Topics: Motivation, Toyota, Toyota Production System Pages: 9 (3400 words) Published: October 27, 2014


Charting Your Course to Higher Performance

Motivating Sustained High Performance
Psychological Lessons from Toyota
Dr. Robert Karlsberg
Dr. Jane Adler

”The real difference between success and failure in an organization very often can be traced to how well the organization brings out the great energies and talents of its people.”

On February 2004, the Santa Clara
Convention Center echoed with the powerful
rhythm of Taiko drummers as 5,000 employees
and guests of New United Motors Manufacturing
International (NUMMI) gathered in the main hall.
The lavish party celebrated NUMMI’s first

Thomas J. Watson, Jr.

GM’s existing supplier relationships and large
dealer networks.
Yet, in our view, NUMMI’s greatest
contribution has not been to the balance sheets
of either General Motors or Toyota — although
both companies have benefited greatly from the

20 years in business. But for those familiar with

venture. Instead, we believe that NUMMI’s

the history of NUMMI -- the first collaboration

greatest contribution has been to demonstrate

between General Motors and Toyota -- there

how specific changes in management strategy

was much more to celebrate that just another

can significantly and rapidly increase employee

automaker’s anniversary.

engagement and improve business productivity.

When it was first proposed in the early
1980’s, NUMMI was designed to provide

A Brief History
After almost 20 years of operations,

General Motors with insight into Toyota’s

General Motors’ Fremont, California Plant was a

production system and management

disaster. A huge facility of over 5 million square

techniques. In return, Toyota would have the

feet, the plant was bleeding red ink. Its work-

opportunity to establish its first manufacturing

force of 5,000 employees averaged 20 percent

operations on US soil and would benefit from

absenteeism, thousands of grievances, and 3 to

© Dr. Robert Karlsberg & Dr. Jane Adler 

Motivating Sustained High Performance

4 wildcat strikes per year. With declining sales

(with a workforce now numbering 2,500).

and assembly costs at least 30% higher than

Assembly costs had dropped to about 50% of

other plants, GM decided that the facility was

other GM plants, and production was now

too big a drain on the rest of the company. But

double the GM average. Most importantly, sales

instead of closing the plant entirely, GM leaders

and customer satisfaction were up significantly.

turned to Toyota, their chief competitor in the
small car market, and proposed a mutually
beneficial joint venture.
Toyota jumped at the opportunity. And,
despite efforts from Chrysler and Ford to block
it, the collaboration was approved with one
important condition.
Because of GM’s labor agreements, the

The Mechanics of the Turnaround
What led to such a dramatic turnaround in
How could one group of managers achieve
such high levels of performance, while another
highly trained and experienced group of
managers failed miserably with the same

plant could not start with a new slate of workers.

people, in the same building, using the same

Instead, it had to first offer reemployment to the


old Fremont employees — the same United
Auto Workers whose poor performance had
contributed to the Fremont plant’s failure.
Toyota executives agreed, insisting only

Since NUMMI was an “experiment”
intended to provide GM with insights into
Toyota’s legendary production system, all
aspects of the plant’s operations were closely

that the plant’s management come exclusively

scrutinized. While a number of factors -- like

from Toyota.

Toyotas new inventory management system -certainly had some impact on the plant’s

Against the Odds
In late 1984, the plant reopened as NUMMI
with 2,200 United Auto Workers — 85% of...

References: 1.
Cameron, Kim S. and Quinn, Robert E. (1999) Diagnosing and Changing Organizational Culture. New York:
Liker, Jeffrey M. (2004) The Toyota Way: 14 Management Principles From the World’s Greatest Manufacturer.
New York: McGraw-Hill
O’Reilly, Charles A., III and Pfeffer, Jeffrey (2000) Hidden Value. Harvard Business School Press
© Dr. Robert Karlsberg & Dr. Jane Adler
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