Friday, May 9, 2008

HR and Performance Management

Very insightful story on a number of levels related to HR and Performance Management.

A Japanese company (Toyota) and an American company (General Motors) decided to have a canoe race on the Missouri River. Both teams practiced long and hard to reach their peak performance before the race. On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team composed of senior management was formed to investigate and recommend appropriate action. Their conclusion: The Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.

Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion. They advised, of course, that too many people were steering the boat, while not enough people were rowing.

Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team’s management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents and 1 assistant superintendent steering manager.

They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the ‘Rowing Team Quality First Program,’ with meetings, dinners and free pens for the rower. The new change initiative also included plans for getting new paddles, canoes and other equipment, plus extra vacation days for practices and bonuses.

The next year the Japanese won by two miles.

Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the senior executives as bonuses and the next year’s racing team was outsourced to India.

Sadly, The End.

Sad, but oh so true! Here’s something else to think about: Ford has spent the last thirty years moving all its factories out of the US, claiming they can’t make money paying American wages. Toyota has spent the last thirty years building more than a
dozen plants inside the US. The last quarter’s results: Toyota makes 4 billion in profits while Ford racked up 9 billion in losses. Ford executives are still scratching their heads.

1 comment:

  1. LOL! You’ve hit the nail right on the head. Whether it’s US or any other company, proper allocation of resources is always necessary. Moreover, another requisite is to keep the resources motivated to perform better. This is where the HR team of a company comes in. They ideate and implement new strategies that mutually benefit the employee and the organization.
    But who keeps the HR motivated? For instance in a large-scale manufacturing companies like ours, the HR faces challenges on a daily basis. They come-up with interesting solutions to the problem. Therefore, in order to boost their morale as well as to showcase our strategies, we’ve applied for the SAIL HR Awards at This recognition, I believe will definitely uplift the spirits of my HR team. What do you think?