Toyota to Pay for Kaizen OT in Japan

3 article – ENGLISH

Interesting article from Japan…

Toyota's 40,000 factory workers in Japan are all engaged in kaizen, or continuous improvement, as a core part of the quality control (QC) activities.

No surprise there… Lean and kaizen are tightly linked concepts, they go hand in hand. But…

Prompted by a ruling over a death from overwork, Toyota Motor Corp. will pay full overtime to factory workers engaged in after-hour kaizen activities designed to improve efficiency and product quality, sources said.

Japan's top automaker now pays compensation only for up to two extra hours a month because it considers employees are engaged voluntarily in kaizen activities.

But the company decided Wednesday to regard kaizen as part of the workers' job requirements and start paying allowances on June 1 to cover all activities done after hours, the sources said.

It's kind of hard to reconcile Toyota's “respect for people” concept with the idea of not paying employees overtime for working on kaizen activity. I certainly can't claim to be an expert on Japanese business culture, so maybe somebody can enlighten us a bit on how this had been an accepted practice?

Toyota considered it “voluntary,” however:

Some employees and their families have said the workers are effectively forced to engage in QC activities because the results and achievements from the activities are included in their evaluations.

The article continues:

Toyota plans to encourage workers to review and simplify QC activities so that overtime work will not exceed two hours a month.

A senior Toyota official said the revision will inevitably push up labor costs.

So is Toyota asking employees to limit kaizen activity or to be more efficient in how they conduct it? Of course labor costs will go up, but I thought the point of kaizen was that the improvements should pay for themselves through quality improvement and cost savings… plus it develops the workforce. Does it seem a bit short-term focused to want to be limiting kaizen?

What do you think?

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Mark Graban
Mark Graban is an internationally-recognized consultant, author, and professional speaker, and podcaster with experience in healthcare, manufacturing, and startups. Mark's new book is The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation. He is also the author of Measures of Success: React Less, Lead Better, Improve More, the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, and the anthology Practicing Lean. Mark is also a Senior Advisor to the technology company KaiNexus.


  1. This shows that somebody powerful at Toyota does not value kaizen, and wants to get rid of it to cut costs. This idea is a great ploy because they can then turn around after a year and say, “See, look how much we have spent on kaizen, and our sales are down!” (discounting the fact that some of their markets are are struggling economically). It is also a great ploy because the workers will be happy to get an extra 2 hours of pay. Once they have a case that kaizen costs a lot, they then have a way to move kaizen off the books and stop paying for it.

    Quantifying the costs of Kaizen is a good idea, but laying out hard limits is not a good idea. There is also a tacit assumption that 2 hours is in the ballpark. I would bet that this number is way off for groups that need the most improvement. Individual managers should be trusted with good judgement on how much to invest in it.

    Toyota should instead ask people to honestly (and perhaps anonymously) document how many hours are spent on Kaizen, both during regular hours and overtime.

    They should also make a point of documenting how much money each Kaizen activity saves. Over time, they will gather the true ROI of kaizen and can then deal with it more objectively rather than merely considering it a cost without a direct impact on the balance sheet.

  2. The way I’m reading this is the employees are complaining that they’re required to do kaizens as part of their evaluations, but they are doing them without pay. It doesn’t sound like a bean counter asking for data or a manager looking to do away with kaizen, like Jay is saying.

    I can see the company’s point of trying to limit the amount they have to pay for kaizen – it could become a “cash cow” for the employees, if they’re only doing it for the pay and not for the improvement of the company. Up until now the main reasons for doing kaizen were improvement of the company’s bottom line, but this could encourage the employees to look at their own bottom lines. Besides this is coming as a result of a ruling that a man worked himself to death, so this seems to be an effort by Toyota to encourage workers to limit their overtime.


  3. There has been a real change in the work life culture in Japan over recent years. I go there regularly with my wife whose Japanese and just talking to people over there it is obvious that things are changing.

    It’s still true that the average Japanese “salaryman” works hours that would be unimaginable to us in the West but the hours worked are on the decline. Many young housewives (Japan is an economy based on one member of the family working fulltime) do not accept that fact that they will never see their husbands. Unlike their mothers who thought it was natural.

    It’s not that Japanese don’t get paid overtime, of course they do – if they declare it. Many work long, long hours without including it on their time sheets. I’ts just not their way. They’re looked after by the business and in return the employee has to pay his dues.

    Another example is holiday allocation. If your boss takes five days holiday in a year, as his subordinate you would never dream of taking the same amount, let alone take more. It’s just not done. You would maybe take two or three days holiday. Again people under you would then take one or two and so it goes on. That’s why its tough when you first start out – you get no holidays.

    But as I said, things are slowly changing but it will still take a long time and with the rise of China and India it could probably go in reverse.

    I think there’s a lot of gloss and heavy marketing given to Toyota and in some aspects it is deserved, but at the end of the day we also have to remember that it’s a Japanese company and they work and think completely differently to us in the West.

    Take me for example, I’m still trying to figure out my wife:)


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