Section 3. Promotion of Internal Reforms
Item 3. Expanding Reforms
Roll out of PRO21 initiative
Reforms were instituted in human resources as well, beginning in 1996. The first such initiative was PRO21, a comprehensive set of human resources reforms aimed at developing autonomous and competitive personnel, organizational structures, and systems capable of meeting the needs of the 21st century.
A fundamental organizational and human resources system reform implemented in 1989 to make Toyota a less hierarchical organization failed to fully achieve its intended goals of changing the thinking of company employees, and as such it became necessary to make further changes, including to the compensation system. The first part of the new initiative was the introduction of the "Challenge Program", a human resources system introduced in 1996 for section managers and above. The program aimed to achieve three goals: 1) replace the traditional seniority-based promotion system with a performance-based system, 2) train and utilize personnel as specialists in a given field, and 3) clarify systematic personnel development details and lines of responsibility for such development.
Toyota also began revising the compensation system, introducing a system that dynamically altered the employee's compensation depending on the results of an annual evaluation. In terms of middle management, a new concept of compensation classification was introduced that involved replacing the traditionally used designations of "General Manager Level", "Deputy General Manager Level", and "Section Manager Level", which had negative overtones of a strong managerial hierarchy, with the more innocuous "Senior Grade 1", "Senior Grade 2" and "Senior Grade 3", respectively. However, the reforms stopped shy of adopting wholesale the result-oriented performance system that was taking hold in corporate Japan at the time, opting instead to adopt an evaluation framework that retained Toyota's traditional values of taking a long-term perspective in work and emphasizing strong teamwork.
As a part of the PRO21 initiative, in 1999 the "Professional Human Resources Development Program" was launched, targeting young employees in administrative and technical positions below the assistant manager level. As all participants aim to become professionals in a given field, the program's emphasis is on developing a core area of expertise for each employee and improving fundamental skills. The program originally had 10 different employee classifications, but in partial response to Japan's Equal Employment Opportunity Law, the "general employee" classification was eliminated and the remaining classifications were reduced to "clerical employee", "specialist employee" and "advanced specialist employee". The result was a mechanism whereby female employees, many of whom fell under the "general employee" category, could now aim for higher goals. Then in 2006, after the company had become less hierarchical, further human resources structural reforms were implemented to encourage greater motivation and the development of a higher degree of skills among clerical staff. The original "clerical employee" category was subdivided into "Gyomu Shoku" and "Jigi Shoku", and a further "advanced clerical employee" category was added.