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Spring 2015

A comparison between volkswagen and toyota

| BUS 450: Human Resource Management

ContentsOverview of the companies............................................................................................................................3

Volkswagen AG............................................................................................................................................3

Toyota Motor Corporation..........................................................................................................................3

HRM Philosophy..............................................................................................................................................3

Volkswagen.................................................................................................................................................3

Toyota.........................................................................................................................................................4

Job Design.......................................................................................................................................................4

Chassis Designer in Toyota..........................................................................................................................4

Chassis Developer in Volkswagen...............................................................................................................5

Conclusion...................................................................................................................................................6

Recruitment practices.....................................................................................................................................6

Recruitment at Volkswagen........................................................................................................................6

Recruitment at Toyota................................................................................................................................7

Selection process.............................................................................................................................................7

Selection in Toyota......................................................................................................................................7

Selection in Volkswagen..............................................................................................................................7

Performance appraisal systems......................................................................................................................8

Toyota.........................................................................................................................................................8

Volkswagen.................................................................................................................................................8

Training...........................................................................................................................................................9

Toyota.........................................................................................................................................................9

Volkswagen.................................................................................................................................................9

Formal educational opportunities.................................................................................................................10

Volkswagen...............................................................................................................................................10

Toyota.......................................................................................................................................................10

Compensation...............................................................................................................................................10

Volkswagen...............................................................................................................................................10

Toyota.......................................................................................................................................................11

Benefits.........................................................................................................................................................12

Toyota.......................................................................................................................................................12

Volkswagen...............................................................................................................................................12

Special HRM challenges related to the industry...........................................................................................13

Best HRM practices.......................................................................................................................................13

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Volkswagen...............................................................................................................................................13

Toyota.......................................................................................................................................................13

Comparison of HRM practices in the two companies...................................................................................14

Opportunities for improvement....................................................................................................................15

Volkswagen...............................................................................................................................................15

Toyota.......................................................................................................................................................15

Summary.......................................................................................................................................................15

References.................................................................................................................................................17

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Overview of the companies

Volkswagen AG

The Volkswagen Group with its headquarters in Wolfsburg is one of the world’s leading automobile manufacturers and the largest carmaker in Europe. The share of the world passenger car market amounts to 12.9 percent.

The Volkswagen Group is one of the leading car manufacturers in the world, and the largest one in Europe. The headquarters of the company are in Wolfsburg, Germany. The market share of the company is 12.9%. The Volkswagen Group owns not only Volkswagen, but also twelve other different brands in different European countries, including Audi, Bentley, Porsche, etc. The product spectrum covers all kinds of vehicles, ranging from motorcycles to luxury vehicles. The Volkswagen Group operates in 20 European countries as well as 11 countries in Africa, Asia and the Americas. It employs 592 586 people worldwide and sells its vehicles in 153 countries.1

Toyota Motor Corporation

Toyota Motor Corporation (TM) is a Japan-based company that is famous for its cars. It operates in three segments: automobile, finance, and ‘other’ segments. Automobile segment concentrates on the production and sales of all types of cars: from passenger cars to trucks, from low class cars to luxury ones. ‘Other’ segment include information, communication, and biotechnological business as well as design, construction and sales of housing2.

The company operates in 27 countries and regions and has well established worldwide sales network that include 170 countries. TM’s capital is 397.05 billion yen and the staff consists of 338.875 employees, as was stated in the report from May 20143. TM is a group of 54 companies that operate in different fields and different countries. Toyota had 12.47 percent of market shares in 2013 in the worldwide car production industry. It produces 13 percent of cars that are produced globally4. The point of differentiation for the company is the hybrid environmentally friendly cars that are becoming more and more popular as people increase their concern about environment.

HRM Philosophy

Volkswagen

The main focus of the HR strategy of Volkswagen is to stimulate outstanding performance and the success that comes from it. Volkswagen knows that the excellence needed for the company to

1 "Goals and Strategies." Volkswagen AG. Web. 1 May 2015.2 "Company Profile." Toyota. N.p., n.d. Web. 29 Apr. 2015.3 "Toyota Motor Corp. (TM)." Stock Analysis on Net. N.p., n.d. Web. 29 Apr. 2015.4 "Toyota's Share of Global Car Production from 2003 to 2013." The Statistics Portal. N.p., n.d. Web. 29 Apr. 2015.

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become the best in international car manufacturing can only be delivered by a top team. This policy maxim applies in all of the brands that the Volkswagen Group owns.5

Toyota

Toyota’s philosophy regarding its employees has been systematically organized as the Personnel and Labor Toyota Way. The main purpose of the Toyota Way is the recognition of a management that shows respect to the employees. Their main principle is to establish a relationship of trust and respect between the workers and the management. This philosophy is shared by Toyota affiliates around the world. 6

Job DesignThe job design practically answers the question of who performs the job and how they perform it. It describes the responsibilities on the job, makes the job look attractive and helps appeal to the right applicants. The work scope and job depth are some of the important features to be included in a job design. A good job design informs the candidate for the job about the variety of skills the job requires, the significance of the task, the freedom it allows for, and the feedback the applicant will be getting. The ultimate goal of the job design is to increase the engagement of employees on the job, as well as their motivation, and to minimalize the dissatisfaction.

Chassis Designer in ToyotaJob DescriptionThe chassis area in the vehicle contains the suspension, electric power steering and driver-control.

TME Chassis Engineering Division’s responsibility is :

1) Local development of Chassis parts for vehicles built in one of Toyota’s European assembly plants. This activity is done in close cooperation with our local suppliers and our mother divisions in Toyota Motor Corporation (TMC) in Japan. TMC relies on us to make sure the design is adapted to European customers’ expectations and European suppliers’ production methods.

2) Investigation of new European technologies.

After investigation and benefit clarification we propose them to TMC for application in future vehicle projects.

Your challengeAs engineer in Chassis Design 1, your main responsibility will be the successful completion of Chassis parts development. This is achieved by the following activities :

• During the prototype phase, you will drive the development process of locally-developed parts. Continuously you need your engineering skills to support the suppliers in their development. You make sure the development is finished on time and meets all Toyota’s requirements. For parts

5 "Volkswagen Konzern - AR 2013 - Employees." Employees. Web. 1 May 2015.6 "TOYOTA | Employees." Www.toyota.co.jp. Web. 1 May 2015.

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developed in Japan, you are the liaison between our mother divisions in TMC and other European parties (assembly plants, suppliers)

• During the production-preparation phase, the formal design responsibility is handed over to you. You make sure production parts achieve expected performance levels and solve any workability issues in the assembly plants.

During each step of the development, you will focus on cost-reduction and remain vigilant that the parts performance is matching European customers’ expectations.

Your additional responsibility will be to investigate new European technologies in your responsible area. In case a promising technology is found and the benefit for customer and Toyota is confirmed, you set-up a pre-development study. If successfully concluded, you propose it to TMC for application in a future vehicle.

In this position you will report to the team leader and Senior Manager of the department.

Your Profile- Master in (Electro-) Mechanical Engineering or Automotive Engineering.

- 2 to 5 years relevant experience in the design & development of complex mechanical parts. (Preferably but not mandatory, in the area of vehicle chassis parts (suspension, steering, brakes, tire). - Extensive mechanical engineering knowledge- Project management competence- Good knowledge of the general vehicle design- Competence with windows tools : MS Excel, Powerpoint, Word - A basic know-how of business case making (cost planning, scenario, etc…) is an asset- Fluent in English. Japanese, German and French are an asset (in reducing order of importance). - Experience with CATIA v5 and FE analysis are an asset- Willing to travel up to 20% of time in Europe and Japan

Place of EmploymentPlace of Employment: TME Technical Centre, Zaventem, Belgium7

Chassis Developer in VolkswagenRole Summary Responsible for a responsive support of R&D in Chattanooga. Liaison between the process partners Production, Pilot Hall, Logistic, Quality Assurance and R&D Center in Chattanooga or other different brands/departments/plants

Role Responsibilities Establish, launch and maintain measuring systems and devices and test facilities; Components and parts disassembly; Collecting of data and comparison with the desired value; Function trial and durability analysis; Built up of production reference vehicle frontend and component updates;

7 "Toyota Motor Europe Jobsite - Toyota's Job Offers." Toyota Motor Europe Jobsite - Toyota's Job Offers. Web. 1 May 2015.

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Vehicle updates; Problem analysis; Supporting special tests on site; Software updating / flashing of cars; Materials procurement;

Work flexibility (travel requirements, work schedule, etc.) Readiness for domestic and international business tripsReadiness for professional trainings in Wolfsburg/Germany

QualificationsRequiredAt least 5 years in automotive industry

Special training in automotive industry

Relevant automobile engineering knowledge like: Interface to Production, Quality Assurance, Pilot Hall and Logistics and Customer Service; Support for analysis at customer complaints; Knowledge about production process; Permanent production checks in close collaboration with Quality Assurance; Special automotive knowledge

PreferredAutomotive apprenticeship

Experience in the co-operation with VW development departments

German skills, written and verbal

ConclusionBoth job designs cover the basics – summary of the job, requirements and skills needed, as well as tasks the employee is supposed to do on the job. 8

Recruitment practices

Recruitment at VolkswagenInternalVolkswagen uses the usual means for spreading information about new job openings within the company – internal postings. In addition, the company keeps the assessment tests each employee goes through during selection, and in case of on opening they inform the current employees that are eligible for the job.

ExternalMuch like internal recruitment, in external recruitment Volkswagen uses a lot of the typical ways of sharing information – websites, advertisements, LinkedIn. There are two interesting things to be noted, however. The first one is that VW uses the so called “undercover” recruitment. They sent recruiters to different car service companies to “get their car fixed”. What’s interesting is that they put job ads for mechanics in VW on the undercarriage of the cars, and try to “win” the mechanics over. Another interesting practice VW has is to keep track of the students that come to do internships in the company. They have the so called Student Talent Database, which keeps information about all the undergraduates who have already completed internships in VW and their

8 "VW | Drive Your Career." VW | Drive Your Career. Web. 1 May 2015.

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performance with the company, as well as their performance in school. The Database provides VW with a pool of students who are already aware of the company values and are ready to “jump in” and fill vacancies.

Recruitment at ToyotaInternalToyota uses the same ways of informing people about job openings as Volkswagen, when it comes to internal positions. What is more important here, however, is that Toyota supports the idea of growing internally. They have the so-called “in-house grooming”, according to which employees in the company should grow as the company grows. That’s why Toyota pays more attention to internal recruitment than other companies.

ExternalAs one of Toyota’s main focuses is for their employees to grow with the company, much of their external recruitment policy concentrates on recruiting students fresh out of college. That’s why Toyota concentrates on using educational institutions for external recruitment. Toyota is in contact with career centers in many school. It works together with the schools to organize career exhibitions for students, which are usually attended by representatives from Toyota, who talk about the company. This way, Toyota gets to meet personally with undergraduates and “win them over” while they are still in school.

Selection process

Selection in Toyota The selection process in Toyota has a 6 steps, however only 4 of them are directly connected to the selection, with the last 2 being induction and orientation for the already selected new employee. One of the important things to know about the selection in Toyota is that the future manager of the applicant is present during the interviews, as well as representatives of the senior management. The assessment part of the selection process makes sure that the applicant fits the “Toyota Way”. At the end of the process, the newly hired employee is offered the so called “New Hire” package which includes a short 3-day orientation. In addition every new hire is assigned to an HR representative, who acts as their “person of trust”.

Selection in VolkswagenCompared to Toyota, Volkswagen’s selection process is smaller and a bit more simplified, but still similar. It starts with application and screening of applications. After screening, the shortlisted applicants are invited for assessment. Depending on the position the applicant is applying for, the assessment is different – for administrative jobs it tests mainly cooperation and communication skills while candidates for production jobs perform agility exercises and measurement tests. After the assessment, applicants go through an interview with their immediate supervisor and they are later informed on the final decision.

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Selection process

Toyta Volkswagen

Step #1 Phone Interview Application

Step #2 Testing/Assessment Application Selection

Step #3 Final Interview Assessment Center

Step #4 Contract Proposal Interview

Step #5 New Hire Welcome Induction Decision

Step #6 New Hire Orientation Days

Table 1: Selection process

Performance appraisal systems

ToyotaWhen it comes to performance management, Toyota focuses more on the efficiency of the entire system, rather than the efficiency of the individual. For Toyota the whole picture in the workplace matters more than the individual contribution. There are two steps to the appraisal system of Toyota. The first one is a self-appraisal assessment, in which the employees themselves give feedback on their own performance, with the help of a special form. The employees rate their achievements during the year and talk about their weaknesses, strengths and accomplishments. The second type of assessment is the Head of Department assessment. Every head of department is responsible for checking if his/her employees are performing well on their job, and to rate their efficiency. In addition to assessments, Toyota also surveys its employees to find out about employee satisfaction and then analyzes the results in order to provide a better working environment and overall more satisfaction for the employees.

VolkswagenThe assessment in Volkswagen is also done in two steps, but they are both conducted by the manager, and it is all a part of a performance-related pay component. The first part assesses the performance of the employees and gives them feedback on how they are doing with their tasks, while the second part consists of planning the personal development of that employee for the future. The employee is provided with the opportunity to grow in the company and given guidance on how to perform better or to achieve more in the company. In addition, Volkswagen’s appraisal system is designed to identify whether employees need more training in order to help them perform their jobs better.

Appraisal

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Toyta Volkswagen

Self - assessment Annual appraisal with manager

Head of Department Assessment

Perforamnce assessment

Development planning

Table 2: Appraisal

Training

ToyotaToyota Motor Corporation has extensive training programс for new employees as well as for the employees who are already in the company – professional development. Training program for newbies is mostly for the foreigners that is designed to help new employees to adjust their already existing knowledge to the new language and culture9.

Toyota does not neglect the fact that in order for the new employees to be productive from the beginning, they have to be aware of company’s policies, mission and vision statements. For these purposes Toyota has orientation, the so called “assimilation” program, which lasts for four days. The first day starts at 6:30 am, with the welcoming speech of the vice president for human resources. During this day he explains the role of the company’s departments; talks about the history and culture of the company. He tries to explain all the policies including benefits and quality policies. The first half of the second day is dedicated to the communication training, and concentrated on the importance of the mutual respect and teamwork. During the second part of the day vice president for HR clarifies how the production systems works with the stress on the safety. The third day starts with a short communication training that educates new employees how to solve problems and conflicts if there are any. Then the training continues with the explanation of the policies for hazard of all kinds. The fourth day is all about teamwork and the system of suggestions in the company. This type of the orientation helps new employees to get to know each other and understand the policies and the practices in the organization10.

VolkswagenUnlike Toyota, Volkswagen Group company has training for all new employees, nоt only foreigners. It is called vocational training and in December 2013, 17.703 new employees were trained. This program works mostly in Germany, however, the company tries to organize this type of trainings in other countries, like India and Russia. Every year Volkswagen management group present awards to the best trainees. This type of training helps the company to develop Volkswagen’s “outstanding team”, which is familiar with the values of the company and represents a great contribution for the company. Especially talented trainees can be employed for the positions of specialists in various fields. Other talented trainees can decide to participate in the “Years Abroad” program that allows them to work 12 months in the one of the company’s international locations. Volkswagen has different approach to the university students. Once an undergraduate student participated in the company’s internship program and showed an outstanding performance, he is placed in the Student

9 "Vocational Training to Help Trainees Find Employment." Toyota. N.p., n.d. Web. 29 Apr. 201510 "Recruitment." Slideshare. N.p., n.d. Web. 1 May 2015.

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Talented Bank. Volkswagen Company support those former interns in their studies and invite them to the seminars and presentations. Right before the graduation, those students are added to the Academic Talent Pool, where they are traced and can be invited to work for the company if there are suitable positions for those people11.

Formal educational opportunities

VolkswagenBoth Toyota Motors and Volkswagen Group provide internal trainings for the professional development of their employees. Not so long ago, Volkswagen founded the “Volkswagen Group Academy” that provides trainings for all employees, directed by the head of the personnel development. Dr. Horst Neumann, the head of the human resources department in Volkswagen Group says: "The specialist expertise of our employees is a prerequisite for excellent cars, customer satisfaction and competitiveness, and therefore lays ground for the success of the Volkswagen Group. The Volkswagen Group Academy will ensure that joint learning and training is taught and practiced throughout the various groups of vocations."

ToyotaToyota also has a training for employees for professional development. Managers in TM believe that it is very hard to become a true expert without professional assistant. This is an idea behind their training program. They provide personal consultation, trainings, and assistance for each employee, who asked for it. However, neither Toyota Motor nor Volkswagen Group has external degree program or reimbursement practice.

Compensation

Volkswagen“The objectives of our compensation structure are to attract and retain valuable employees, assure fair and internally equitable pay levels and provide a mix of base salary and variable bonuses that provides motivation and awards performance. At the same time, we seek to optimize performance and manage compensation costs.” – stated in the Volkswagen report from 22nd of March, 2010.

The compensation in Volkswagen include (taken from the Volkswagen report VLKAY DEF 14A filed 21st Dec., 2009):

• Competitive Compensation. The Company needs to hire, retain and motivate executives with the requisite skills and experience to develop, expand and execute upon the Company’s business initiatives, as this is essential to the Company’s success in providing value to shareholders.

• Performance-Based Compensation. Variable compensation tied to Company and individual performance should represent a significant portion of total compensation for the Company’s executives.

11 "Vocational Training at Volkswagen." Volkswagen. N.p., n.d. Web. 1 May 2015.

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• Reward Both Company Performance and Individual Achievement. In determining annual incentive and long-term equity-based incentive awards, the Company considers both Company performance and individual achievement. Merit increases to base salaries are weighted towards recognition of individual performance and achievement.

• Long Term Incentive. The Company believes that long term equity-based incentives are a valuable tool to align the interests of executives and other senior managers with those of shareholders. These incentives can be accomplished through awards made under the Company’s Long-Term Incentive Plan, which was approved by shareholders in200612.

The company pays only in cash, not equity, because it is Limited Liability Company.

ToyotaCompensation system is completely different in Toyota Motor. Compensation is a part of the salary for every employee, just the amount of it depends on the employee productivity. It is designed that way so employees try to increase personal productivity and do not compete with each other. It is very attractive for the ‘perspective employees’ because these bonuses can increase wage from 85% to 115% from the amount allocated13.

Toyota employed unusual compensation practice for the Japan-based company. They reduced compensation based on the seniority. It is considered to be the move towards global culture, where not everything is based on seniority. Instead they pay more based on the individual performance. Volkswagen, on the other hand, pays higher compensation to the employees who have more years of experience working in the company. By doing this, Volkswagen is trying to increase retention rate. Taking into consideration that the people with the most years of experience in one company most of the time are elder people (seniority), and hence has the lower performance rate than the younger employee, one can understand the difference in bonuses for employees with 20 years of experience in these two companies (figure 1a, 1b)14 15. However, Toyota has “Years of Service” recognition program that allows employees with many years of working experience in Toyota choose presents they want from the online catalog. This program is designed to reward dedicated employees who have worked for the company for more than 10 years.

Figure 1a

12 "Volkswagen. Compensation Philosophy and Objectives." Wikinvest. N.p., n.d. Web. 1 May 201513 "Toyota. Compensation." Slideshare. N.p., n.d. Web. 1 May 2015.14 "Average Bonus for Volkswagen Group." PayScale. N.p., n.d. Web. 1 May 2015.15 "Average Bonus for Toyota Motors Manufacturing Employees." PayScale. N.p., n.d. Web. 1 May 2015.

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Figure 1b

Benefits

ToyotaToyota has various benefits to attract and retain employees. Those benefits include health and dental package, covering employees’ spending on health and dental services; health and wellness program, which gives employees discount in local fitness centers. Another benefit in TM called “team member purchase plan” that provides employees with discounts for new cars, for service and repair. Tickets for some concerts and events are provided for free; when it is not possible, employees get the opportunity for early purchase of the tickets. Other benefits include free parking; free turkey during the winter holidays; three annual scholarship for employees’ children for post-secondary school education; and annual paid 4 week vacation16.

VolkswagenIn Volkswagen Group all benefits vary depending on the location. However, all employees of the Volkswagen Automobile Group are insured against accidents that result in employee’s death or disability. Other benefits include transportation, monthly childcare allowances, affordable housing, as well as aids for the selected leisure activities. Occupational pension systems and healthcare services depend on the location. In most of the locations pension system consists of basic pension and additional benefits of two contributory pension system. The first contributory system is funded by the employer, while the second gives the employees opportunity to fund their own retirement income through deferred compensation. Benefits also include paid health and dental care17.

Special HRM challenges related to the industryThe problems most of the car manufacturers nowadays face are that it is hard find younger people who want to work in the manufacturing field. In addition, the constantly changing new technologies make it even harder to hire people who are aware of all technological trends the industry calls for.

16 "Benefits and Compensation. Competitive Benefits Package." Toyota Brichwood. N.p., n.d. Web. 1 May 201517 "Social Benefits." Volkswagen. N.p., n.d. Web. 1 May 2015.

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One of the challenges Toyota had to go through recently was 5 years ago when they had to recall nine million vehicles worldwide. This was a huge challenge to HRM because when there are problems in production that means there is a problem with employees, and a problem with employees means a problem in HR. One of the questions that was asked most is whether Toyota’s focus on trust between management and employees is really working the way it should be, as well as whether their hiring and training processes are well thought through. However, Toyota managed to recover and 5 years later they are again on the top of all car manufacturers worldwide.

Best HRM practices

Volkswagen

“Wanderjahre”(Years abroad) – Employees can move to any VW office around the world for around 12 months. This is an amazing opportunity for development for new employees or recent university graduates.

Work/Life balanceVolkswagen offers a variety of part time and shift models, as well as creative solutions with flexible, individual working time are available for employees to choose from. Some factories even offer child- care facilities, so that it is easier for families with kids to go to work and still be able to pay attention to their kids.

ToyotaToyota ClubsToyota has more than 35 sport clubs, both competitive and non-competitive. Their main goal is to promote the teamwork in the company, to increase to motivation in employees and to increase the solidarity among employees. In addition to the sport clubs, there are also cultural clubs.18

Comparison of HRM practices in the two companiesWhen it comes to job design, both companies are very explicit in what they are looking for, what the skills of the perfect applicant would be like, and what he/she will be expected to do as part of the company. However, Toyota provides much more information on the benefits and compensations offered, especially higher-level jobs that require more experience, which makes it more attractive for potential candidates for the job.

The internal recruitment practices in Toyota are better developed, as the company is focused on internal growing and development for employees within the company. Even though many of the ways for spreading information about openings internally are the same, Toyota puts more effort in finding people internally than Volkswagen. When it comes to external recruitment, what we can see is that Toyota tries harder on employing students. Both companies offer a lot of internship to

18 "Human Relations Activities: Toyota Clubs." TOYOTA MOTOR CORPORATION GLOBAL WEBSITE | 75 Years of TOYOTA | Employee Welfare | Human Relations Activities: Toyota Clubs. Web. 1 May 2015.

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students, but Toyota goes the extra mile and leads the conversation with universities and career centers in order to find the perfect fits, instead of just offering internship positions. On the other hand, Volkswagen has a really good practice of keeping track of all the students that worked for them with the Student Talent Database, which they use to offer vacant positions to students who are good fits for the job.

Despite being very similar, the selection process between the two companies differs greatly during the “induction” process of the new employees. Toyota pays very special attention to new hires when they first come to the company and provides them with a special package that includes a three-day orientation. This is a key point in “winning” the employee over, because the company demonstrates a special personal treatment to the employee from the moment they are hired in the company.

Performance management is also similar, however Toyota provides opportunity for self-assessment, in comparison with Volkswagen, where assessment is conducted by managers only. Another thing about Toyota is the employee satisfaction surveys, which provide feedback to the company when it comes to working environment and general well-being of all the workers in the company. On the other hand, Volkswagen offers the so-called “Idea Management”, where employees submit ideas and suggestions to the company.

Overall Toyota Motor and Volkswagen Group has vocational trainings for new employees, and TM has good and effective orientation program that allows newbies to understand the culture and the policies of the company. However, the training program in Volkswagen Group is more intense and includes orientation for the new employees. The program provided by Volkswagen is more attractive to employees because it is not only for foreigners, it is designed for all new employees at all levels.

Educational opportunities in both Volkswagen and Toyota does not include internal or external college degrees or reimbursement practices. Both of them give employees opportunity for the professional development by participating in the training programs.

Both of the companies have compensation programs for their employees. Volkswagen provides wider variety of compensations allowing employees to fit at least one of them. However, TM have the policy to give compensations to all the employees, just the amount of it depends on the employee’s performance. On the other hand, Volkswagen has ‘competitive compensation’ that is both good and bad. It is good because it motivates employees to perform better and bad because sometimes employees can be over competitive. It is hard to judge which compensation system is better, but by just looking at the numbers employees can prefer Volkswagen to Toyota, because the numbers are considerably bigger. Also the way the Volkswagen’s compensation system is built around employees that worked for the company for a long time can be very attractive for the employees because it shows that the company values loyalty and it cares about employees’ retention.

As for the benefits, both companies have almost the same policies. But Toyota gives more attractive benefits with a ‘team member purchase plan’, and scholarship for children’s education. If an employee thing in a long term, those benefits may attract him to work for Toyota. On the other hand, retirement plan in Volkswagen Group can attract people who think further in the future.

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Opportunities for improvement

VolkswagenVolkswagen can make use of Toyota’s practices for internal recruitment, as well as their ways for performance management – more precisely the employee satisfaction surveys. Both companies have their ways of getting feedback from the employees, and they are both good, however the Idea Management of Volkswagen is a great way to get new suggestions of improvement for the company.

Volkswagen needs to work on the recruitment and selection process because compared to Toyota it looks a bit too simplified, and maybe not thorough enough. Another addition they can include is the “welcoming package” that Toyota employees get – this kind of special treatment will definitely lead to higher employee satisfaction.

Volkswagen has a very family-friendly HR system, which is not exactly the case in Toyota. What Toyota can do is work on improving the work/life balance of its employees, because currently it’s lacking, compared to VW.

ToyotaThe first thing that can be improved in Toyota Motor is its vocational training program. It should give opportunity for locals to participate in training. For both of the companies it would be a good practice to give employees an opportunity to get a degree in internal or external academies. The companies are big and they can afford to sponsor some employees’ further development and education. It will be attractive for people to work there and at the same time it will help to develop specialists.

SummaryAfter looking closely at the HRM practices in the two companies, we can conclude that they are very similar, because both companies work a lot on providing the best for their employees. One of the things both companies pay the most attention to is training and personal development of the employees. From the moment the employees start working in the companies, both Volkswagen and Toyota try to provide them with good benefits, a lot of out-of-work activities to keep them entertained, and they both work hard on improving the work/life balance of the employees.

In order to choose which company wins in terms of “Employer branding”, we should first come up with some sort of a rating system or points distribution. If we look at their practices and try to rate them separately, then we can say they are probably on the same level. However, when it comes to employer branding, one of the most important things is recognizing and promoting the company culture on every level, which Toyota undoubtedly does in all of its HRM practices. Starting from designing the particular job, then going through the so-called “assimilation” process and then finish with all the benefits an employee gets, it is easy to see what makes the company so attractive. The role of the HR in Toyota is not only to build a company that people would love to work at, but also to make sure they keep loving it while they are there. In addition, Toyota’s website provides plenty of information on their HR policies, as well as the structure and implementation of the “Toyota Way”. The main reason Toyota is “doing it” so much better than other companies is that they know exactly what they are looking for when they hire employees, they have defined all the qualities that they are

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looking for (work ethic, teamwork, integrity, motivation, etc.), and they take only people who clearly show these qualities – a policy that will never leave them disappointed with the choice they have made when hiring. Once hired, all of the employees are taking great care of with all the compensation, benefits and rewards the company has to offer. Even a recent survey proved that 75% of employees “love working for the company”.19

There is a lot one can learn from both companies – Volkswagen is a great example of German straight-forwardness, where everything is exactly as it has been stated, and everyone knows exactly what they will get, and what they need to do in order to get it. On the other hand, Toyota offers the gentle approach to building a company culture and teaching employees to respect it and slowly become a part of it. Both companies not only allow, but stimulate employees to grow within and through the company, while at the same time are keen on getting feedback on how the company can grow through its employees. Acknowledging employee feedback is a very important thing in every organization, and in order for a company to do well, it should definitely try to get as much feedback from the employees as possible. Another thing companies can learn from both Volkswagen and Toyota is promoting freedom – whether it’s the VW way of spending “Years abroad” or the Toyota way of praising individuality on the job, freedom should be something companies strive for, because it definitely increases the satisfaction of employees. These among other things will definitely help companies gain competitive advantage and help them build a successful employer brand.

References

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"Human Relations Activities: Toyota Clubs." TOYOTA MOTOR CORPORATION GLOBAL WEBSITE | 75 Years of TOYOTA | Employee Welfare | Human Relations Activities: Toyota Clubs. Web. 1 May 2015.

19 "Toyota Enters The Sunday Times Best Companies To Work For List." Toyota. 5 Mar. 2015. Web. 1 May 2015.

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