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Jeff Liker

Jeff Liker: A variable employee base (temps) is necessary to provide stable employment through the major ups and downs of the market

By Jeff Liker, - Last updated: Tuesday, March 18, 2014 - Save & Share - Leave a comment

First off there is no real “lean stand” on this issue and perhaps no lean stand on much of anything as lean means so many different things to different people.

Second, speaking strictly about The Toyota Way the two pillars are respect for people and continuous improvement. In order to accomplish respect for people as partners in the business, and invest the time it takes to develop their capabilities to do the job and improve how they do the job, Toyota depends on continuity of employment. It gives them a stable employee base to develop and gives the employee job security for they and their families. Toyota knows that they cannot provide stable employment for everyone they ever need to hire because there are major ups and downs in the market. Like heijunka applied to production schedules they need heijunka of employment—stable and level. There are multiple ways to provide that stability in the face of variation in demand including working 2 shifts instead of three and using the off-shift to add or delete overtime. Another way is through the “variable employee base.” That is the temporary employees. Like adding some extra safety stock to deal with variation, Toyota adds temporary employees as a buffer against a downturn in demand. Toyota has to very seriously consider when to make a temporary employee permanent because they then feel responsible for that person’s future. Now most companies do not feel a great detail of responsibility and thus virtually everyone who is full time is really part of a variable work force. But Toyota distinguishes clearly those who they will try to provide a job for life from those to whom they have not made that commitment. They have a policy of a maximum of 2 years in a temp role and then you become a regular team member or are let go.

For regular team members it can be difficult to work side by side with someone doing the same work as you but getting less pay and benefits. But the temporary work force allows Toyota to provide a highly unusual degree of security for the regular team members. Also, almost all the hiring comes from the temp pool when Toyota predicts there will be a need for the long term.

Toyota works to be as respectful as possible to the temps training them intensively and giving them opportunities to participate in improvement activities like quality circles. The temps know they have at least a chance to become regular team members which is like winning the lottery to many of them.

A general number I hear is about 15% temps in both manufacturing and engineering. They come form temp agencies so presumably they get placed someplace else if they are let go. In the recession Toyota in the US went the distance of providing severance pay that was not contractually required to temps they let go and also providing job placement services.

It does create some moral dilemmas and some discomfort in a company that works to provide employment security and a high quality of work life. But they do not want to take the position if there is not enough for everybody—job security—we will then offer it to nobody. Instead the majority of employees are very fortunate in having the security they enjoy and Toyota plans carefully to ensure that security with the variable workforce as one tool.

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