Anything we do can be summed up with those three things.
When you say "lower-cost", people may get the idea they are cutting corners, but that's not my understanding with Toyota.
My brother worked for a major company in Cincinnati, and he came away from his Lean 101 training and the impression he got from it was that Lean means less employees are needed. My heart just sinks but he gets that from companies and they get it from companies that do that! That obviously is disrespectful and even if it's not that explicit or extreme, we still have companies out there cutting costs, but then quality can suffer. That is the opposite of operational excellence. That's where we talk about Toyota, this quality, they said in 1958, we're gonna build in quality and do it with our people, respecting our people. Our people are our assets. If we utilize our people, empower, engage to improve quality and improve that process, guess what? We're lowering costs, providing more value. Not cutting corners, providing more value.
I was the 201st employee, years later 8,000 people! 40,000 in America. When you're providing that value, not cutting corners, cutting waste, then your market share grows, and your people grow. That's the win-win.
Do you have any insight into how people-first culture affects tenure?
We measured it. It was important. A lot of companies now, they know their turnover is terrible and they are not problem-solving. Toyota, we had less than 3% turnover per year. That's a very real cost, some people estimate half a year's salary over the turnover. We used to use more like $15,000-$18,000 per employee. It behooves us to invest in our people, that's the win-win. When you develop your people, you empower your people, those frontline employees, that's the biggest gap out there. We're missing this frontline operator employee. Those are the numbers. When we invest in them, grow and develop them, they are contributing to that higher quality lower cost. When we're not engaging them, then the turnover goes and those costs are going up. They are coming in the door, but going out the door quicker than they are coming in.
I want to talk about team huddles. They are one of the most inconsistent activities I've ever seen. I would love to hear your thoughts on the importance of the huddle.
I always tell people, Toyota had 5 minutes morning and the afternoon, and that's 6,500 and the line would shut down, a minute was $38,000 multiply that! Why would Toyota do that? It usually takes a bit of time for the group to understand, the ROI was there, otherwise, we wouldn't be doing that and the ROI is only there if we can make those huddles productive. It's not to talk about the basketball game last night, or whatever else, and it's not about how many are we building today and how much overtime? All of that is great, but we want other systems to do that. We want those five minutes to be focused on that army of problem solvers. If we can convert to this value add, which is rarely done, then we can have productive huddles. Back to our leadership, what are we doing to teach our people that, and support our people? Our huddles should be back to that servant leadership, a lot of their problems, we want them to be able to solve on their own, but get help on the ones they can't solve on their own.
What's something that you believe that if everyone else in the world believed too, would make the world a better place?
It's the respect for every individual. If we truly believe that, and truly respected every individual, no matter what they could or couldn't do for us, how would we treat them? I think our behaviors and actions would be different.