David Dodd
Well-known member
A few days ago, we got into a brief discussion in another thread about the use of lean to reduce headcount. This issue is critical to success with lean, so I thought it deserved a separate thread. In the earlier thread, some members of the forum argued that if lean practices reduce waste and make it possible to perform current levels of work with fewer people, most companies will respond by reducing headcount. No doubt, some companies have done this and others will in the future. But this approach is self-defeating and will undermine success with lean.
Lean has now be implemented by many companies around the world, but the best example of a truly lean enterprise is still Toyota Motor Corporation. Last month, Toyota halted production of Tundra pickups and Sequoia SUV's at plants in San Antonio, Texas and Princton, Indiana for three months because of declining market demand. This production halt idled some 4,500 employees, but Toyota will not lay off any of these employees. Instead, these workers will use the "downtime" to improve production processes, take training courses, and even perform community service work. One commentator estimated that the decision to keep these 4,500 employees on the clock at full pay and benefits during the planned 14-week shutdown will cost Toyota at least $50 million. Latondra Newton, general manager of Toyota's Team Member Development Center in Erlanger, Kentucky explained the decision by saying, "This was the first chance we've really had to live out our values. We're not just keeping people on the payroll because we're nice. At the end of all this, our hope is that we'll end up with a more skilled North American workforce."
Now, you can say that Toyota's size and financial strength gives it the "luxury" of making this decision. But, Toyota has made many similar decisions in the past when it wasn't as large or as financially strong. Toyota recognizes that its ability to continuously improve the productivity of its operations depends largely on its people.
That's true in any company that is trying to become lean. You simply cannot achieve long-term success with lean without the active participation of your employees. And you cannot hope to win the support of your employees for your lean efforts if you use lean improvements as the reason for eliminating "unnecessary" people.
Lean has now be implemented by many companies around the world, but the best example of a truly lean enterprise is still Toyota Motor Corporation. Last month, Toyota halted production of Tundra pickups and Sequoia SUV's at plants in San Antonio, Texas and Princton, Indiana for three months because of declining market demand. This production halt idled some 4,500 employees, but Toyota will not lay off any of these employees. Instead, these workers will use the "downtime" to improve production processes, take training courses, and even perform community service work. One commentator estimated that the decision to keep these 4,500 employees on the clock at full pay and benefits during the planned 14-week shutdown will cost Toyota at least $50 million. Latondra Newton, general manager of Toyota's Team Member Development Center in Erlanger, Kentucky explained the decision by saying, "This was the first chance we've really had to live out our values. We're not just keeping people on the payroll because we're nice. At the end of all this, our hope is that we'll end up with a more skilled North American workforce."
Now, you can say that Toyota's size and financial strength gives it the "luxury" of making this decision. But, Toyota has made many similar decisions in the past when it wasn't as large or as financially strong. Toyota recognizes that its ability to continuously improve the productivity of its operations depends largely on its people.
That's true in any company that is trying to become lean. You simply cannot achieve long-term success with lean without the active participation of your employees. And you cannot hope to win the support of your employees for your lean efforts if you use lean improvements as the reason for eliminating "unnecessary" people.