Help wanted: New blood, ideas must fuel inclusive, expanding corporate culture
Will Toyota's top post in the United States continue to be reserved for Japanese males and white American males?
Is the company doing enough to ensure a diverse leadership? Or has its rice-paper ceiling cut Toyota off from large parts of America's rich pool of aspiring managers from widely disparate backgrounds?
Ask a senior Toyota manager, past or present, about diversity in the company's leadership, and the conversation takes a 90-degree turn.
It quickly becomes apparent that he (never she) isn't thinking about diversity in terms of ethnicity, gender or national background. The hot-button diversity issue in his mind is whether Toyota suffers from drawing its leaders from too shallow a pool of corporate backgrounds.
Toyota in the United States, its leaders fret, has become too inbred. They worry that an increasingly insular culture is a precursor to "big-company disease."
Jim Farley, Lexus' former general manager, had spent his entire auto industry career at Toyota until he left recently for a job at Ford Motor Co. In an interview before he left, Farley said the lack of exposure to other corporate cultures was a negative.
"I've been here 20 years, and it's all I've done," said Farley, 45. "This could be the most important human resources issue we face."
In Toyota's early days here, inbreeding was not a problem. Not only was the company's U.S. operation much smaller, but its leadership necessarily was drawn from an array of company and industry cultures.
Norm Lean was the top American executive for Toyota Motor Sales in the late 1970s.
"I know the vitality and enthusiasm that the French Foreign Legion mentality brought us," says Lean. "We had guys from GM, Ford, Chrysler and AMC. We would get all of us in a room to talk about an incentive program we'd want to do. And one person would say, 'Well, at GM we did it this way, and this was what was wrong with it.' And the next guy would talk about his experiences at Ford. And so on.
"By the time we got around the room, we had a plan that would avoid all the problems that Detroit had."
ONLY THE TOYOTA WAY
That version of diversity allowed Toyota to use the strengths and discard the weaknesses of all the lessons learned at those other companies. But it's disappearing as Toyota becomes inbred, with lots of executive trainees hired straight out of college and knowing only The Toyota Way.
But expanding the mix can be risky, too. "If I were at Toyota, I wouldn't be going out looking for outsiders," says Lean, 80. "It could be a real morale problem for employees to think positions and promotions are being given to someone from the outside, just because they are coming in from the outside."
He says that the answer is not more diversity inside the company but more input from folks outside the corporation.
"They need to listen more to the superdealers, the guys who have holdings in many brands, like a Mercedes-Honda-Nissan dealer," says Lean. "These guys can tell you if a plan is good, bad or indifferent."
Says Dave Illingworth: "The challenge is that we are a much bigger company than we were in the early '80s. Back then you didn't have the employee base to pull from, so you had to go outside." Illingworth, 64, is chief planning and administrative officer for Toyota Motor Sales U.S.A.
But that means knowing the way through the corporate bureaucracy has become more critical.
"Today our challenges are a lot more difficult, and the people you need to solve them need to know the culture of the company and where to go to get things done," Illingworth says. "When you pull someone from outside the company, it's hard because they don't know where to go and how to do it.
"Back when Norm Lean was doing it, it was four or five people in a room; you'd know everybody. Now we have 5,500 people. It's not that simple."
Don Esmond, Toyota Motor Sales' 63-year-old senior vice president of automotive operations, was one of the "Legionnaires," joining Toyota from Ford in 1982. He sees both sides.
"Like the French Foreign Legion, you end up having your own culture," he says. "When I was at Toyota Division, we came up with our core values probably two or three years before Toyota published The Toyota Way guidelines. You match up the core values to The Toyota Way, and it's almost exactly the same. There are some instilled values that are a plus."
Esmond says he has confidence in the executives "who only have Toyota experience," citing Bob Carter, general manager of Toyota Division, as an example. But, he adds, a Toyota-only resume might not have prepared them fully for the kinds of challenges that could accompany Toyota's growth into new products and new segments.
"There are going to be different problems popping up," Esmond says. "Adversity will come up sooner or later. There probably are district managers and department managers who may not always have had good times, but they haven't had the tougher times. We have talked about it in terms of ensuring how we grow. You could be challenged in the future if you don't change with the times."
IN THE PIPELINE
The Toyota Web site's diversity section talks about the importance of pipelines, advancing people at dealerships from sales to become general managers and then dealers. But who's in the pipeline for Toyota's own executive suites?
"We don't hire (management trainees) by personality type, but we tell our recruiters to 'hire someone you like,' " says Bryan Bergsteinsson, 62, a former Lexus boss who also ran Toyota's HR department. "People don't succeed or fail based on their technical knowledge or how hard they work. It's how they work as part of a team or a system, how they fit a cultural mode."
It's a reasonable argument, but it could also be a recipe for insularity.
If Toyota truly wants a wider range of viewpoints at the table when it discusses policies, wouldn't it benefit from having more ethnic and racial minorities, more women and more folks who were neither American nor Japanese?
It's not as if Toyota has no experience with ethnic or racial diversity. The company already has done a commendable job in reaching out to U.S. minority communities.
Toyota Motor Sales launched its $7.8 billion 21st Century Diversity Strategy in 2001, setting tangible targets in areas including employment, procurement and dealer development.
Five years later, it had doubled annual spending with diverse suppliers; people of color made up 30 percent of its U.S. work force; and Black Enterprise magazine ranked it one of its Best Companies for Diversity.
LARGELY JAPANESE AND MALE
Still, Toyota's executives clearly have not linked the issue of inbreeding to the issue of a management that is overwhelmingly composed of Japanese nationals and American white males. They seem not to have thought that addressing the latter might solve the former. Although the company is rooted in California, there appears to be little interest in tapping that state's smorgasbord of humanity.
Sometime in its next 50 years, Toyota Motor North America might be headed by an executive who is not male, Japanese or white. But based on the energy Toyota is devoting to truly diversify its management ranks, there's only one reasonable conclusion.
It won't happen in the next decade. And it may not happen in the decade after that.
You can reach Jeff Mortimer at (Unknown address).