Description
How can organizations establish a leadership strategy and implementation process that goes well beyond the typical approach of using training as the primary or only methodology? The short answer is that they need to develop a talent mind-set-an orientation in which the organization's talent (its people) is recognized as a significant part of the organization's competitive advantage.
H
Case St udy/ Toyot a Fi nanci al Servi ces
Creating a Foundation
for Leadership Development
David Berke and Judy Fike
ow can organizations
establish a leadership strategy and
implementation process that goes
well beyond the typical approach of
using training as the primary or only
methodology? The short answer is
that they need to develop a talent
mind-set—an orientation in which the
organization’s talent (its people) is
recognized as a significant part of the
organization’s competitive advantage.
But an orientation is not enough.
Organizations must also have internal
systems that value and support using
development and other talent man-
agement processes to maximize
results, and they must hold leaders
accountable for employing these
processes.
This requires assessing perfor-
mance accurately and investing differ-
entially in the development of talent.
In this context, development has a
firm foundation because it is recog-
nized for what it should be: a means
to maximize performance and there-
fore results.
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 develop-
ment. (See the sidebar on page 16 for
the TFS story.) The strategic initiative
started when the CEO, George Borst,
and the organization’s human
resource department (HR) realized
that TFS needed to change the way
talent was being managed and devel-
oped. TFS also recognized that sev-
eral things needed to occur to accom-
plish this.
When TFS began its initiative, it
was already exceeding goals and
expanding into new markets. But the
CEO wanted to create an organization
in which leaders maximized their
results by developing and growing
the capabilities of their people. Borst
understood that this was a long-term
investment that ultimately would
strengthen TFS’s organizational capa-
bilities.
He also knew that key cultural and
infrastructure changes would be
needed to sustain lasting change. The
result was that the CEO partnered
with HR, giving that department the
opportunity and challenge to help
lead TFS in this new direction—
becoming a higher-performance
organization.
For TFS, a higher-performance
organization is one that values perfor-
mance, development of people,
accountability for results, and strong
leadership—and that is always ready
for change. (The word higher in the
term higher-performance organiza-
tion 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
LI A • VOLUME 27, NUMBER 4 • SEPTEMBER/OCTOBER 2007
15
key cultural areas needed to be
addressed.
CHANGE AND CULTURE
Merely acknowledging that an organi-
zation needs to change rarely leads to
deep and fundamental change.
Fundamental change requires a large
amount of preparation and work. That
is why TFS’s approach has taken
years, not months, to implement. For
every two steps TFS took forward, it
took one step backward. It is no exag-
geration to say that without extensive
efforts to prepare the organization for
change, TFS’s initiative could easily
have failed.
Organizational change begins with
the organization’s culture, whether
that culture is approached directly or
indirectly. Some attributes of TFS’s
culture are
• A high respect for people and
relationships (very associate focused).
• A focus on improving quality
of life and supporting the communi-
ties in which we live.
• Zero tolerance when it comes to
issues of integrity.
• The pursuit of kaizen, a philos-
ophy of continuous improvement.
TFS is always striving to be better.
This translates into placing a high
value on performance and results.
TFS’s culture has enabled it to
achieve many successes over the
years. But at times the organization
lived out its cultural values inconsis-
Editor’s note: Case Study is an occa-
sional series that reveals how specific
organizations or leaders have dealt
with their leadership challenges.
tently. For example, respecting people
and relationships is a strong value, as
is continuous improvement. But these
values were sometimes seen as con-
flicting. As a result, strong perfor-
mance was sometimes treated about
the same as average or even poor per-
formance. This led associates to ques-
tion why they should work harder
when strong performance was not
rewarded. Consequently, associates
felt a sense of entitlement. Factors
such as length of tenure had become
key drivers for career advancement.
Changing the way management
and associates thought about TFS’s
value of performance required a deli-
cate balance—honoring the parts of
TFS’s culture that would serve as the
foundation for change while redefin-
ing other aspects. In essence, what
TFS needed to do was create a cul-
ture in which leaders could
•
Hold associates and managers
accountable for performance, and
align rewards and consequences
accordingly.
•
Differentiate based on perfor-
mance, and develop associates differ-
ently 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 man-
agement, compensation, talent man-
agement, succession planning, and
associate development. They require
much more than simply rolling out
new HR tools or training programs.
For a start, the CEO needed his
senior management team to under-
stand and buy into the fact that his
expectations of them would change.
Broadly speaking, the vision was to
get senior managers to rethink how
leaders are selected, developed, and
rewarded. The focus was on leader-
ship skills rather than technical skills.
The senior managers needed to sup-
port and lead these changes through
their daily actions and decisions.
HR knew that it would also need to
partner differently with the business to
demonstrate how HR itself added
value. HR redefined its own perfor-
mance 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 geographi-
cally with the department’s business
partners
• Creating an organizational
development team to infuse stronger
organizational design and develop-
ment capabilities
• Enhancing the recruitment
function to respond more effectively
to the need for new talent
This was a long and sometimes
painful process. Ultimately, it
LI A • VOLUME 27, NUMBER 4 • SEPTEMBER/OCTOBER 2007
resulted in a stronger HR team that
could partner with business leaders to
navigate through the changes to
come.
Initially, HR presented only the
concept of becoming a higher-perfor-
mance organization. Senior managers
agreed with the concept and wanted
to support it. However, because there
were no specific implementation
plans or infrastructure changes, the
senior managers didn’t really under-
stand the details of what was being
requested, what they would need to
do differently, or how it would
change the way they made leadership
decisions. The process stalled.
In spite of this, many supporters
on the business side pushed forward.
Some embraced the overall direction
and made gradual changes as well as
they could; others struggled. Several
groups started grassroots efforts and
began to change how they evaluated
and rewarded performance. They vol-
unteered to pilot new programs, or
led the way by differentiating pay.
Success persuaded those who were
more reluctant to get involved. These
efforts created a critical mass of sup-
porters.
TFS also did the unprecedented
and filled some executive leadership
positions with outside candidates.
This helped introduce new skills,
knowledge, and ideas into the organi-
zation, illustrated that the changes
touched every level of the organiza-
tion, and sent a clear message that in
the future, getting ahead at TFS
would be more about the leadership
skills and knowledge necessary to
16
The Toyota Financial Services Story
TFS, a wholly owned subsidiary of
Toyota Motors, was founded in 1983.
It has grown into an organization
with more than $65 billion in assets
and about three thousand employ-
ees. It is the third-largest captive
finance company (a subsidiary that
provides financing to customers
buying the parent company’s prod-
ucts) and eighth-largest finance
company in the United States. TFS
provides retail and wholesale financ-
ing, retail leasing, and insurance
products and services to Toyota and
Lexus dealers and their customers.
TFS also provides similar services to
dealers and customers for Toyota
forklifts and Hino trucks.
move TFS forward and less about
who was next in line.
These efforts to prepare TFS for
change were slow, deliberate, and
often difficult—but they were essen-
tial. 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 experi-
ences for managers to use as anchors
as TFS continued to move forward.
CORE STRATEGY
How do you get people to make
required significant changes in behav-
ior and mind-set? From some per-
spectives, the solution is fairly clear:
• Conduct a study of competen-
cies as they relate to business goals.
• Design and roll out a perfor-
mance management system, using the
competencies as a base for perfor-
mance measurement.
• Integrate the competencies into
the recruitment and compensation
systems.
• Create or align the compensa-
tion process.
• Conduct coaching workshops
to support more effective communi-
cation during performance discus-
sions.
The steps TFS took were very sim-
ilar to these. However, TFS wanted an
organic process that would adapt to
the organization as it grew. And it
wanted a specific focus on 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.
TFS’s core leadership strategy is
built on two fundamental levers:
accountability and differential invest-
ment. In a performance-based organi-
zation, managers and associates must
hold themselves accountable and
think of themselves as owners. TFS
decided to differentiate how it
invested in associates, based on per-
formance. Rewards and consequences
were more strongly linked to perfor-
mance and results. TFS wanted to tai-
lor how it developed and rewarded
associates to maximize results.
To implement its leadership strat-
egy, TFS needed to integrate the con-
cepts of accountability and differen-
tial investment into every existing
and future HR program, including
performance management, develop-
ment and succession planning, com-
pensation, and recruitment.
MAPPING THE WAY
TFS began with performance manage-
ment. This decision was based on the
belief that a performance-based organ-
ization 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 Maxi-
mizing Associate Performance, or
MAP. It provides the foundation for
all current and future HR programs.
TFS also needed a common lan-
guage 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
person’s overall performance assess-
ment; 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
engage in coaching and developing.
What TFS did next made this pos-
sible. Two important competencies,
performance accountability and
coaching and development were
shifted to the “results” section of the
managers’ performance 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 organization—which
also was not enough.
In the past, managers had felt con-
flicted about which was most impor-
tant—immediate 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 devel-
oping 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 per-
formance only at the end of the per-
formance period. This meant
• Accepting that performance
management is an ongoing process
that occurs throughout the perfor-
mance period, not just at the end
• Establishing clear expectations
at the start of the performance period
• Providing honest feedback fre-
quently 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 person’s cur-
rent performance level
The conceptual shifts were from
managing performance to maximiz-
ing performance, from assessment to
action, from annual appraisals to
ongoing feedback, and from compli-
ance to commitment.
The data that emerge from perfor-
mance management are essential to
how associates are rewarded and
developed. There are many opportu-
nities in this model to build effective
leadership development processes.
LI A • VOLUME 27, NUMBER 4 • SEPTEMBER/OCTOBER 2007
17
Concurrent with the establishment
of MAP, some changes were made to
the compensation programs. This was
to reinforce differentiation based on
performance. More focus was placed
on rewarding higher-performing asso-
ciates, to ensure they felt valued and
recognized. MAP performance rat-
ings 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 develop-
mental and promotional conversa-
tions on leadership capabilities. The
CEO also initiated leadership strategy
conferences at which the elements of
strong leadership were reinforced.
Borst led many of the discussions and
used these conferences as an opportu-
nity to broaden the perspective of
members of his leadership team and
to clarify his expectations of them as
leaders. These additional steps served
to drive home the fact that TFS was
following up its words with actions.
LIVING IT
Currently, TFS is in the process of
rooting MAP to ensure that it is inte-
grated into the organization and is
sustained over time. Most organiza-
tions experience an initial dip in per-
formance when implementing a
change initiative; although managers
may understand the reasons for the
change and what is expected of them,
they are often uncertain about how to
implement the new behaviors.
TFS has invested significant
energy over the past year into mini-
mizing this dip and helping managers
identify ways to “live” MAP. TFS has
focused on three main areas: commu-
nication, education, and (most impor-
tant) leadership.
Communication. Efforts have
focused on helping managers and
associates acclimate to the new MAP
schedule and processes. Ongoing
communication was developed to
keep associates up to date on MAP
activities and to ensure that MAP
stays at the forefront of managers’
minds. The CEO played a significant
role, using oral and written channels
to reinforce his support by communi-
cating that MAP is a top priority.
Managers incorporated messages
about MAP at the departmental level
via meetings, town halls, and other
forums.
Education. Efforts have focused
on upgrading the coaching skills of
managers. Tools have been developed
to enhance knowledge levels and
guide managers through the MAP
cycle and integrate it into their daily
routines. The MAP message is being
made available to new managers and
associates through e-learning and
recurring course offerings.
Leadership. Efforts have focused
on incorporating measures (such as
180-degree surveys) into evaluation
to ensure that managers are effec-
tively adopting MAP, that ownership
and accountability are shifting, and
that new experiences are being cre-
ated for managers to reinforce MAP.
MORE WORK AHEAD
TFS’s 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 pri-
mary 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 lead these changes).
Working to create an accountable
organization means rethinking how
business decisions are made to ensure
that the elements of TFS’s organiza-
tional design are aligned to support
an accountable culture. Specifically,
accountability levels should be con-
sistent with levels of control and
LI A • VOLUME 27, NUMBER 4 • SEPTEMBER/OCTOBER 2007
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 account-
able culture.
As a result of TFS’s efforts, per-
formance management and leadership
development planning are now an
integral part of the organization’s
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 iden-
tify those who exhibit leadership abil-
ities as well as those with high poten-
tial 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 use the kaizen philoso-
phy to ensure that the performance
management process is accomplish-
ing 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 devel-
opment discussions.
It’s too soon to tell whether TFS’s
leadership strategy will be successful.
Success will largely depend on how
well these concepts continue to be
embraced and owned by the business
leaders.
David Berke is a senior custom solu-
tions program associate at CCL’s cam-
pus in San Diego. He holds an M.B.A.
degree from the University of Southern
California and an M.A. degree from the
State University of New York at Stony
Brook. Judy Fike is national organiza-
tional development manager for Toyota
Financial Services. She holds an M.S.
degree from California State University,
Long Beach.
18
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doc_368834275.pdf
How can organizations establish a leadership strategy and implementation process that goes well beyond the typical approach of using training as the primary or only methodology? The short answer is that they need to develop a talent mind-set-an orientation in which the organization's talent (its people) is recognized as a significant part of the organization's competitive advantage.
H
Case St udy/ Toyot a Fi nanci al Servi ces
Creating a Foundation
for Leadership Development
David Berke and Judy Fike
ow can organizations
establish a leadership strategy and
implementation process that goes
well beyond the typical approach of
using training as the primary or only
methodology? The short answer is
that they need to develop a talent
mind-set—an orientation in which the
organization’s talent (its people) is
recognized as a significant part of the
organization’s competitive advantage.
But an orientation is not enough.
Organizations must also have internal
systems that value and support using
development and other talent man-
agement processes to maximize
results, and they must hold leaders
accountable for employing these
processes.
This requires assessing perfor-
mance accurately and investing differ-
entially in the development of talent.
In this context, development has a
firm foundation because it is recog-
nized for what it should be: a means
to maximize performance and there-
fore results.
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 develop-
ment. (See the sidebar on page 16 for
the TFS story.) The strategic initiative
started when the CEO, George Borst,
and the organization’s human
resource department (HR) realized
that TFS needed to change the way
talent was being managed and devel-
oped. TFS also recognized that sev-
eral things needed to occur to accom-
plish this.
When TFS began its initiative, it
was already exceeding goals and
expanding into new markets. But the
CEO wanted to create an organization
in which leaders maximized their
results by developing and growing
the capabilities of their people. Borst
understood that this was a long-term
investment that ultimately would
strengthen TFS’s organizational capa-
bilities.
He also knew that key cultural and
infrastructure changes would be
needed to sustain lasting change. The
result was that the CEO partnered
with HR, giving that department the
opportunity and challenge to help
lead TFS in this new direction—
becoming a higher-performance
organization.
For TFS, a higher-performance
organization is one that values perfor-
mance, development of people,
accountability for results, and strong
leadership—and that is always ready
for change. (The word higher in the
term higher-performance organiza-
tion 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
LI A • VOLUME 27, NUMBER 4 • SEPTEMBER/OCTOBER 2007
15
key cultural areas needed to be
addressed.
CHANGE AND CULTURE
Merely acknowledging that an organi-
zation needs to change rarely leads to
deep and fundamental change.
Fundamental change requires a large
amount of preparation and work. That
is why TFS’s approach has taken
years, not months, to implement. For
every two steps TFS took forward, it
took one step backward. It is no exag-
geration to say that without extensive
efforts to prepare the organization for
change, TFS’s initiative could easily
have failed.
Organizational change begins with
the organization’s culture, whether
that culture is approached directly or
indirectly. Some attributes of TFS’s
culture are
• A high respect for people and
relationships (very associate focused).
• A focus on improving quality
of life and supporting the communi-
ties in which we live.
• Zero tolerance when it comes to
issues of integrity.
• The pursuit of kaizen, a philos-
ophy of continuous improvement.
TFS is always striving to be better.
This translates into placing a high
value on performance and results.
TFS’s culture has enabled it to
achieve many successes over the
years. But at times the organization
lived out its cultural values inconsis-
Editor’s note: Case Study is an occa-
sional series that reveals how specific
organizations or leaders have dealt
with their leadership challenges.
tently. For example, respecting people
and relationships is a strong value, as
is continuous improvement. But these
values were sometimes seen as con-
flicting. As a result, strong perfor-
mance was sometimes treated about
the same as average or even poor per-
formance. This led associates to ques-
tion why they should work harder
when strong performance was not
rewarded. Consequently, associates
felt a sense of entitlement. Factors
such as length of tenure had become
key drivers for career advancement.
Changing the way management
and associates thought about TFS’s
value of performance required a deli-
cate balance—honoring the parts of
TFS’s culture that would serve as the
foundation for change while redefin-
ing other aspects. In essence, what
TFS needed to do was create a cul-
ture in which leaders could
•
Hold associates and managers
accountable for performance, and
align rewards and consequences
accordingly.
•
Differentiate based on perfor-
mance, and develop associates differ-
ently 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 man-
agement, compensation, talent man-
agement, succession planning, and
associate development. They require
much more than simply rolling out
new HR tools or training programs.
For a start, the CEO needed his
senior management team to under-
stand and buy into the fact that his
expectations of them would change.
Broadly speaking, the vision was to
get senior managers to rethink how
leaders are selected, developed, and
rewarded. The focus was on leader-
ship skills rather than technical skills.
The senior managers needed to sup-
port and lead these changes through
their daily actions and decisions.
HR knew that it would also need to
partner differently with the business to
demonstrate how HR itself added
value. HR redefined its own perfor-
mance 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 geographi-
cally with the department’s business
partners
• Creating an organizational
development team to infuse stronger
organizational design and develop-
ment capabilities
• Enhancing the recruitment
function to respond more effectively
to the need for new talent
This was a long and sometimes
painful process. Ultimately, it
LI A • VOLUME 27, NUMBER 4 • SEPTEMBER/OCTOBER 2007
resulted in a stronger HR team that
could partner with business leaders to
navigate through the changes to
come.
Initially, HR presented only the
concept of becoming a higher-perfor-
mance organization. Senior managers
agreed with the concept and wanted
to support it. However, because there
were no specific implementation
plans or infrastructure changes, the
senior managers didn’t really under-
stand the details of what was being
requested, what they would need to
do differently, or how it would
change the way they made leadership
decisions. The process stalled.
In spite of this, many supporters
on the business side pushed forward.
Some embraced the overall direction
and made gradual changes as well as
they could; others struggled. Several
groups started grassroots efforts and
began to change how they evaluated
and rewarded performance. They vol-
unteered to pilot new programs, or
led the way by differentiating pay.
Success persuaded those who were
more reluctant to get involved. These
efforts created a critical mass of sup-
porters.
TFS also did the unprecedented
and filled some executive leadership
positions with outside candidates.
This helped introduce new skills,
knowledge, and ideas into the organi-
zation, illustrated that the changes
touched every level of the organiza-
tion, and sent a clear message that in
the future, getting ahead at TFS
would be more about the leadership
skills and knowledge necessary to
16
The Toyota Financial Services Story
TFS, a wholly owned subsidiary of
Toyota Motors, was founded in 1983.
It has grown into an organization
with more than $65 billion in assets
and about three thousand employ-
ees. It is the third-largest captive
finance company (a subsidiary that
provides financing to customers
buying the parent company’s prod-
ucts) and eighth-largest finance
company in the United States. TFS
provides retail and wholesale financ-
ing, retail leasing, and insurance
products and services to Toyota and
Lexus dealers and their customers.
TFS also provides similar services to
dealers and customers for Toyota
forklifts and Hino trucks.
move TFS forward and less about
who was next in line.
These efforts to prepare TFS for
change were slow, deliberate, and
often difficult—but they were essen-
tial. 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 experi-
ences for managers to use as anchors
as TFS continued to move forward.
CORE STRATEGY
How do you get people to make
required significant changes in behav-
ior and mind-set? From some per-
spectives, the solution is fairly clear:
• Conduct a study of competen-
cies as they relate to business goals.
• Design and roll out a perfor-
mance management system, using the
competencies as a base for perfor-
mance measurement.
• Integrate the competencies into
the recruitment and compensation
systems.
• Create or align the compensa-
tion process.
• Conduct coaching workshops
to support more effective communi-
cation during performance discus-
sions.
The steps TFS took were very sim-
ilar to these. However, TFS wanted an
organic process that would adapt to
the organization as it grew. And it
wanted a specific focus on 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.
TFS’s core leadership strategy is
built on two fundamental levers:
accountability and differential invest-
ment. In a performance-based organi-
zation, managers and associates must
hold themselves accountable and
think of themselves as owners. TFS
decided to differentiate how it
invested in associates, based on per-
formance. Rewards and consequences
were more strongly linked to perfor-
mance and results. TFS wanted to tai-
lor how it developed and rewarded
associates to maximize results.
To implement its leadership strat-
egy, TFS needed to integrate the con-
cepts of accountability and differen-
tial investment into every existing
and future HR program, including
performance management, develop-
ment and succession planning, com-
pensation, and recruitment.
MAPPING THE WAY
TFS began with performance manage-
ment. This decision was based on the
belief that a performance-based organ-
ization 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 Maxi-
mizing Associate Performance, or
MAP. It provides the foundation for
all current and future HR programs.
TFS also needed a common lan-
guage 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
person’s overall performance assess-
ment; 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
engage in coaching and developing.
What TFS did next made this pos-
sible. Two important competencies,
performance accountability and
coaching and development were
shifted to the “results” section of the
managers’ performance 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 organization—which
also was not enough.
In the past, managers had felt con-
flicted about which was most impor-
tant—immediate 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 devel-
oping 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 per-
formance only at the end of the per-
formance period. This meant
• Accepting that performance
management is an ongoing process
that occurs throughout the perfor-
mance period, not just at the end
• Establishing clear expectations
at the start of the performance period
• Providing honest feedback fre-
quently 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 person’s cur-
rent performance level
The conceptual shifts were from
managing performance to maximiz-
ing performance, from assessment to
action, from annual appraisals to
ongoing feedback, and from compli-
ance to commitment.
The data that emerge from perfor-
mance management are essential to
how associates are rewarded and
developed. There are many opportu-
nities in this model to build effective
leadership development processes.
LI A • VOLUME 27, NUMBER 4 • SEPTEMBER/OCTOBER 2007
17
Concurrent with the establishment
of MAP, some changes were made to
the compensation programs. This was
to reinforce differentiation based on
performance. More focus was placed
on rewarding higher-performing asso-
ciates, to ensure they felt valued and
recognized. MAP performance rat-
ings 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 develop-
mental and promotional conversa-
tions on leadership capabilities. The
CEO also initiated leadership strategy
conferences at which the elements of
strong leadership were reinforced.
Borst led many of the discussions and
used these conferences as an opportu-
nity to broaden the perspective of
members of his leadership team and
to clarify his expectations of them as
leaders. These additional steps served
to drive home the fact that TFS was
following up its words with actions.
LIVING IT
Currently, TFS is in the process of
rooting MAP to ensure that it is inte-
grated into the organization and is
sustained over time. Most organiza-
tions experience an initial dip in per-
formance when implementing a
change initiative; although managers
may understand the reasons for the
change and what is expected of them,
they are often uncertain about how to
implement the new behaviors.
TFS has invested significant
energy over the past year into mini-
mizing this dip and helping managers
identify ways to “live” MAP. TFS has
focused on three main areas: commu-
nication, education, and (most impor-
tant) leadership.
Communication. Efforts have
focused on helping managers and
associates acclimate to the new MAP
schedule and processes. Ongoing
communication was developed to
keep associates up to date on MAP
activities and to ensure that MAP
stays at the forefront of managers’
minds. The CEO played a significant
role, using oral and written channels
to reinforce his support by communi-
cating that MAP is a top priority.
Managers incorporated messages
about MAP at the departmental level
via meetings, town halls, and other
forums.
Education. Efforts have focused
on upgrading the coaching skills of
managers. Tools have been developed
to enhance knowledge levels and
guide managers through the MAP
cycle and integrate it into their daily
routines. The MAP message is being
made available to new managers and
associates through e-learning and
recurring course offerings.
Leadership. Efforts have focused
on incorporating measures (such as
180-degree surveys) into evaluation
to ensure that managers are effec-
tively adopting MAP, that ownership
and accountability are shifting, and
that new experiences are being cre-
ated for managers to reinforce MAP.
MORE WORK AHEAD
TFS’s 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 pri-
mary 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 lead these changes).
Working to create an accountable
organization means rethinking how
business decisions are made to ensure
that the elements of TFS’s organiza-
tional design are aligned to support
an accountable culture. Specifically,
accountability levels should be con-
sistent with levels of control and
LI A • VOLUME 27, NUMBER 4 • SEPTEMBER/OCTOBER 2007
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 account-
able culture.
As a result of TFS’s efforts, per-
formance management and leadership
development planning are now an
integral part of the organization’s
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 iden-
tify those who exhibit leadership abil-
ities as well as those with high poten-
tial 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 use the kaizen philoso-
phy to ensure that the performance
management process is accomplish-
ing 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 devel-
opment discussions.
It’s too soon to tell whether TFS’s
leadership strategy will be successful.
Success will largely depend on how
well these concepts continue to be
embraced and owned by the business
leaders.
David Berke is a senior custom solu-
tions program associate at CCL’s cam-
pus in San Diego. He holds an M.B.A.
degree from the University of Southern
California and an M.A. degree from the
State University of New York at Stony
Brook. Judy Fike is national organiza-
tional development manager for Toyota
Financial Services. She holds an M.S.
degree from California State University,
Long Beach.
18
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