Every workday, in the Southern California desert city of Ontario, some 242,000 auto parts arrive from Japanese and U.S. suppliers at the Toyota North American Parts Center California (NAPCC), a low-slung, sun-filled warehouse roughly the size of 17 football fields. Inside, some 400 workers receive, sort and store the parts in ceiling-high racks, or pick, pack and load them onto trucks for delivery to a dozen regional centers in the U.S. and worldwide. In so doing, NAPCC employees are the crucial link in a supply chain that gets error-free shipments to these centers within five days of an order or, for priority items, within an astounding two hours.
Impressive as the operation is, however, what NAPCC does is not nearly as remarkable as how it does it. In most warehouses, workers wait for supervisors to tell them what to do, and supervisors, in turn, don't welcome suggestions from the floor, says James Womack, coauthor of the industrial organization classic The Machine That Changed the World: The Story of Lean Production (HarperCollins, 1991). "Management is pretty grim," he says, "and what there is consists mainly of yelling."
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In contrast, NAPCC is organized into 54 work teams, whose members, or "warehouse associates," are expected by management to come up with ways to make the work more stimulating -- and workers more productive. Indeed, many workers carry a laminated card in their wallet inscribed with the NAPCC values, including this one from management: "We depend upon our associates' ideas for continuous improvement."
NAPCC's story of achievement holds real value for senior executives in any industry. Its power lies not so much in the description of teams as in its insights about why teams fail. There was little time for team-building when Toyota Motor Sales USA first opened the parts center warehouse in October 1996, and it is precisely because of the company's concerted effort to understand its initial problems that NAPCC can now illuminate what makes teams truly functional. Namely, for a team to most effectively meet its objectives, each member's unique personal strengths must be identified and utilized, by the individuals themselves as well as by the team as a whole.
To construct teams based on strengths, Toyota worked with The Gallup Organization to develop the High Impact Team Series, or HITS. A multidimensional intervention strategy, HITS is used to identify associates' strengths and construct teams accordingly, as well as to select team leaders and to measure the impact of teamwork on employee engagement and business outcomes. The cornerstone of HITS is StrengthsFinder, a management tool that encourages individuals to focus on their strengths rather than fixate on their weaknesses. At the NAPCC warehouse, HITS helped transform large work groups into motivated and mutually supportive small teams.
When NAPCC began hiring in 1996, it promised its recruits a distinctly Japanese-influenced warehouse process: They would be working in a team culture, not an authoritarian environment. Small groups would be guided by a team leader rather than bossed by a foreman and would be expected to work together to perfect the functions in their section of the warehouse. By streamlining communication and pooling skills, the teams would help ensure that operational problems and employee conflicts were resolved when and where they occurred, by the people who were closest to the issue at hand. For NAPCC job applicants who had spent most of their working lives in command-and-control warehouse environments, the prospect of teamwork was a huge and welcome change. In fact, many of them left other employers to work at NAPCC because they were intrigued by the team concept.
In promising the recruits a team culture, NAPCC managers were invoking the enduring corporate legacy of Taiichi Ohno, Toyota's famed chief of production in the post-World War II period. Ohno rejected the assumption of standard mass production, created by the revolutionary success of Henry Ford's assembly line, in which it made more sense to allow faulty cars to proceed through the line until they were eventually reworked or trashed, rather than to stop the system to fix one mistake somewhere along the way. Instead, Ohno championed lean production, which uses less of everything -- people, space, tools, raw materials -- to make a product right on the first try. Work teams were central to the success of lean production: By using the collective decision-making skills of factory workers, and not just their muscle, teams eliminated much of the supervisory and bureaucratic framework inherent in most large operations, thereby maximizing workers' local control over different parts of the assembly line.
With lean production, Toyota set a new worldwide standard for manufacturing excellence. As a result, team-based manufacturing systems attracted a brighter spotlight as a method for raising quality standards. According to John Paul MacDuffie at the University of Pennsylvania's Wharton School, teams facilitate learning and cross-training, create a social context that contributes to morale and motivation, achieve higher performance by replacing close supervision with peer pressure and offer a framework for testing and implementing ideas for improving productivity, quality and safety. But "it's hard to do teams right, to have them taken seriously and to sustain their effectiveness over time," says MacDuffie. "Toyota is very good at this."
So if teams are Toyota's forte, why didn't they coalesce, at first, at NAPCC? The problem, in brief, was bad timing: Before the NAPCC hires could be schooled in a team approach to their tasks, the demand for parts exploded. NAPCC quickly hired an additional 200 temporary workers to help relieve the crunch. Still, the problems mounted: Orders were delayed, for example, because of computer glitches in inventory-tracking. Not surprisingly, customers started to complain. "We were clearly challenged at the huge task of launching this new operation," says Joe Kane, NAPCC's national customer support financial administration manager. "Our focus shifted to doing everything necessary to process and ship our customer's orders."
Nor was the situation easily correctable. To cope with the crush, NAPCC supervisors adopted a command-and-control style, an understandable reaction under the circumstances. When a matter is urgent, "single leader units are intrinsically more efficient than teams," says Jon Katzenbach, author of The Wisdom of Teams: Creating the High-Performance Organization (Harper Business, 1994).
Unfortunately, the "traditional supervisory structure" culture persisted at NAPCC, even after order flow had stabilized 18 months later, by the spring of 1998. What had been envisioned as an operation comprised of small teams had transmogrified into 13 supervisor-driven "home positions" that consisted of up to 50 or more workers taking orders from group leaders and assistant group leaders.
The associates, however, had not come to NAPCC for old-style management. "They were telling us in opinion surveys that NAPCC was not delivering on its initial commitment to teams," says Kane. " Our work group structure made it extremely difficult to build strong partnerships with our associates."
In assessing their workforce, NAPCC managers knew they had to address these important issues.That concern was uppermost in their minds when, in April 1999, they attended the Toyota Great Managers Program, a four-day Gallup course that is routinely attended by Toyota managers at the University of Toyota, the company's training school in Torrance, Calif. Teamwork, it should be noted, is not the focus of the Great Managers' Program. Rather, the program's tent pole is StrengthsFinder, the Gallup approach to identifying an individual's strengths and helping managers match individuals to tasks that play to their strengths, while managing around their weaknesses.
The NAPCC managers immersed themselves in Gallup's strengths-based approach, they came to see NAPCC's tendency to overlook individual characteristics as one of the root causes of their associates' frustration. Confident that they had learned new management principles that were directly relevant to their specific challenges, they committed "then and there to following through on steps to effect real change at NAPCC," says Tom Hatton, a senior managing consultant at Gallup who has worked extensively with Toyota.
When they returned to the warehouse, a nine member cross functional planning team, Leadership 2000, was formed with a goal of restoring workers' trust by creating the team environment that had been promised.
Their first team effort was to ask Will Decker, an associate dean at the University of Toyota, to create a formal curriculum to develop a team-based culture at NAPCC. Decker partnered with Gallup to design the course. The course put StrengthsFinder at its core and relied on Q12, Gallup's workplace quality metric, to establish the baseline for measuring improvement. (See "Exactly What is Talent, Anyway?" and "Feedback for Real" in See Also.)
Applying concepts and tools from the Great Managers Program to warehouse floor associates was a new direction for NAPCC and Toyota; until then, the program had been offered only to managers. "Instinctively, we knew that the strengths-based concepts and tools of the Great Managers Program could be applied on the warehouse floor, as well as in a knowledge-based environment," says Decker. "We just needed to try it."
So NAPCC managers prepared to have all associates learn about their strengths. They decided to keep the original 13 home positions, but also to break down each position into a series of much smaller teams of seven to 10 associates, each with its own autonomy, accountability and team leader. Workers in each position organized themselves into smaller teams, with the guidance of Leadership 2000.
When the restructuring and training intervention began in June 2000, not everyone was psyched about the renewed emphasis on teams. Many associates responded to the reorganization with cynical disbelief. "We were supposed to be in teams before, and look what happened," recounts one worker. Some associates were reluctant to complete the StrengthsFinder questionnaire, a set of 180 paired statements, such as I Like Explaining Things/I Like Doing Things. From each pair, associates choose the one that most closely fits his or her temperament, thereby creating a map of dominant behavior patterns. One's behavior is then associated with a series of natural strengths, such as the ability to set and achieve goals, develop expertise in new areas and to identify and have empathy with others.
Reluctant associates saw no reason to accept management's word that the assessment would help workers learn more about themselves. Instead, they feared that management might somehow use the results to cull mediocre performers. But the enthusiasm of those who did take StrengthsFinder eventually won over the disaffected associates. And that commitment grew with the realization that the overall effort was not just for show. For example, to make sure that the associates' strengths would be put to use, Gallup and Toyota conducted several "learn at lunch" sessions. (Normally, Gallup consultants explain the profile's findings during one-on-one consulting sessions. But this wasn't feasible at NAPCC, where employees couldn't be pulled off the job.) At the lunchtime meetings, Gallup consultants delivered each participant's StrengthsFinder results and answered questions about the findings. "I thought they were psychic," says one associate, echoing the amazement of many colleagues. Gradually, associates began to see how their various strengths could mesh to form strong teams. For example, a team member with a natural strength in focusing could help the others set goals. One associate realized he could be a catalyst for change because he wasn't intimidated by having to acquire new skills.
With their newfound insights, associates and managers could turn their attention to the selection of team leaders. The NAPCC managers believed that team leaders should be facilitators, peers leading peers, rather than bosses barking orders at subordinates. They encouraged anyone interested in being a team leader to volunteer.
Initially, potential leaders were identified by human resources and managers. That process has since changed; now everyone in a home position votes on a team leader. Management still has the final say on leaders, but team members see the vote as an opportunity to influence the selection. "This is a great process if people are honest," says one team member. "Your colleagues are the ones who know you and they are going to have to live with the choice once it is made."
The crowning team-building effort at NAPCC was the team-blend day, a half-day session that associates spend together with coaches from the university and Gallup. The purpose was to move from awareness of one's own strengths to awareness of one another's strengths, which would facilitate teamwork later on.
The team-blend day started at 6 a.m. on a Saturday morning. The session couldn't take place during normal working hours because it would have disrupted operations. Associates had requested the early-morning start, not because they couldn't wait to complete their training, but because they wanted to keep as much of their Saturday free as possible. As the session progressed, however, a transformation took place. "At first participants seemed to be asking, 'Why are we here?'" says Hatton, "but they ended up valuing the experience as a springboard to better work relationships."
Some deceptively revealing questions got the session rolling. One of the first was: "At work, what do you like to be called?" Gallup researchers know that many workers have nicknames they don't like. Obviously, teammates would bond better with people who called them by names they liked. Team members were also asked to share salient details about their work lives, such as turning points in their careers, job-related successes and goals for the coming year. At times the discussions proved difficult, because in general the associates were not accustomed to talking about themselves or their aims.
To inject some levity, team members were also asked what animal they would like to be. The worker who wrote down penguin explained that he admired the bird because it was always dressed and ready to go. Another identified with the jaguar because, unlike other cats, it knew how to swim. "You lay your cards on the table and you walk away with newfound respect for the other people in your team," says one associate. The insights also pay off in better communication at the warehouse. "The questions got people to talk about themselves. Then it was easier to talk to them later," says another.
In fact, associates found the team blend sessions so valuable that when a team from one of the shipping docks added a new member, the rest of the group decided to go through the process again to meld the newcomer into the group.
The real measure of success, of course, is whether teams improved the operation of NAPCC. As the team-building process got under way, Gallup made an initial assessment of employee engagement using Q12, a 12-question survey that measures how well employee needs are met. (High Q12 scores indicate a workforce that is engaged, a trait that portends enhanced productivity and other desirable business outcomes. Low Q12 scores reflect a workforce that is disengaged, or fundamentally disconnected from the work.) Not surprisingly, the first Q12 at NAPCC was quite low: Compared with Gallup's database of 106,000 work units and 1.4 million employees, NAPCC associates were less engaged than average. "Let's just say the scores weren't the best I've ever delivered," says Gallup's Hatton. By February 2001, however, six months after the intervention began, engagement as measured by Q12 had risen from the 15th to the 29th percentile in Gallup's database, and the percentage of warehouse associates who said they were "extremely satisfied" with NAPCC as a place to work rose from the 71st to the 82nd percentile.
Perhaps most significant, within a year of the intervention, Toyota's own productivity measure showed a 6% increase in overall per-person productivity. To compare, in quarter over quarter for the previous three years, the measure had not varied by more than 1%, plus or minus. Another encouraging sign: When the team selection first got under way, two of the home positions were singled out for intensive team training, and those two groups showed a 9% productivity increase within just six months.
There are also less quantifiable signs of improvement. Says one team leader: "If there's a problem, we stop and deal with it. We never had that before, the ability to get together for five minutes and either solve the problem or raise it as an issue to deal with later." Also, NAPCC's human resources department reports that it is involved in fewer disciplinary actions because teams handle most of them on their own.
Happily, the change for the better does not seem transitory. Rather, teams focus on solidifying gains while improving even more. Take, for example, the home position that stores radiators and carpets. They recently put together a temporary four-person team to address the physical safety issue of manhandling bulky items across wide distances. Their solution was to widen the aisles so that carts could get closer to bins and the parts would not have to be carried so far.
Now that the problem is solved, however, the team doesn't want to disband. "The team wants to mentor other groups in forming teams based on strengths," says one member proudly. With a team spirit like that, no wonder Toyota relies on its associates for continuous improvement.
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