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Honda Motor Company Limited Management Practices

Introduction

The internal structure of the Honda Motor Co., Ltd. is largely based upon the corporate fundamental philosophy instilled by the company’s founders, Soichiro Honda and Takeo Fujisawa. From its establishment, they embedded the “The Honda Way” into the heart of the company’s policies, which highlights the importance of creating a work environment that places responsibility at all levels of the corporate structure, while demanding equality, involvement, and communication. This view of management closely relates to the ideals at the center of the Human Relations School, while also characterizing a high commitment work practice.

Formal Organization

The formal organization of Honda, as seen in the flow chart below, has the appearance of a tall hierarchal structure, however, the company demonstrates many distinct characteristics of a horizontal organization as well. At the top of the structure there is the Board of Directors, who makes decisions on highly important matters, and the Board of Auditors who assesses the director’s execution of duties in accordance with Honda’s standards. What is known as the Executive Council, which includes the President and CEO, deals with important regional and management issues. Honda also appoints a general manager from its Board of Directors to each of its six regional administrative, business and functional divisions, as to bridge the gap between regional and upper management. In this way the top-down structure of Honda has been an efficient way to organize such a large international company.

Management Strategies

However, this model is not a traditional vertical hierarchy. Beneath the surface, Honda’s management strategies also deploy many characteristics of a horizontal flat hierarchy. Even though titles are given, each person does not have distinct job description. Instead, at all levels, management tactics are based upon one main feature, teamwork. There is no Presidential office at Honda, or separate offices for directors. Instead there is simply a “director’s room,” which allows for an environment where leaders can freely share ideas and form stronger bonds of trust. This informal organization of management is seen all the way down to the factory floor. At Honda plants, it is hard to tell the manager, referred to as a “motivator,” apart from the factory worker, who is referred to as an “associate,” because all members of Honda are required to wear the same uniform, with the "fundamental purpose being to tell everyone loudly and clearly that no one is more or less important than anyone else” . Managers are expected to spend about 50% of their time on the factory floor, which provides the opportunity for workers and managers to form relationships with one another.  Communication in the decision making process is encouraged at all levels, but managers are told to solve their own problems without taking them to their superior . In this sense, the company exhibits the management theories consistent with a flat hierarchy, which allows workers to feel a higher level of responsibility in the organization and removes a sense of elitism.

Employee Management

The methods of employee management at Honda implement other characteristics of a successful high commitment practice, which also coincide with the concepts of the Human Relations School. For example, the structure at Honda follows a very natural theory of motivation, relying on the idea that people seek out responsibility and will self-manage themselves if they are committed to a group. Workers therefore are assigned to teams based on specific functions with a team leader. There are off the line discussions with associates and managers, where members are told to be creative and take risks in solving problems. The focus on a team atmosphere relates to the Human Relations theory as described by Elton Mayo, who came to the conclusion that social factors matter most in management. By allowing employees to work as a team and receive special management attention, it creates the sense that the company cares for them, which is what Mayo describes as the “Team Effect” (Lecture 10/1/12).

Honda jobs are impermeable. Only young workers with no prior experience, so bad habits are not brought to the company, are hired. Honda’s tests are not written, but are personal to screen for a cooperative personality. Once hired, new associates are welcomed by the top manager himself and are introduced to the team culture with an indoctrination process. While there is no lifetime employment guarantee, management has a long-term focus, which is why the company investments in employees from the start. In addition to usual benefits such as health insurance and profit sharing, Honda offers things such as a recreation center, a health club, and a service garage for associate’s automobiles. Honda enforces job rotations, which help reduce boredom and increase morale, while creating skilled workers who know all of the production processes. For these reasons, promotions only come from within the company because they know the company the best. These management strategies fulfill the categories of a high commitment practice, as described in lecture, which are found to work together as a system and effectively eliminate the problem of alienation found in the Fordism approach to an assembly line. This effectiveness is proven by Honda’s 2% employee turnover rate per year.

Relationship between Honda and it Suppliers and Susidiaries

Honda outsources for most of the 30,000 parts that are necessary to make an automobile, while deploying a flexible manufacturing system in plants worldwide, allowing Honda the ability to quickly and efficiently shift production within individual plants and between plants. This has caused Honda to foster long-term trust based relationships through the “timely procurement of high-quality goods at reasonable prices” (Honda Suppliers). Capitol Industries, an Ohio plastics company reports that it was “tough to get the first contract with Honda, but once a relationship was developed, Honda stuck with the company even when it was sold to new owners”. The same is true even for its advertising companies and especially its subsidiaries. For example, Honda’s research and development independent subsidiaries are treated as direct business partners and have a manager from Honda’s Board of Directors assigned to each of these subsidiaries. Without these faithful suppliers and subsidiary companies, Honda would not be able to stay on top of the technological market, or be as flexible worldwide in its manufacturing.

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 * Thank you for your contributions to Wikipedia! Wywin (talk) 17:28, 22 October 2012 (UTC)

Rather than add your essay to a Wikipedia article, it would be better if you paid attention to some of the links given on writing articles, e.g. Writing better articles. Please do some more work on your content, use inline references (from third parties rather than the company itself), and if possible discuss its addition the article's talk page instead of keep re-adding it unchanged. --Biker Biker (talk) 16:28, 23 October 2012 (UTC)

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