APEC Forum on HRD 2007

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2007/HRDWG/FOR/007b

Case Study of Thailand: Sustainable Career Development Throughout Working Life (Paper)

Submitted by: Thai Automotive Industry Association (TAIA)

APEC Forum on Human Resources Development 2007

“Sustainable Career Development throughout Working Life”

Mr. Ninnart Chaithirapinyo

A Resource Person from Thailand

Introduction

Globalization leads to an increasing worldwide integration and convergence in the economic, social, political, and technological spheres. This phenomenon has brought about rapid change, which has had a definite impact on us.In order to survive this change, and be well-prepared and on a competitive edge, we need to createnew approaches to capability and competency development.

One of the key factors that can create high capability and competency of organizations is human resources development. Not surprisingly, both public and private sectors have plunged into the tide of developing competitiveness without concerning themselves with sustainable growth. However, this issue has become an increasingly, widely debated topic in recent years. Therefore, in terms of human resources, sustainable career development has been emphasized and has become a crucial issue to achieve sustainable competitive advantages.

Based on my experience in the auto industry for over 36 years, this paper will more focus on human resources development in the automotive industry. I will present new methods of human resources development which aim, not only to develop employee’s capabilities, but to expand this to proper working conditions and an impressiveatmosphere in the workplace, which can lead to sustainability of careers throughout one’s working life.

Before I begin this presentation, I would like to briefly touch upon problems in the Thai labor market.Even though unemployment, with a rate of 1.57%, is not a problem in Thailand,in my opinion, we are currently facing the following problems.

1. A supply shortage of skilled labor
2. A mismatch between labor market’s demand, and human resource’s supply,created by the Thai educational system
3. A high turnover of new employees
4. Refusal of employees to take-on3D jobs; dangerous, dirty and difficult jobs
5. A preference of Thai youth to work in the service sector rather than the industry sector.

The solutionsto these problems can be roughly summarized with the following points;

1. Effective training
2. Cooperation between the public and private sectors to develop a new education system
3. Better structure of welfare and human resources management
4. Standardization of a skill certification system
5. Improvement of a salary and rewards structure

I will now explain how to turn these ideas into practical results by using Toyota Motor Thailand, or TMT for short, as a case study. As most of us are well aware, currently, we fully compete on a stage of “global car” competition. TMT triesits utmost to solve the problems in the Thai labor market, and also prepares itself for new challenges that lay ahead with global competition. TMT has implemented an abundantnumber of projects, and each of them do not aim onlyat solving immediate problems, but also expects to create sustainable career development throughout one’s working life.

This presentation will be divided into three topics. The first one is HRD within TMT. We also expand our HRD system to our supporting industries such as our suppliers and dealers. For the overall automotive industry market, TMT cooperates with both public and private sectors of Thailand and Japan to provide training systems for local SMEs through a project called, “Automotive Human Resource Development Program”, or AHRDP. In addition, TMT goes beyond the boundary of its industry by contributing many HRD projects to Thai society. Therefore, I hope that this information being shared with you is useful.

1. Human Resource Development
2. Employee Relation Management

1. Human Resource Development

Basic Concept

In the midst of globalization, which every economy is seeking for a competitive advantage, many governments, companies and non-profit organizations also are looking to enhance people’s capabilities by utilizing various developmental tools that are matched with corporate cultures. Toyota Motor Thailand (“TMT”), as a case study, is similar.

Since the completion of the Innovative International Multi-Purposed Vehicle (IMV) project in 2004-2006, TMT has rapidly grown in term of domestic sales and exports to international markets, such as South America, South Africa, EU, Middle East and Asia – Oceania, bringing about increased production volume from 200,000 to 550,000 units per year. This was concurrent with the establishment of its new Ban Pho plant.

Accordingly, TMT considersits people as being the most valuable asset of the company. As a corporate tradition, TMC’s Top Management recognized human value,and paid attention to developits people. One of its historical philosophies is:

“Because people make our automobiles, nothing gets started until we train and educate our people” and

“People are the most important asset of Toyota, and is dominant in the RISE and FALL of Toyota”. (Mr.Eiji Toyoda, TMC President 1976-1982)

Moreover, TMC declared the Toyota Way 2001 as Toyota’s key value and common understanding among Toyota people, with two main pillars consisting of Continuous Improvement, and Respect for People.

The Toyota Way 2001 also clarifies its meaning for Respect for People emphasizing how to make the employees think, act and develop on behalf of the organization by providing opportunities to contribute and achieve self-realization and maximizing the performance of each employee in their respective workplaces.

HRD Approach in TMT

There are two main HRD systems that provide for two different groups of employees: Core Competency for Management and Office staff (White Collar) and Skill System Development for Production staff (Blue Collar).

For the Managerial and Office staff, we have to match a couple of thing, namely, company goals and employee goals. We believe that there are things the company wants to achieve (Vision, Mission and Policy), and this can only be achieved through the dedication of the employees. Promoting competency enhancement through people development is a must for the company so employees can dedicate all their knowledge and skills for the prosperity of the company.

TMT’s Core Competencies deal with Challenge, Change and Commitment.

►Challenge & Change: We want TMT people well-prepared to be self-reliant. Business changes involve six core competencies, namely, Kaizen, Problem Solving and Decision Making, Global Perspective, Innovative Thinking, Policy Management and Strategic Leadership.

►Commitment : We want to fulfill the employees’ role and responsibility, goal achievement, HRD, and care of stakeholders by raising six other core competencies, including Achievement Orientation, Customer Focus, Cost and Quality Consciousness, People Development and Coaching, Mutual Trust, and Communication and Integrity.

To provide effective training, TMT established the ToyotaAcademyThailandin May 2004 by splitting its HRD section under the HR department, to a new department with its mission to: 1) be the core HRD center of theToyota Way in Thailand, and2) enhance business performance and globalization within TMT and itsnetwork through an excellent HRD system.

Toyota AcademyThailand shifted its importance to a division level in October 2005. Today, theToyotaAcademyThailand has trained more than 24,000 TMT employees and 800 people in TMT’s Network (Management of Affiliates, Suppliers and Dealers). In the near future, Toyota AcademyThailandwill prepare readiness forToyota human development in the entire Asia Pacific region as well.

For the Production staff, TMT has provided a step-by-step Skill Development System for newcomers, Team Members, and Controller and Managerial level employees. There are two required capabilities for doing this job:

►Standardized Work Management: They have to perform their work by following established work standards developed by production skill training, such as Fundamental Skill Training and Maintenance Skill Training.

►Shop Floor Management: They have to perform their work by acquiring necessary production knowledge and skills developed by role-playing and supervisory training, such as the Toyota Production System, Toyota Job Instruction, and Group Leadership Role.

This kind of development requires a specific department to ensure training effectiveness which is relevant to actual performance at work.The Asia Pacific Global Production [Training] Center, or AP-GPC, therefore, was established in August 2005 to perform this task.

As a HRD center for production skills, and located in Thailand, AP-GPC has gradually developed its role and responsibility to support all Toyota manufacturing companies in the Asia Pacific Region, similar to other regional HRD centers for production like the North American Production Support Center (NAPSC) in theUSA, and theEuropeanGlobalProductionCenter (E-GPC) in theUK.

Career Development in TMT

Opportunities for career growth are very important. Therefore, concrete systems have been developed to ensure that self-realization of employees are not overlooked.

TMT provides a Training Roadmap for both office and production employees on a step by step basis, from newcomers, to General Managers. The Training

Roadmap will alsobe integrated into HRM functions as one factor for promotion in 2008.

The production staff has also been provided a career development mechanism named “Working Life Plan” (WLP). Under this plan, employees are trained in the fundamental skills of their respective shops on a rotational basis. WLP is also linked to promotions, similar with the Training Roadmap.

Furthermore, TMT expanded its self-realization opportunities to other activities, such as:

1)Potential Executive Programs: Thisprogram isprovided to managerial staff at each level whose competency and performance evaluation results are high.

2)Skill Contest 2007: Designed to motivate career development in the production area and strengthen the WLP system. TMT has conducted Skill Contests for many years starting in each shop of each plant, finding representatives to join the TMT Cross Plant, Asia Pacific Skill Contest and TMC Skill Interchange Festival, respectively.

3)QC Circle (QCC): Since 1983, QCC has been implemented in TMT as one of the main Kaizen (Continuous Improvement) activities for the production line. QCC is an activity that promotes problem-solving, called the Toyota Way in Practices. In this activity, employees accumulate knowledge and practices of problem solving, including job and process improvement. Currently, the number of participating teams has substantially increased due to wider participation from the office area.

1. Employee Relation Management

Our Principle

With its long history of great success in Thailand, one of the core principles underlying TMT’s remarkable performance is Human Resources Management, which has become the company’s DNA. It deals with “Mutual Trust and Mutual Respect”, which requires the company to ensure stability of employment and also improves working condition. In return, employees have to show their strong ownership of their responsibilities. Based on the company’s DNA, both the company and its employees share common values, goals, and targets for the company’s prosperity. When success comes, all employees receive suitable benefits which contribute to happiness within our organization.

How to ensure good relations with employees

TMT strongly believes in the importance of human resource management, thus, it promotes good relations with employees through three key factors:Information sharing, communication opportunities, and mutual trust and respect. We initiate many activities that provide mutual understanding within the company. They can be divided into activities concerning our labor unionand activities with all employees.

Our company respects its Labor Union sinceit acts as employees’ representatives. Accordingly, TMT and the labor union have many kinds of communication.

Activities with labor union

1. Information Exchange Meetings: The objective of thisis to acknowledge situationsin all departments. The first benefit derived from this activity is to let the Labor Union understand the current situation of the company. And the second benefit is to reduce negotiation time.
2. Joint seminars between senior management and the Union Committee, and Familiar Communication between the President and the Labor Union Committee: The objective of these two activities is to directly convey Company Policies and direction to the Union Committee. The benefits received are good relationships between Top Managements and the Union Committee.
3. Workplace Visits:This activity provides an opportunity for our HR staff and the Labor Union staff to acknowledge problems and receive suggestions directly from employees for improving working conditions.

Apart from that, I would like to give some examples of activities TMT directly provides its employees.

Activities with all employees

1. Familiar talk between Senior Management and Staff:The objective of this program is to enhance each workplace’s communication and relationship between top managements and the non-managerial staff. It is also an exchange channel for communication between the company and its employees.
2. ToyotaFamily Day: This is an annual event for employees and their families to be entertained and to enjoy a cheerful moment together through many activities at an amusement park.
3. Asakai, Yorukai Activities (Morning and afternoon meeting before start working):This activity provides a communication channel among production lines. It’s also a chance for blue collar employees to directly communicate with the human resource staff.
4. Communication Promotion Office: This is a recently established special unit designed to enhance communication within TMT. It is intended to be a direct way for employees and top management to communicate so that we can acknowledge employees’ needs for further improvement.
5. Internal Communication 2007 under the theme “Reflect the past to start our future”: This massive event was recently held on Aug 26th, 2007 for the first time in TMT’s45-year history. The objective of this event was to communicate the history of our company, including our past hard efforts to 4,000 employees, especially the newer generation. This is crucial because many of them have different images about the company’s history, especially the struggle during the financial crisis in 1997, and the way we got through that difficult period with no-layoff policy and moved forward together. The messages of this event were shared by our top executives directly from their own experiences. The result is a greater commitment between top management and employees to form a united front for a brighter future for the company.

Performance of TMT’s Employee Relations Management

Our effort to keep good relations with our employees has contributed to the outstanding performance of Toyota’s employee relation management. This can be seen from our employee’s level of engagement and the many Excellent Labor Relation Awards we received.

Employee’s level of engagement: I would like to share with you our employee’s level of engagement rate after the massive event previously mentioned. The feedback from the questionnaires is extremely positive and impressive. The results indicate that the duration of service years directly correlates with the employee’s level of engagement. Compared to the average level of engagement prior to the Talk show, which was at 50%, the engagement level of the group of employees with more than 10 years of service was 96%, which is the highest. Moreover, the level of employee engagement between 2-5 years of service is around 80%, which is the lowest. Therefore, special attention must be paid to this group. In general, employees who attended the event really enjoyed themselves, and many were inspired by the activities that were conducted, and represented the highest rate of 98%. It can be concluded that we have achieved great results from the Internal Communication event, especially in terms of enhancing the sense of belonging of all employees.

The Excellent labor relation Award and the Excellent Welfare Award: Since 2002, TMT has been evaluated by the Ministry Of Labor governmental agency in terms of basic compliance to labor law and the excellence of welfare for employee.In line with TMT’s efforts and dedication to take good care of its employees, they received the Excellent Labor Relation Award and the Excellent Welfare Award for five consecutive yearssince 2002. This outstanding performance has led to the “Continuous Excellent Welfare award for 2007”, whichwas received from the Prime Minister on September 10th, 2007.

1. Suppliers: Toyota Production System, Safety Management, Quality Management
2. Dealers: ToyotaEducation & TrainingCenter, Toyota Automotive TechnologySchool

1. Suppliers

Toyota Production System

Sincebeing established in October, 2004,the TPS Promotion section’s responsibility has beento support suppliers that produce automotive parts for TMAP-EM.

Considered as our business partners, suppliers are encouraged to achieve higher levels of quality in their manufacturing system. We replaced the old “Push System” by introducing a “Pull System” that eliminates processes that do not add valuetoour products. Furthermore, theToyota Way is applied in order to counteract new challenges and to ensure continuous improvement for suppliers.

This year, we have 81 TPS suppliers that are separated intothreedivisions; namely, Leader, Sub-Leader, and Member.

ATPS training program is provided at the beginning of each year, educating suppliers on TPS introduction and theory. Accordingly, we select suppliers by their TPS efficiency to participate in the project, such as “TSST – Supplier Joint Jishuuken” (“Self-study” or “Autonomous study group”). This includes various practical contents. The activities offer specific expertise that is best suited to their type of achievement. “TPS Final Presentation” and “TPS Supplier Evaluation” areconducted at the end of each year in order to evaluate annual TPS results.

The purposes of our activities are to ensure Quality, Delivery, Safety, and also toenhance their staff morale. The selected suppliers are trained on TPS ability by the Genchi – Genbutsu (Go & See) method in order to promote self-reliance and be able to develop their firm’s competencies.