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Ariel Caraballo Communication 306: Organizational Communication December 7, 2011 ariel.caraballo@rexmail.queens.edu

Organizational and Crisis Communication within Toyota North America When purchasing a car, most people put reliability and safety into high consideration for their choice. Each car brand has their own philosophy as to how they are able to obtain and maintain their customers. For many years, Toyota was known as a brand that could be trusted. Toyota vehicles were viewed as dependable, reliable, practical, and stylish enough for the average consumer. In 2010, however, the view of Toyota by many consumers was completely changed. There was a situation where several of the accelerator pedals in newly made Toyota vehicles were sticking which lead to several accidents and even deaths (www.toyota.com). Obviously, there was a factory mistake on these vehicles. Toyota immediately sent out a recall for all vehicles created during the time period when there was a potential mistake that could have been made in the factory. This recall and the accidents lead to a public relations and media nightmare for the corporation (www.toyota.com). Overnight, Toyota went from being a dependable and trustworthy car brand to a company which consumers did not view as reliable. Consumers questioned how Toyota could not have more intricately inspected all of these vehicles for a problem as significant as the accelerator, before sending them out to dealerships. At this point, Toyota was faced with the responsibility to begin crisis communication for their company. In order to make people believe in them once again, they needed to develop a strategic plan in order to gain trust and prove that their cars are actually dependable. They had to show that the recall was a terrible mistake, that those who were affected will be compensated, and that the problem would not happen again. Years later, it seems that Toyota has taken their crisis communication plan during this time very

seriously. Nowadays, there is little talk of the recall and Toyotas are once again being viewed as a smart car choice (www.toyota.com). Crisis communication is a growing field during this time for public relations agencies, crisis communications firms, and organizations in general. There is no question that recently in the media there has been a long string of crises regarding both organizations and individuals themselves. It is during these times that the organizations and individuals must prove that they are based on honesty, integrity, and are capable of being trusted. Otherwise, they have the potential to lose all of their followers or consumers. According to Zaremba, Crisis Communication is caused by an event that occurs unexpectedly, could damage an organization s reputation, values, and performance, and requires effective communication (Zaremba 234). Crisis Communicators have the responsibility to conceive, create, and disseminate messages to internal and external audiences during times of organizational crisis (Zaremba 234). Overall with crisis communication, the main thing to keep in mind is to be honest. Without honesty, problems can go from terrible to disastrous for a company or individual. If there was already a problem, consumers do not want to be lied to further. Therefore, it is imperative for crisis communication teams to disclose the facts only at all times. (Zaremba 237). Another portion of crisis communication rules which must be kept in mind is to remember the Four R s . The Four R s are reputation, relationships, responsibility, and response (Zaremba 245). All four of these elements must be examined and taken into account for crisis communication to be truly effective.

Toyota has recently reported that their sales for the month of November 2011 were 137,960 units, which is a 2.4% sales increase from last year (www.toyota.com). Although this is not a large increase, given the state of the economy it is an increase none the less. In order to be gaining these yearly sales increases post crisis, Toyota must have taken most of the appropriate steps regarding their crisis communication after the recalls. One of the most important steps they took which they felt lead to an increase in their sales was to develop a different and much improved break and accelerator system for newer Toyota models (www.toyotanewsroom.com). Their website states that, independent of the recall remedy, Toyota has developed a brake override system to provide an extra measure of owner confidence (www.toyotanewsroom.com). After reviewing Toyota s media and press section of the website, it seems evident that they are very concerned about Toyota owners being proud and confident with their vehicles. This is one of their main goals for marketing (www.toyota.com). The history of Toyota and their dedication to customer service is a large part of what helped them to form their plans for crisis communication. Toyota first opened its doors in the United States in 1958 in Hollywood, California. In the very beginning, Americans were not sure what to think of Toyota. They had not been around long enough to establish a reputation, and they were a foreign company. Many of the first Toyota models had failed, however in just nine years Toyota was able to make a name for itself in the United States. In July of 1967, Toyota became the third highest selling brand of foreign vehicles in America (www.toyota.com). This trend of success for Toyota continued for decades after the 1960 s (www.toyota.com). This is why the recall scandal of 2010 was such a shock for consumers and the company itself. For an

organization which seems to prides themselves on responsibility, it was apparent to consumers that there was some definite irresponsibility during initial inspection for the vehicles with the accelerator defect. It was Toyota s responsibility to decide how they would make decisions during this crisis situation. This recall was covered very heavily by news stations and the media. All of this media coverage even lead to legal issues for Toyota. They were forced to attend congressional hearings, and had to pay three (very expensive) federal penalties (www.toyota.com). Due to all of this, they realized that their initial crisis communication was unsuccessful. It was apparent that consumers were quite disappointed in them, and felt that they were not handling the situation carefully enough. At this time, Toyota admitted that they needed to improve their communication, and the quality and safety of their vehicles (www.toyota.com). This decision came right from the head of the company, and was passed on to all other employees. There was no room for any more mistakes, and those in charge of the company realized that everyone needed to improve their communication and strategies within the organization (www.toyota.com). The year of the recall, Toyota believes that it was the intensity of the negative media portrayals which lead to a sales decrease of 0.3% (www.toyota.com). In the end though, they once again gained the title of being the Number 1 Retail brand and the Toyota Camry having the highest rate of sales for a passenger car (www.toyota.com). Author Jing Liu, who did an in-depth analysis of crisis communication for Toyota after the recall scandal believes that in time, Toyota did realize that their way of communicating to the masses and consumers was ineffective (Liu 1). At first, they were not addressing the issue

seriously enough and almost seemed to be avoiding it. Their communication style would have been much more effective had they been totally honest and upfront with consumers right from the start. The fact that Toyota did not have a good communication strategy and left consumers dissatisfied for too long of a period is possibly what lead them to have to face Congressional hearings. It was when they were finally honest, and willing to compensate consumers for their recall issues that the company began to be trusted once again (Liu 1). According to the Toyota website, the organizational structure of its North American division seems to be typical of other large companies. It includes the CEO (Yuki Funo) and President (Jim Press) at the top, followed by those who are managers and members of various teams and departments (www.toyota.com). They have recently created a special task force to review policies within the company regarding discrimination and harassment, and this team is lead by the former Secretary of Labor for the United States, Alexis Herman (www.toyota.com). Toyota has a large engineering department, a marketing department, and a department which maintains communications with individual dealerships. Within the individual dealerships, there are owners, managers, and sales representatives (www.toyota.com). Communication seems to come down the chain from the CEO and president, to the task force teams, to the various departments within corporate Toyota headquarters, and then also to the individual dealerships (www.toyota.com). After reading information about management within Toyota, it appears that they truly value their employees and are making a strong effort to make communication flow throughout all levels of the organization (www.toyota.com). It seems evident that they realize in order for the

company to function at its best, different teams need to cooperate and work together. Their website mentions a great deal of information about the different teams and departments within the company, and how all of these departments build a company which is very successful worldwide (www.toyota.com). Toyota focuses much more on the humanistic theory of management than on critical theories. They mostly incorporate the human resources theory of Miles into their management style. According to Zaremba, employers who use the human resources theory want to make employees feel, useful and important, capable of making contributions, and having managers who believe in them (Zaremba 46).

The culture of Toyota seems to be centered on innovation and making sure that employees have the ability to be creative and developing new ideas to help improve products and sales. Toyota is a company which is extremely dedicated to diversity. In fact, they have an entire force which is known as the Diversity Advisory Board (www.toyota.com). This team makes sure that there is diversity within each department, division, and dealership which is company owned.. At Toyota, we believe continued growth toward a more inclusive culture is necessary for business success. Our customers, business partners and employees should see themselves represented in our workforce, in our marketing campaigns, in our dealerships, in the communities we serve, and the organizations we support (www.toyota.com/diversity). Toyota has actually been recognized by Diversity Inc., Black Enterprise, and Hispanic Business for being leaders with diversity and inclusion (www.toyota.com/diversity). It seems that the organization s commitment to diversity really helps to improve communication for employees. Due to Toyota s value on inclusion, they put an emphasis on the idea that they want opinions, comments, and ideas from all employees. They believe that it is their diversity of employees

which brings about diverse ideas and opinions (www.toyota.com). Their website makes it seem as though they are very concerned with making every employee feel valued and appreciated no matter which department they are in, or what their background is. As opposed to a company which only values opinions that come from the head of the corporation, Toyota does not seem to be this way (www.toyota.com).

Being a company that places high importance on philanthropy is extremely important to the culture of Toyota as well. For example, they are involved with philanthropy projects for various communities throughout the United States, such as the Boys and Girls Club and United Way (www.toyota.com). They are also quite involved with many cultural philanthropies such as 100 Hispanic Women and The Jewish Federation of Washington, D.C. As an automotive company, they have incorporated a sense of environmental awareness into their culture (www.toyota.com). Besides developing hybrid cars such as the Toyota Prius, they also have a lot of involvement with local 4-H clubs, The World Wildlife Federation, and national parks throughout the United States. It seems that helping to maintain and develop new ways to help to protect the environment is one of the main focuses of Toyota culture (www.toyota.com/philanthropy).

There are still steps which Toyota can take in order to improve their communication. First, I think that it would be helpful if on their website they provided a list of all the different recalls which they have had to fix over the past few years. They are only listing the most current recall, and I think that this is not very helpful to consumers who may want to find out about potential problems with their Toyota vehicles. It is understandable that they are trying to move forward,

but this is information which could be very useful to consumers and they should not be trying to hide it from their own website. They mention the recalls only in articles, and of course place them in a positive light, since in their eyes they have amended the situation. However, I think it would have been more considerate of them to add a line of apology in this article on their site to the consumers which had serious problems due to the company s mistake. The way that they simply state a mistake was made, but now they are having an increase in sales does not sound very sympathetic.

There is an excellent article which is called What Others Can Learn from Toyota s Mistakes. The article states that one of Toyota s main mistakes is that they did not go far enough in restructuring management in order to address company and safety issues (Automotive News via Ebsco). Another major mistake they made was being defensive or not actually taking into account complaints or negative criticisms which were coming their way (Automotive News via Ebsco). It is a crucial customer service action to recognize customer comments. Consumers want to be listened to, and if many of them were saying that something was wrong then Toyota should have taken immediate action to try to fix this. Also, there is criticism that Toyota simply did not take enough safety precautions. Had management really warned other employees about the risk of not making extremely thorough inspections, then there is the possibility this mess never would have happened (Automotive News via Ebsco). However, thorough inspections were not made. Toyota faced the most detrimental mistake in their corporation s history because of a supposed lack of communication. This proves that organizational communication is the core of any corporation. Without strong organizational communication, a company does not have much chance of survival.

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It is apparent that Toyota has realized the importance of both effective crisis communication and overall good organizational communication. The company itself and consumers have all acknowledged that they made a severe mistake with both of their communication styles. Now, Toyota is making a greater effort to be more considerate and communicative with their consumers. Also, in order to improve internal communication they have developed specific teams to help with communication and create more operative ways of communication between management and employees. Due to this, Toyota is rising from their fall and being a leader through sales in the automotive industry once again.

*In order to obtain information for this paper, I consulted the company s website. They really provide a lot of important information about the company which was asked to be included in this paper. They provide information about the culture, their styles of communication, and management. Also, I consulted a couple of articles available on EBSCOhost regarding Toyota and Crisis Communication. Finally, I referred to Organizational Communication by Zaremba in order to look up information about theories and Crisis Communication.

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APPENDIX:

Management Chart for Toyota, North America: CEO Yuki Funo

President Jim Press

Special Assignment Task Forces and Teams (Communication, Diversity, etc.)

Corporate Departments

Dealership Owners

Dealership Managers

Dealership Sales Representatives and Administrative Employees

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References: Diversity in Toyota About the Company www.toyota.com. 2011.

Jing, L. (2011). Toyota s Achilles Heel: A Study on Crisis Communication Management. China Media Report Overseas available via EBSCOhost, 7(4), 72-77. What Others Can Learn From Toyota s Mistakes. Automotive News available via EBSCOhost (2011). Automotive News, 85(6466), 12. Zaremba, Alan J. Organizational Communication. New York: Oxford University Press. 2010.