MCOE Project Report

8/8/2019 MCOE Project Report

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CHANGE MANAMGEMENTAT TOYOTA FINANCIAL

SERVICESAn MCOE report submitted in partial fulfillment of the

requirements

For the award of the degree

Of

POST GRADUATE DIPLOMA IN MANAGEMENT

Approved by AICTE

2009-11

(Equivalent to MBA)

Submitted To: SubmittedBy:

Prof. Anita Singh NISHI SHUKLA-9245

Chairperson HR AVANEE TAYAGI-9054

IMS (GZB) MOHSIN ALI-9111

MADHUBALA SHARMA-9099

PRASHANT PRIYADARSHI-9145

INSTITUTE OF MANAGEMENT STUDIES


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GHAZIABAD

DECLARATION

I hereby certify that we has successfully completed our report on STUDY OFCHANGE MANAGEMNT IN TOYOTA FINANCIAL SERVICES, USA. This isalso to certify that this report is an original product and no unfair means like copyingetc have been used for its completion.

NISHI SHUKLA -9245

AVANEE TYAGI -9054

MADHUBALA SHARMA -09099

PRASHANT PRIYADARSHI -9145

MOHSIN ALI -9111

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ACKNOWLEDGEMENT

For the preparation of this report and for all the personal insight into the study ofChange Management Systems and Processes of TOYOTA FINANCIALSERVICES, USA. I would like to take this opportunity to extend my sincerest noteof gratitude to PROF. ANITA SINGH (CHAIRPERSON HR) without which ourlearnings and insights would not have taken place.

This report would have been incomplete without our acknowledging the immensecontribution and encouragement of my project guide, who has been instrumental at allimportant stages of knowledge-assimilation and report-preparation of this period.

I would like to thank you for providing us with this wonderful opportunity andguidance.

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TABLE OF CONTENT

DECLARATION 2

ACKNOWLEDGEMENT 3

TABLE OF CONTENT 4

EXECUTIVE SUMMARY 5

OBJECTIVE 6

COMPANY PROFILE 7

INTRODUCTION 9

TYPES OF PMO 11

TFS PMO DESIGN 13

HISTORY OF PMO 15

ORGANIZATIONAL INFLUENCES 18

CHANGE AND CULTURE 24

CORE STRATEGY 27

MAPPING THE WAY 28

LESSON LEARNED APPROACH 31

LIMITATION 32

CONCLUSION 33

REFERENCES 34

ANNEXURE 35

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EXECUTIVE SUMMARY

The increased recognition of project management as an effective means of completinglarge and complex efforts has led to a proliferation of projects within a company. This

has increased interest in developing Program Management Offices (PMOs) to

coordinate projects across the organization. Developing and implementing a PMO

within an organization can be difficult. While executives are ready to accept the

benefits a PMO brings, some project managers have difficulty accepting a loss of

control.

In 2001 Toyota Financial Services made the decision to implement a PMO. There

were three areas that provided particular challenges to the process: managing a

complex process change, the high percentage of contractors in the workforce, and a

collaborative Japanese culture populated by more individualistic Americans.

Leadership In Action is an excellent value and an indispensable tool for improving

your leadership and your organization. By uniting the insights of top scholars and the

experience of working executives, each issue provides the best strategies for

confronting such critical issues as leading a diverse workforce, maximizing the

effectiveness of teamwork, stimulating creativity in the workforce, and more.

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OBJECTIVE

To study the impact of organizational change management in TOYOTA Financial

Services, USA. More specifically to study the :

Implementation of PMO (Program Management Office).

Implementation of Leadership in action at TFS, USA

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COMPANY PROFILE

Since opening its doors in 1983, Toyota Financial Services has grown from a smallcompany with eight associates to one that currently employs approximately 3,300

associates nationwide with managed assets in excess of $81 billion.

The Toyota Financial Services brand identity was launched in December 1999. TFS is

a service mark that acts as an umbrella brand name used to market the products of

Toyota Motor Credit Corporation (TMCC) and Toyota Motor Insurance Services, Inc.

(TMIS). TMCC was incorporated in California on October 4, 1982, and commenced

operations in May 1983 by approving a finance contract for a used Toyota Corolla in

Denver, Colorado. The company provides retail and wholesale financing, retail

leasing, vehicle protection plans and certain other financial services to authorized

Toyota, Lexus and Scion dealers, Toyota forklift and Hino dealers as well as Toyota

Material Handling, U.S.A. dealers, affiliates, and their customers in the United States

(excluding Hawaii).

TFS is part of the worldwide financial services operations for Toyota Financial

Services Corporation (TFSC), which is a wholly owned subsidiary of Toyota Motor

Corporation (TMC) in Japan. TFS has three Regional offices, three Customer Service

Centers, 30 Dealer Sales and Service Offices throughout the United States, and an

affiliate financial services company in Puerto Rico.

Toyota Motor Credit Corporation (TMCC) is one of the largest consumer finance

companies in the U.S. and one of the highest-rated captive auto finance companies in

the world with AA/Aa2 long-term credit ratings by Standard & Poor and Moody's,

respectively.

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Originally known as TMCC Equipment Finance, Toyota Financial Services

Commercial Finance, a division of Toyota Motor Credit Corporation began operations

in November 1984. We funded our first wholesale flooring (dealer) transaction in

January 1985 and our first lease (customer) transaction in November 1985. Today,

TFS Commercial Finance offers financial services to support Toyota Industrial

Equipment and Hino Motor Sales dealers across the USA. Dedication to customers

and dealers has earned Toyota Financial Services a reputation for service excellence

in the commercial finance industry.

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INTRODUCTION

The Program Management Office

Program offices trace their origins back to the Project Support Offices (PSOs)

that cropped up in the 1960s to help large, complex aerospace and

construction projects. As automated support tools such as the original Artemis

scheduling application started to appear and become more widespread, the

direction of program offices changed to include tools support to project

managers. The emphasis changed again during the 1990s to include

coordination among multiple projects to ensure consistency in PM practicesand quantitative portfolio management. While individual projects may have

specific PSOs depending on the projects size and complexity, more often now

the enterprises Program Management Office (PMO) provides support across a

variety of projects that the organization is involved in. The Meta Group

estimates that deploying a Project Office can reduce project failures by up to

80% [STANDISH, 1995].

While there is still confusion in the literature about whether such an office is a

Project Office, a Program Office, a Project Support Office, or a Program

Management Office, for the purposes of this article we will use the term

Program Management Office to specify a project-centered organization which

supports a variety of projects across the enterprise.

Leadership In Action

About five years ago, Toyota Financial Services (TFS) began an incremental process

of establishing a leadership strategy that reflects both an orientation toward

performance and a firm foundation for development.The strategic initiative

started when the CEO, George Borst, and the organizations human resourcedepartment (HR) realized that TFS needed to change the way talent was being

managed and developed. TFS also recognized that several things needed to occur to

accomplish this.When TFS began its initiative, itwas already exceeding goals and

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expanding into new markets. But theCEO wanted to create an organizationin which

leaders maximized their results by developing and growing the capabilities of their

people. Borstunderstood that this was a long-terminvestment that ultimately would

Strengthen TFSs organizational capabilities. He also knew that key cultural andinfrastructure changes would beneeded to sustain lasting change. Theresult was that

the CEO partneredwith HR, giving that department theopportunity and challenge to

helplead TFS in this new directionbecoming a higher-performanceorganization.

For TFS, a higher-performance organization is one that values performance,

development of people, accountability for results, and strong leadershipand that is

always ready for change. (The word higher in the term higher-performance

organization was deliberately chosen to imply that even after the organization

becomes better than it is today, there will always be room for more improvement.)

Although TFS had many attributes that supported achievement of its objective,

several key cultures are needed to be addressed.

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TYPES OF PMOS

Given that PMOs will oversee multiple projects, what types of things should a PMO

do? The answer depends as much on the organizations needs as it does on anything

else. There is not one right way to design a PMO. There are a variety of services and

products that a PMO can offer an organization, and which ones the PMO will have

when it is deployed depends on the specific needs of the organization.

At the very least, a PMO can profitably serve to support a single function, such as a

repository for historical project information or a location for project coordinatrs to

live. As a historical repository it can gather the results of previous projects and of

lessons learned and make them available for project managers to search through

before they begin new projects. This becomes the corporate knowledge repository so

that experience gained is not lost when people leave.

At the high end, a PMO can change the PM culture [BLOCK 1999] and provide:

Enterprise-wide project coordination and consistency.

Set standards and methodologies for all projects in the enterprise

Do quality audits of the projects.

Help the management and executive teams select projects that support

strategic goals.

Help the executive team track the entire portfolio of projects in work by

developing metrics and measuring all projects against those metrics.

Identify the resources that are available to work on upcoming projects.

Support the project managers and project teams with training mentoring, and

career development.

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Collect and archive the documents from completed projects and analyze them

for trends.

Provide a knowledge management system that gathers all project-relatedinformation.

Makes it available in a readily accessible and useful format.

The way the PMO is designed in any one-organization will usually lie somewhere

between these two extremes, with the specific functions chosen according to the needs

of the organization. At a major utility in California, the PMO in their Infrastructure

Organization is referred to as the Nerve Center for the organization. Within Toyota

Financial Services (TFS), the PMO has a strong emphasis on strategic project support

and portfolio management.

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TFS PMO DESIGN

Toyota Financial Services is a relatively new company, having separated from Toyota

Motor Sales (TMS) in 2000. At the time of the separation, TMS was assessing its

project management capabilities. This assessment continued after the companies

separated. The results of the analysis indicated that the best way to increase the

abilities of TFS to deliver projects on time while meeting all of the business needs

would be to institute a PMO. Experts were hired as contractors and the PMO

organization structure shown in Figure 1 was developed based on TMSs needs.

This is a true enterprise-wide PMO. It supports the executive branch, giving them an

objective oversight into the current status of all projects as well as a project selectionprocess that is oriented towards the TFS strategic goals. It also supports the project

managers, providing them best-practices methodologies and processes as well as

administrative help in managing project schedules and, in the future, project costs.

A major driver to the PMO design was that there were almost three dozen projects in

work and more in the queue. The executive-level Governance committee managed

this portfolio of projects, but they had very little factual data to base their decisions on

when it came time to selecting and prioritizing projects or even understanding the

current status of projects. Inputs were given them by the project managers who would

sometimes gloss over problems on their projects and report that everything was going

well even when it wasnt.

There were several projects that were reported as being in work, even though no

resources had been assigned to them beyond the project manager. There was one

particularly important project that had a requirements analysis done, a project

manager assigned, and no resources given it for almost two years after it had been

started. This was the environment the PMO was designed in.

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RECENT HISTORY OF PMOs AT TOYOTA

THE TMS PMO

This is not the first attempt at a PMO that has been developed. In discussions with

employees at Toyota Motor Sales, it was revealed that a PMO was created several

years ago to address the project management problems that were evident at that time.

The development was done internally using existing project managers.

With the advantage of historical hindsight, the developers did almost all of the right

things to create a strong PMO. They developed methods and processes, they worked

with the Human Resources department to create skill requirements for project

managers, and they studied and examined best practices to design the PMO.

The one thing they did not do as well as they could have been to understand the needs

of the project managers themselves. If they had, they would have readily seen that

there were a number of organizational issues, unrelated to project management

practices that were making it difficult to manage projects. As a result of the PMO

developers not gathering requirements, the PMs had no input into the effort.

The first few processes that were implemented did not address the specific needs of

the PMs and were therefore ignored. This created a climate where the remaining

processes were also simply ignored by the PMs and never resulted in any long-lasting

improvements. The PMO was killed during 2001.

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THE TFS PMO

The development relationship between Toyota Financial Services and Toyota Motor

Sales was a complex one and is still in the process of evolving. Project managerscould come from either organization, but the development staff for software products

was in the TMS IS group. The development problems affected both organizations.

TMS already had a PMO at the time of the separation, so TFS determined that in

order to ensure their projects got managed, as efficiently as possible they also needed

a PMO.

At one point each organization had a separate project manager assigned to the same

projects, both of them being told they were in charge. When it became apparent that

dual managers was not a workable solution the decision was jointly made that it

should be the business that manages the overall effort and not the technical group.

Currently the project manager comes from the part of the organization that origina ted

the initial request, from the business side if its a business product being developed or

a regulatory-mandated change and from the technical side for a technology upgrade.

The PMO at TFS started out small. Because it was created at a relatively low level inthe organization, its primary effort was gathering project financial data and reporting

it to a mid-level financial officer. As the need for a full PMO became apparent during

the project management assessment, the decision was made to create a fully

functional enterprise-level PMO and to move the office organizationally so that it

reported directly to the CIO. Because a PMO will impose significant changes to the

project management process, it gains authority by being positioned as high in the

organization as possible [Miller, 1998]

In consideration of the organizational issues surrounding the separation of the

business side from the technology side of the company, the design of the PMO and

development of the PM methodology very carefully separated project management

from any specific product development methodology.

Thus the project manager is responsible for the overall management of the project,

while the technical lead is responsible for selecting the software development

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approach. At TFS the development group is implementing the Rational Unified

Process (RUP) for much of the work and kept a more traditional waterfall approach

for mainframe development work. The project management methodology design was

made flexible so that the PM could adapt to whatever approach was chosen by the

development lead.

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ORGANIZATIONAL INFLUENCES

Depending on the level of project management maturity within the organization and

the functionality desired from the PMO, implementing a PMO can be a highly

complex and difficult undertaking, equivalent to implementing a full Enterprise

Resource Planning (ERP) package. It involves significant change to how project

managers, development staff, and project sponsors perform their work.

While designing the PMO architecture can take only a few months, implementing it

across the organization in a way that makes it both acceptable to employees and

efficient in its processes takes a lot longer. It can take three years before everyone

involved in project management buys into the changes and the product developmentprocess becomes consistent and efficient. It can take another two years before the

efficiencies recover the initial costs and the PMO becomes cost effective. This is a

long-term commitment that requires significant buy-in from the top of the

organization.

In many organizations where there are no standard processes that everyone accepts,

there was a sense of doing whatever was necessary to do what you wanted to do.

Within one particular group, the feeling was that many of the existing processes were

cumbersome and not designed to support the type of work they did.

They discovered that efforts of less than 100 man-hours were considered maintenance

work and therefore were not expected to follow project management processes. As a

result, this group designed virtually all of their projects to be less than 100 hours,

thereby avoiding much of the formality associated with developing new products.

At TFS, there were three issues that needed to be dealt with during the

implementation planning phase:

1. Organizational change management issues.

2. The Minimal Employees approach.

3. A Japanese-style consensus-building culture.

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ORGANIZATIONAL CHANGE MANAGEMENT

Because one of the primary emphases of the PMO was to develop a consistent set of

methodologies (including processes, tools, and templates), it would significantlychange how the project managers would manage projects. Without a standardized

approach the project managers were free to manage their projects in any way they

wished, with no specific reporting requirements or controls. Because of the poor

experience with previous attempts to implement a PMO, the project managers were

not immediately ready to support this effort. In addition to the project managers,

project sponsors were also not completely ready to support the changes because it

would remove some of their authority over the project and make it obvious to

everybody which projects were having problems.

It is often said that when you introduce a change into an organization,

20% of the people will support the change because they are either unhappy

with the existing state or theyre so new they have no investment in the

existing culture.

20% of the people will resist the change no matter how beneficial you say it is

to them. They have so much invested in the existing process that they see no

reason to change.

The remaining 60% are waiting to see how beneficial the change is and how

serious upper management is about instituting the change. They will become

unsupportive if they feel this is just another quick-hit so that someone can say

we created this improvement. But they will become supportive if they see that

the change is successful and to their benefit.

When we developed the implementation plan for the PMO we were sensitive to these

numbers. As we developed new processes, forms, and templates, we reviewed them

with both the project managers and the project sponsors. During the review cycles itbecame obvious that many of the changes we were getting simply moved the changed

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processes back to where the old processes were and de-scoped the new processes so

that the net result was very little change. It required a great deal of consensus building

in order to convince many of these people that the changes would be to their long-

term benefit and much of the approval was given with a well wait and see

mentality.

Because the PMO has a variety of functions in different areas, the implementation

was prioritized with the effort going into the most critical areas first. The first area to

be developed was the creation of a set of consistent project management

methodologies (including processes, templates, examples, and forms). Once this was

completed the next area was to provide an infrastructure to support the project

managers with help in project schedule tracking and project initiation. The last effort

to be implemented will be the strategic support to the executives so that they have a

consistent approach to managing the entire portfolio.

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THE MINIMAL EMPLOYEES APPROACH

Both TFS and TMS are required to keep down the quantity of full-time employees,

presumably so that if the economic conditions deteriorate there will not be a need to

lay people off. However, the amount of work that must be done grows as more

products are sold. Without being able to hire employees the organizations turn to

hiring contractors and consultants to fill the gap. Because the work is not necessarily

simple, the contractors can be there for several years, a situation that is not

uncommon in many companies.

This use of contractor labor, in some parts of the organization 30% of the total labor

force, has several effects. While many American companies have justified the use of

contract labor as saying it gives them more flexibility because they can rapidly obtain

the newest skill sets, the problems created by having a high percentage of contractors

may outweigh that slight benefit.

One major side effect is that much corporate knowledge resides with people who can

leave at any time. While this is true of employees also, the turnover rate among

contractors is higher because they are constantly aware of better opportunities outside

the firm. Also, critical skills may be lost from the company. Operations of the

mainframe computer system has been contracted to an outside firm. While the firm is

well established and well-known, if they decide to cancel their contract Toyota no

longer has the skills necessary to run their own mainframes. Additionally, there is an

increasing gap between the skills needed to compete in todays environment and the

skills of the employees. When skills can be hired on a temporary basis there is little

incentive to invest in employees developing these skills.

Within the PMO we were very sensitive to the fact that many of the project managers

used by TFS were consultants. Our feeling was that project management should be

considered a core competency of the organization and should be done by employees.

Successful project managers have many soft skills that are necessary to consistently

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deliver projects and that are specific to the organization they work in. If these people

leave after a project is completed those skills leave with them and any new project

managers brought in must relearn the same skill sets. Relearning how to be successful

when those skills are already known is an unproductive way to spend time.

Another side effect that we had to deal with in implementing the PMO was the fact

that with so many contractors, much of the real power in the organization was

concentrated in the hands of a relatively small number of middle managers. These are

the people who own the business resources and they have the ability to slow down or

kill any effort they choose not to assign resources to. Any change that occurred in the

organization had to be filtered through them and approved by them.

This was the group that provided the greatest amount of resistance to the PMO

implementation. They saw themselves as giving up a significant amount of power to

this new organization. When the PMO was elevated during the implementation

process to reporting directly to the CIO some of this problem was mitigated because

people saw that the PMO was being taken seriously. Prior to that a large amount of

time was spent working with and coordinating with this management tier. As

documents were routed for coordination many of the comments were designed to

return the processes to the old way of doing things.

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JAPANESE-STYLE CONSENSUS BUILDING CULTURE

What was most challenging about working within the TFS culture was not the fact

that it was originally modeled on the Japanese management approach of coordination

and consensus building. What was most challenging was that we have a Japanese

culture populated by Americans, many of whom came in with a typically American

attitude that Im going to do whatever it takes to get this job done.

The result was a set of clashes between people who had been with the organization for

several years and were comfortable with the culture and people who were relatively

new and were more at home with a style that recognized individual initiative rather

than slow and careful consensus building.

This provided challenges during the implementation of the PMO. Both the people

who wanted rapid improvements and the middle-tier of managers who wanted to

spend several weeks reviewing every change and assessing its impact had to be

accommodated for the rollout.

A two-fold approach was taken to ensure that buy-in was obtained from both groups.

We worked with the project managers to identify where their biggest problems were

and identified quick fixes to those problems. The quick fixes were designed to resolve

the problem with as little impact to other areas as possible.

For example, when the project managers complained that there were too many

documents that they had to generate and that they were never aware of what all the

documents were, the PMO team created a checklist showing which documents were

required for the different phases of the project, who was responsible for those

documents, and provided templates to assist in generating the documents.

Once the project managers saw that what we were doing was actually helping them,

they were more receptive to the other changes, like quality audits, that were also

being rolled out. We found that many of the project managers had the can-do

attitude that focused on completing the project.

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At the same time we had to deal with a layer of middle management that did not want

to see changes made to their organizations. We found we had to spend a lot of time

building consensus among them in order to roll out many of the more far-reaching

changes such as implementing a budget management process.

A management review process was created where the changes were sent to the

managers for review and approval. However, the changes were first coordinated with

the project managers so that they could give a positive recommendation to their

managers. This gave the managers an input into the process changes, but with the

understanding that their employees were supportive of the changes.

This did not completely resolve the problem of having managers make changes that

would return the new processes to shadows of the existing processes, but the team felt

it reduced the frequency and severity of the complaints from managers who wanted

things to stay the way they were.

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CHANGE AND CULTURE

Merely acknowledging that an organization needs to change rarely leads to deep and

fundamental change. Fundamental change requires a large amount of preparation and

work. That is why TFSs approach has taken years, not months, to implement. For

every two steps TFS took forward, it took one step backward. It is no exaggeration to

say that without extensive efforts to prepare the organization for change, TFSs

initiative could easily have failed. Organizational change begins with the

organizations culture, whether that culture is approached directly or indirectly. Some

attributes of TFSs culture are:

A high respect for people and relationships (very associate focused).

A focus on improving quality of life and supporting the communities in which we

live.

Zero tolerance when it comes to issues of integrity.

The pursuit of kaizen, a philosophy of continuous improvement. TFS is always

striving to be better. This translates into placing a high value on performance andresults.

Changing the way management and associates thought about TFSs value of

performance required a delicate balancehonoring the parts of TFSs culture that

would serve as the foundation for change while redefining other aspects. In essence,

what TFS needed to do was create a culture in which leaders could:

Hold associates and managers accountable for performance, and align rewards and

consequences accordingly.

Differentiate based on performance, and develop associates differently based on

their individual needs.

Produce strong managers who value the development of people.

Provide regular and honest feedback to associates to help them maximize their

performance.

These changes may seem simple. But they fundamentally affect every aspect of the

work experience, including leadership expectations, hiring decisions, performance

management, compensation, talent management, succession planning, and associate

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development. They require much more than simply rolling out new HR tools or

training programs, key drivers for career advancement.

Changing the way management and associates thought about TFSs value of

performance required a delicate balancehonoring the parts of TFSs culture that

would serve as the foundation for change while redefining other aspects. In essence,

what TFS needed to do was create a culture in which leaders could

Hold associates and managers accountable for performance, and align rewards and

consequences accordingly.

Differentiate based on performance, and develop associates differently based on

their individual needs.

Produce strong managers who value the development of people.

Provide regular and honest feedback to associates to help them maximize their

performance.

The focus was on leadership skills rather than technical skills. The senior managers

needed to sup-

port and lead these changes through their daily actions and decisions. HR redefined its

own performance expectations and capabilities and how it held itself accountable for

performance. The changes included:

Acquiring and developing stronger analytical, strategic, and consultative capabilities

Reshaping HR consulting teams, and locating them geographically with the

departments business partners

Creating an organizational development team to infuse stronger organizational

design and development capabilities

Enhancing the recruitment function to respond more effectively to the need for new

talent.

TFS also did the unprecedented and filled some executive leadership positions with

outside candidates. This helped introduce new skills, knowledge, and ideas into the

organization, illustrated that the changes touched every level of the organization, and

sent a clear message that in the future, getting ahead at TFS would be more about the

leadership skills and knowledge necessary to move TFS forward.

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These efforts to prepare TFS for change were slow, deliberate, and often difficult

but they were essential. They validated that things were changing and that the

organization was moving in the right direction. Many organizations miss or quickly

pass over the importance of readying an organization for change.

Instead they focus on introducing new programs or tools, assuming that these will

create the change. TFS believes that leaders must own and drive change, using the

appropriate tools. At TFS, the initial steps set the stage for change and began to create

experiences for managers to use as anchors as TFS continued to move forward.

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CORE STRATEGY

How do you get people to make required significant changes in behavior and mind-

set? From some perspectives, the solution is fairly clear :

Conduct a study of competencies as they relate to business goals.

Design and roll out a performance management system, using the

competencies as abase for performance measurement.

Integrate the competencies into the recruitment and compensation systems.

Create or align the compensation process.

Conduct coaching workshops to support more effective communication during

performance discussions.

The steps TFS took were very similar to these. However, TFS wanted an organic

process that would adapt to the organization as it grew. And it wanted a specific focuson transferring accountability and ownership to the business leaders. TFS believed

that without such a shift, the tools would just be tools. TFS firmly believed that

leaders, not tools, make leaders.

TFSs core leadership strategy is built on two fundamental levers : accountability and

differential investment. In a performance-based organization, managers and associates

much hold themselves accountable and think of themselves as owners. TFS decided to

differentiate how it invested in associates, based on performance. Rewards and

consequences were more strongly linked to performance and results. TFS wanted to

tailor how it developed and rewarded associates to maximize results.

To implement its leadership strategy, TFS needed to integrate the concepts of

accountability and differential investment into every existing and future HR program,

including performance management, development and succession planning,

compensation, and recruitment.

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MAPPING THE WAY

TFS began with performance management. This decision was based on the belief that

a performance-based organization needs to have a practical and credible assessment

and measurement system so associates can be accurately differentiated and held

accountable. At TFS, this program is called Maximizing Associate Performance, or

MAP.

It provides the foundation for all current and future HR programs. TFS also needed acommon language for describing its expectations for associates and their work. In

2005, TFS defined core competencies by band or grade level across the organization.

Evaluation on these competencies constitutes half of a persons overall performance

assessment; assessment of results makes up the other half. The competencies

described how TFS wanted managers to act. It then was necessary to create the

conditions that would encourage them to act in the desired ways to engaged in

coaching and development.

The two important competencies- performance accountability and coaching and

development were shifted to the resultssection of the managersperformance

appraisal. This sent the message that meeting or exceeding traditional results was not

enough and that focusing solely on these results created a short-term view for the

organizationwhich also was not enough. In the past, managers had felt conflicted

about which was most importantimmediate business results or development. They

tended to focus more on these results because more weight tended to be placed there.

Now managers were being told that developing associates was as important as results

and that they were accountable for current performance and for investing in

expanding capabilities to achieve long-term profit growth. Another change came in

the way performance was managed. The focus shifted away from documenting

performance only at the end of the performance period. This meant

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Accepting that performance management is an ongoing process that occursthroughout the performance period, not just at the end

Establishing clear expectations at the start of the performance period

Providing honest feedback frequently and with an emphasis, when needed, on

performance changes that could be made

Tailoring feedback to each per- son, and providing developmental direction based

on that persons current performance level.

The conceptual shifts were from managing performance to maximizing performance,

from assessment to action, from annual appraisals to ongoing feedback, and from

compliance to commitment. The data that emerge from performance management are

essential to how associates are rewarded and developed. There are many opportunities

in this modal to build effective leadership development processes.

Concurrent with the establishment of MAP, some changes were made to thecompensation programs. This wasto reinforce differentiation based onperformance.

More focus was placedon rewarding higher-performing associates, to ensure they felt

valued and recognized. MAP performance ratings were also used as the primary

driver of compensation programs, to further reinforce the link between pay and

performance. Additionally, TFS expanded its talent review process, using the new

competencies and focusing developmental and promotional conversations on

leadership capabilities. The CEO also initiated leadership strategy conferences atwhich the elements of strong leadership were reinforced. Borst led many of the

discussions andused these conferences as an opportunity to broaden the perspective

ofmembers of his leadership team andto clarify his expectations of them asleaders.

These additional steps served to drive home the fact that TFS was following up its

words with actions communication was developed to keep associates up to date on

MAP activities and to ensure that MAP stays at the forefront of managers minds. TheCEO played a significant role, using oral and written channels to reinforce his support

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by communicating that MAP is a top priority. Managers incorporated messages about

MAP at the departmental level via meetings, town halls, and other forums.

As a result of TFSs efforts, performance management and leadership development

planning are now an integral part of the organizations annual planning calendar. But

the work is not yet done. Measurement and accountability systems continue to be

built, the reward system is being modified, and the leadership development strategy is

extending downward into the organization as the succession process develops. Talent

reviews are being used to identify those who exhibit leadership abilities as well as

those with high potential to do so. Some people at TFS are adapting to performance

management and MAP more easily than others.

In keeping with the Toyota culture, the HR team will ensure that the performance

management process is accomplishing what it was intended to do. HR will

incorporate changes that make sense for the business and ensure that the new system

remains practical for facilitating good coaching and development discussion. Its too

soon to tell whether TFSs leadership strategy will be successful. Success will largely

depend on how well these concepts continue to be embraced and owned by the

business leaders.

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LEASON LEARNED APPROACH

TFSs leadership effort began slowly and progressed incrementally, using a lessons-

learned approach. The focus was on building understanding and creating a shift in

mind-set. Three primary elements figured in the design and implementation of the

effort: strategy (where the organization is going), culture(what the organization

values and how it behaves), and readiness(leaders willingness to embrace and leadthese changes). Working to create an accountable organization means rethinking how

business decisions are made to ensure that the elements of TFSs organizational

design are aligned to support an accountable culture. Specifically, accountability

levels should be consistent with levels of control and influence. Leaders will resist

being held accountable for areas over which they have little or no control. This will be

an important area for TFS to focus on if it is to sustain an accountable culture.

As a result of TFSs efforts, performance management and leadership development

planning are now an integral part of the organizations annual planning calendar. But

the work is not yet done. Measurement and accountability systems continue to be

built, the reward system is being modified, and the leadership development strategy is

extending downward into the organization as the succession process develops. Talent

reviews are being used to identify those who exhibit leadership abilities as well as

those with high potential to do so.

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LIMITATION

Limitation of our project are as follows :

Study is based on secondary data, since TFS Change Mangaement that we

have studied are based on TFS situated in USA.

There is no use of statistical data, hence conclusion is more subjective (which

is not generally more reliable and accurate).

Many changes have occurred time to time in TFS but we have only studied

two changes.

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CONCLUSION

Once the need to have a PMO became obvious, the most difficult task of doing it was

to implement it into an organization where many of the employees were not initially

supportive of the large changes that were being made. They had seen PMOs

developed before and cancelled. While the implementation effort is still in its early

stages, the initial successes, while small, have changed many peoples minds about

how beneficial the PMO can be.

The stakeholders were coordinated with during the design effort and the PMO was

designed to satisfy the organizations major project management issues. By

identifying where the most pain was and quickly fixing some of those, we obtained

support from the project managers who began to see that this could be highly

beneficial to themselves and not just another set of changes.

The full implementation is expected to be a three-year effort that began in late

summer of 2001. At the present time it appears to be on track. It has been a somewhatfrustrating experience for the development team who expected to being implementing

the PMO as soon as it was designed and approved by upper management. Instead they

had to learn how to deal with a recalcitrant organization who changed very slowly and

only with a great deal of coordination and consensus building. Some people at TFS

are adapting to performance management and MAP more easily than others. In

keeping with the Toyota culture, the HR team will use the kaizenphilosophy to ensure

that the performance management process is accomplishing what it was intended to

do. HR will incorporate changes that make sense for the business and ensure that the

new system remains practical for facilitating good coaching and development

discussions.

Its too soon to tell whether TFSs leadership strategy will be successful. Success will

largely depend on how well these concepts continue to be embraced and owned by the

business leaders. Its too soon to tell whether TFSs leadership strategy will be

successful. Success will largely depend on how well these concepts continue to be

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embraced and owned by the business leaders.

REFERENCES

Block, T.R., 1999, The Seven Secrets of a Successful Project Office. PM

Network, April, 1999: 43-48.

Miller, J., 1998, Project Office One of the Fastest Growing Segments in

Information Systems, Proceedings of the 29th Annual Project Management

Institute 1998 Seminars and Symposium, published by The ProjectManagement Institut.e

STANDISH, 1995, The CHAOS Project Management Research Study,

published by The Standish Group.

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