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Unit 1: Total Quality Management: An Introduction

Notes

Case Study Toyota Contract Workers

hile life-time employment has been the norm for a portion of the workers in
Japan, recessionary economic systems have made this trend difficult if not
Wimpossible for some corporations. In an effort to eliminate the costly life-time
employment contract while at the same time avoiding lay-offs, organizations led by
Toyota Motor Corporation have created a new category of temporary professional workers
for labour force in Japan.
These temporary workers will have limited of one year contracts. Employees like
automotive designers will not be offered customary life time employment. The company
will pay these employees a salary based on individual merit rather than the past pay
practice of linking pay to seniority and overall company performance.
According to Toyota “As business conditions surrounding Japanese Corporations
underwent radical change, it was inevitable that the rigid organizational structure of past
would impose limits on the corporate growth”.
Toyota President, Tatsuro Toyoda plans to gradually increase the number of white collar
contract workers in Japan. Other Japanese organization may follow Toyota’s trend. The
number of white collar contract employees in increasing and this class of workers is easier
to terminate than life time workers. Contract workers in blue and white collar segments
increased from 14 percent in 1989 to 19 percent in 1993. These temporary workers will be
the safety valve during the cyclical economic conditions. The practices will reduce the
number of white collar workers blamed for many corporate earning declines. According
to a leading Japanese organization, executives agree Japan “must thoroughly revise the
life time employment system”.
Questions

1. Make a brief presentation of the case.
2. What do you think the Japanese revising their employment trend?
3. What are the advantages and disadvantages of the new employment practice?
4. Are Japanese attempting to adopt an American style employment and evaluation
policy?
5. Would the former lifetime employment system work for US companies? Why?

1.5 Summary

“Total Quality Control” was the key concept of Armand Feigenbaum’s 1951 book, Quality
Control: Principles, Practice, and Administration, in a chapter titled “Total Quality Control”.
Total Quality Management (TQM) is a management strategy aimed at embedding awareness
of quality in all organizational processes.
TQM is defined as both a philosophy and a set of guiding principles that represent the
foundation of a continuously improving organization.

During the early years of manufacturing, inspection was used to decide whether a worker’s
job or a product met the requirements.

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