When a company is running in loss, what will be the suggestions of a HR to improve the company?
From India, Coimbatore
HR is support function it cannot give suggestions to improve the business of company , this job is of the core Technical team.
From India, Madras
We request you to share the concerns that are there in the company for us to suggest and contribute strategic solutions. Please do not share data, but purely the concern. We respect your privacy and would look forward to brain storm on this issue.
(Cite Contribution)

From India, Mumbai

The HR Can help the company only by way of cost control activities by identifying the unwanted expenditure and cultailing the same. Advising the Management for Reducing the Manpower wherever it feels not required. Having the control over the day-to-day overheads by which also it can save upto some extent.
But major part can be done by the operational and maintenance side by increasing the productivity and serviceability of machinaries respectively.

From India, Kumbakonam
Dear P.2010

By- Dr. John Sullivan is a well-known thought leader in HR. He is a frequent speaker and advisor to Fortune 500 and Silicon Valley firms. Formerly the chief talent officer for Agilent Technologies (the 43,000-employee HP spin-off), he is now a professor of management at San Francisco State University. He was called the "Michael Jordan of Hiring" by Fast Company magazine

Unless you have been living off the planet Earth, you have probably already read or heard about several mechanical failures in Toyota automobiles that led the auto maker famous for quality to recall nearly nine million cars worldwide. In addition, poor handling of the issue in the public eye has damaged the automaker’s brand reputation and caused sales to decline to their lowest point in more than a decade.

This think piece wasn’t written to inform you further about the mechanical failures, but rather to reflect on the following premise:

Toyota’s current predicament is a result of poorly designed practices and weak execution on the part of the human resource department!

To Find the Root Cause, You Must Look Beyond Gas Pedals

The mechanical issues plaguing eight Toyota models are not the result of human resource professionals assuming product design roles and producing faulty accelerator pedals and onboard computers, but anyone who has studied failure analysis knows that the breaking point of a product or service is seldom the underlying or root cause of the failure. Using the sinking of the Titanic as an example, the damage caused by the hull colliding with the iceberg ultimately sank the ship, but the collision was the result of a series of poor decisions to travel too fast given weather conditions. While hull design flaw contributed to catastrophe, the root cause of the problem was human error.

In any situation where employees fail to perform as expected, investigators must determine if the human error could have been caused by factors beyond the employee’s control. Such external factors might include actions by senior management, lack of adequate information or job training, faulty inputs to the process, or rewards that incent actions not in line with documented goals.

If you believe in accountability, you have to accept that human errors that lead to corporate catastrophes could be the result of faulty HR processes, most notably those related to acquiring, developing, motivating, and managing labor. Returning to the Titanic example, had the owners of the Titanic implemented rewards for safety as well as speed or hired a captain more detail-oriented, there would have been no crash that dreaded night.

Weak HR Has Been a Major Contributor to Other Notable Failures

Weak people-management practices have been attributed as the primary causes of failure in a number of notable cases. At Enron and Bear Stearns for example, reward systems that incented dangerous behaviors easily overpowered the effect of control systems designed to prevent fraud and ethical breaches. The mass killings at Fort Hood would not have occurred if the Army had better linkage between performance management and critical incident reporting systems.

Employee Errors Were the Root Cause

Business Week estimates that Toyota is losing $155 million per week as a result of their recent recall and in the weeks leading up to this article Toyota had lost nearly $30 billion in stock valuation. The long-term impacts of the root causes that led to Toyota’s current situation could cost the company hundreds of billions of dollars.

The mechanical failures were known to Toyota leaders long before corrective action was taken, and many close to the issue are indicating that the company took decisive action to hide the facts and distort the scope of the problem. The underlying problem of failing to act on this critical information in a manner consistent with Toyota’s brand is again a rewards issue similar to that at Enron. When the organization disproportionately rewarded managers for cost-containment versus sustaining product quality, it created the incentive for everyone involved to ignore the facts and to deny that a problem existed. Employees who are well-trained and subject to balanced rewards and performance monitoring systems would not have allowed the situation to grow as it did.

The Eight HR Processes That Contributed to Toyota’s Downfall

If the root cause of the problems Toyota is facing is failure by employees to make good decisions, confront negative news, and make a convincing business case for immediate action, then the HR processes that may have influenced those decisions must be examined. The HR processes that must at least be considered as suspect include rewards processes, training processes, performance management processes, and the hiring process.

Rewards and recognition — The purpose of any corporate reward process is to encourage and incent the right behaviors and to discourage the negative ones. It’s important for the reward process to incent the gathering of information about problems. It’s equally important to reward employees who are successful in getting executives to take immediate action on negative information.

Key questions —Were rapid growth (sales have nearly doubled recently) and “lean” cost-cutting recognized and rewarded so heavily that no one was willing to put the brakes on growth in order to focus on safety? Were the rewards for demonstrating error-free results so high that obvious errors were swept under the table?

Training — The purpose of training is to make sure that employees have the right skills and capabilities to identify and handle all situations they may encounter.

Toyota is famous for its four-step cycle — plan/do/check/act — but clearly the training among managers now needs to focus more on the last two. In addition, in an environment where safety is paramount, everyone should have been trained on the symptoms of “groupthink” and how to avoid the excess discounting or ignoring of negative external safety information. Key question — If Toyota’s training was more effective, would the managers involved have been more successful in convincing executives to act on the negative information received?

Hiring — The purpose of great hiring is to bring on board top-performing individuals with the high level of skills and capabilities that are required to handle the most complex problems. Poorly designed recruiting and assessment elements can result in the hiring of individuals who sweep problems under the rug and who are not willing to stand up to management. Key questions — Did Toyota have a poorly designed hiring process that allowed it to hire individuals who were not experienced in the required constructive confrontation technique? Were their hires poor learners that did not change as a result of company training?

The performance management process — The purpose of a performance management process is to periodically monitor or appraise performance, in order to identify problem behaviors before they get out of hand. If the performance measurement system included performance factors to measure responsiveness to negative information, Toyota wouldn’t be in turmoil today. Key questions — Was the performance appraisal and performance monitoring process so poorly designed that they did not identify and report groupthink type errors? Did Toyota’s famous high level of trust of its employees go too far without reasonable metrics, checks, and balances? Did HR develop sophisticated metrics that produced alerts to warn senior managers before minor problems got out of control?

The corporate culture — The role of a corporate culture is to informally drive employee behaviors so that it closely adheres to the company’s core values. Because these errors occurred under difficult driving conditions, it’s hard to blame the production group, which has a well-known reputation for Six Sigma quality in its construction. The negative reports came to functions like government, risk analysis, corporate and customer satisfaction. As a result, it is the culture within the corporate offices that need to be more closely monitored rather than assuming that the culture was aligned. It appears that the corporate culture created leaders so concerned with “saving face” and so adverse to negative publicity, that they for years postponed making the announcement of a massive recall.

Key questions — Did HR’s failure to measure or monitor the corporate culture contribute to its misalignment? Was the corporate culture (the Toyota Way) so biased toward positive information that employees learned not to make waves, in spite of their professional responsibility to be heard on safety issues?

Leadership development and succession — The purpose of leadership development and succession planning processes are to ensure that a sufficient number of leaders with the right skills and decision-making ability are placed into key leadership positions. It is likely that the leadership development and the promotion process both failed to create and promote leaders who were capable of confronting problems and making difficult decisions.

Key question — Was the leadership process at Toyota so outdated that it produced the wrong kind of leaders with outdated competencies, who could not successfully operate in the rapidly changing automotive industry?

Retention — The purpose of a retention program is to identify and keep top performers and individuals with mission-critical skills. Key question — Did the retention program ignore people that brought up problems and as a result, did these whistleblowers often leave out of frustration?

Risk assessment — Most HR departments don’t even have a risk assessment team whose purpose is to both identify and calculate risks caused by weak employee processes. Clearly HR should have worked with corporate risk management at Toyota in order to ensure that employees were capable of calculating the long-term actual costs of ignoring product failure information.

Key question — Should HR work with risk-assessment experts and build the capability of identifying and quantifying the revenue impacts of major HR errors, including a high hiring failure rate, a high turnover rate among top performers, and the cost of keeping a bad manager or employee?

Final Thoughts

Toyota’s problems are not the result of a single individual making an isolated mistake, but rather due to a companywide series of mistakes that are all related to each other. So many corporate functions were involved, including customer service, government relations, vendor management and PR, that one cannot help but attribute the crash of Toyota to systemic management failure.

Unfortunately, in this case, the famous Japanese saying is true. “The nail that stands out” was not encouraged to be different, but instead it was “pounded down” to conform.

The key lesson that others should learn from Toyota’s mistakes is that HR needs to periodically test or audit each of the processes that could allow this type of billion-dollar error to occur.

Note: I invite comments about what other human resource factors may have contributed to Toyota’s downfall.




From India, New Delhi
Hi Boss,

Please let me put up oone point whether the HR likes it or not, HR cannot take credit of everything, and anything, and cannot claim that they can bring company out of loss or not...Now let me take you an example of some mechanical manufacturing industry

There are persons who have done BE, ME, and other programs like MOST, and technical courses and are experts in their field, they do their best to identify unwanted expenditure, now if a process has 3 steps a HR is incapable of advising the company whether to avoid the second step or not, only the technical persons are capable of deciding the process. Again control over manpower and over heads is not HR s problem, they cannot tell to reduce one manpower and make a person work two shifts, that person will be fatigued and work will suffer. So let us understand and accept that as a HR there are limitations as to which extent can a HR save a sinking ship...

Also if some HR feels they can save sinking ship please go to mumbai where the Cargo ship MV Wisdom is grounded because of engine failure, might be some HR might solve the issue by some tricks.



From India, Madras
Hello Pearlin2010,
I am not too sure that I agree with kraviravi.kravi. EVERYONE has a role to play in any Company's rise as well as fall--in whatever limited way.

Apart from what S. Bhaskar mentioned, I think the First & foremost YOU as HR NEED TO DO is the First ensure the employees COPE WITH THE PROBLEM. Whatever Bhaskar mentioned WILL COME LATER--what good is any advice and/or steps, if the people aren't MENTALLY PREPARED to take such advice--let alone put into practice?

As HR, YOU need to FIRST UNDERSTAND THE PROBLEM YOURSELF & ALSO ARE CONFIDENT that the situation can be resolved [mind you--I am NOT talking ANYTHING about the possible solutions/suggestions here]. Unless YOU ARE CONVINCED & ARE CONFIDENT, howsoever much pep-talk you give to the other employees, it's, like they say--water down the drain.
In a nutshell--YOU HAVE TO FOCUS ON KEEPING THE TEAM MOTIVATED & HIGH-SPIRITED. And this CAN'T be a single-time effort--it has to be continuous UNTIL things get better. In fact, it's all the more important in such situations--when the chips are down. I recollect a Quote here [one that often used earlier with my team & practiced too]: When the Going gets Tough, the Tough get Going.

Once you are fairly comfortable that the situation--vis-a-vis the motivation--has been handled, then is the time for a good Brain-storming session where MOST--if not all--employees & management participates to give THEIR suggestions to handle different aspects of the problem. You will be surprised at the tempo & the ideas that get thrown-up on such occasions. I recollect an old film of Aamir Khan [not sure of the title] where he gets a BIG Order to deliver a consignment of stitched items--only to realize that the Funding bank played dirty. Then he decides to break the news to his staff & he was surprised with their response--it ends in a pleasant note of course.
All he did was to follow the Simple Management/HR practice--though not frequently used--of speaking in terms of "WE-HAVE-A-PROBLEM/OUR PROBLEM" rather than "COMPANY'S/MY/MANAGEMENT'S PROBLEM". And his BODY LANGUAGE matched his words.

A word of caution: usually the first step--from management's perspective--would be to down-size the staff strength, in such situations. I think though it gives a short-term solution, the long-term consequences would be prohibitive from the HR perspective.

Hope you get the point.


From India, Hyderabad

Dear Mr. Ravi

I do not know about you, but I know I am not doing the work for getting some appreciations from someone or credit from others. I am keeping on doing my duty for my satisfaction. After the working hours If I go to sleep during night time, I used to felt that I have worked today for my satisfaction. If we try to satisfy others, then it is not possible to do any work as per the requirement. If the company runs in loss, obviously we must join hands together alongwith the other team members and try to control atleast in some aspects like cost control, and avoiding unwanted expenditure.

The cinema industry is running in group to obtain success. If the entire team works nicely and one part goes down means also the entire movie will be failure. The HR is as like a production controller who is having the control on the financial planning of a movie. In the same way, even if the move flops then also the Actor or Music Director can have the satisfaction that they have done their part very well. Like that satisfaction if you get, that's only important than getting the appreciation or your so called credit.

Hope you can understand what I want to convey.

All the best.

From India, Kumbakonam
I am with you S. Bhaskar. As the saying goes: A chain is as STRONG as it’s WEAKEST Link. Rgds, TS
From India, Hyderabad
Dear Readers

With reference to the topic, “can HR save a sinking Ship?” my answer is yes. No matter what technicalities business process involve, there is a human element in the process flows, which usually leads to profits and losses in the company. HR must involve themselves in complete functioning of the company. HRs at least must be aware, informed or educated about all functional departments in the company or departments for which they are exclusively hired to take care of like - Sub Unit, Branch, Division, Department etc.

If employees are completely made aware of their requirement in the company and this awareness is updated from time to time, there are fewer chances of companies going in losses.

Contribution by HRs can be :

• Effective recruitments

• Induction & Orientation

• Adherence to Training Standards

• Objective performance appraisal systems

• Retention of Talent and Performers

• Career planning etc.

Line Managers can take care of technical evaluation of employee’s performance, number crunching, production targets, sales targets etc. where as HR can evaluate the quality side of performance, Its understandable that employee spend maximum time with line managers, thus many inter personal initiatives has to be taken care by the line manager to keep the employees motivated. But as technical managers have less experience when it comes to handling employees, this is where HR comes into play.

An effective HR acts as a neutral link between the management and employees, balancing the needs of both sides, needs may include agreeing upon Compensation and Benefits, Manpower recruitments, important non technical trainings, rewards and recognition, career planning etc.

HR cannot suggest, advise or instruct principle changes in process flows due to lack of technical expertise, but understanding these processes can help HR recruit, appraise, retain, compensate and communicate with work force at more effective levels.

Line managers don’t expect to waste time over issues not directly related to their performance. For Line managers, employees are resource allotted to them, just like machines and budgets. And some line managers are concerned only with quantitative output these resources can provide to meet targets. Without due care about resources, this may lead to depreciation of resources, resulting in decreased sales, less productivity, attrition etc.

Im working on an assignment, where company was making miserable losses, and operation manager was unable to understand where the exact problem lies. Although operational processes are near perfect, systems in place, resources are well allotted, yet company is making losses, the reason is Lack of Human Resource Initiatives.

I hope I have positively contributed to this discussion

Thanks for reading

From Kuwait, Salmiya

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