Toyota began as a small, humble auto company in a small Japanese farming village on the outskirts of Tokyo. It was a product of the vision of Sakiichi Toyoda, who believed that the small family-owned business could become something more. As the company grew to new heights, Toyota and its distinctly great leaders established a unique company culture based on learning, mutual respect, and continuous improvement.

Mike Hoseus, former Toyota executive and co-author of Toyota Culture, describes his time at Toyota as being transformative in ways beyond just professional development. He says, “I often look back at the experiences with my mentors as influential beyond the walls of Toyota and applicable to life and leadership in all contexts.” But what about Toyota’s system for people development makes it so uniquely successful?

The continuous improvement process is at the center of the way the company practices people development. Toyota Culture is a continuous cycle of investing in and developing each and every employee, and this can be seen in its investments in sponsored school programs to improve teamwork and problem solving, an extensive training program for every new hire, suggestion system payouts, etc. One of the primary goals of these investments is to avoid losing active fulltime employees, and Toyota continues to succeed in having incredible retention rates; team member turnover is less than three percent each year.

People that visit Toyota are often astounded by what they see. For most visitors, the most surprising thing is how engaged in their work every employee seems to be, particularly the assembly line workers. This is especially surprising because assembly line work is supposed to be the ultimate mind-numbing job. What visitors can’t see, however, is the years of work, development, and investment in each and every employee that compels them to feel good about their work, the company, and themselves. The investments Toyota makes in its people are mutually beneficial and are based in the company’s founding ideal that the business should lead to mutual prosperity. The values that started in Japan have been not only engrained in American Toyota workers, but are carried wherever Toyota operates globally.

The concrete ways in which Toyota supports its people are a clear reflection of the Toyota Culture. On the surface, this is manifested in things like meetings, well-kept metrics, and audits of member safety. Most obviously, the value Toyota places in its people can be seen in how engaged and energetic its workers are. Practices such as holding meetings on the shop floor as opposed to in a cushy meeting room reinforce the Toyota ideals of supporting team members both physically and psychologically, providing a safe working environment, engaging in servant leadership, and always communicating clearly and frequently. All of these ideals, combined with the focus on improving systems instead of blaming individuals, aim to sustain and support individuals and teams in their coordinated efforts to add value.

One thing that you will not find at Toyota is an elaborate system for rewards. Instead, promotions are gradual and modest bonuses are given out on the basis of company performance. Despite the lack of individual performance-based pay incentives, it is not uncommon to see Toyota employees at every level of the organization taking on challenges beyond their job descriptions and doing whatever they can to overcome them.

The reason for this lack of a sophisticated performance-based pay system is simple: Toyota’s values stretch beyond superficial, short-term rewards. In fact, if you ask Toyota leadership what they value most, they are likely to respond with such things as that people must be treated fairly and with respect, that they must feel safe and secure in the work, and that if they have any concerns, leadership will take them very seriously. Toyota leadership are much more likely to view trust, as opposed to compensation, as representing the primary bond between employer and employee. The way Toyota treats its people is based in the fundamental belief that the ultimate company goal is long-term mutual prosperity for all stakeholders of the organization. If the company can establish trust and prove that they are willing to support their employees at each step of their careers, their people will be willing to put their faith in the company to do right by them over the long-term.

The journey to establishing a company culture of continuous people development requires serious effort by every leader in the organization. Despite the challenges associated with making this sort of cultural change, the benefits are worth it. Each step along the process is a unique opportunity to learn and strengthen your people and culture.

If you are interested in learning more about Toyota Culture, Lean Leadership, or Creating a Culture of Continuous People Development, consider attending our partner event, FocusIn, in which Mike Hoseus will lead an executive workshop on all of these topics and more.

Register for FocusIn June 2021 HERE