The Toyota Code of Conduct

For the class that I teach at BYU, I’ve been doing some research on Supplier Code of Conduct (see the Apple Supplier Code of Conduct for an example), or the tenets by which a supplier can be accepted into a network; this is often called “Order Qualifier” — that is, the basic items that a supplier must meet in order to be even considered as a supplier in the company’s network.  In the course of my research, I have studied the Supplier Code of Conduct for Apple, Intel, Boeing, Starbucks, The Gap, and Toyota.  But, I also recently discovered an interesting article — not for suppliers, but for employees.

This document is a fascinating one to read.  It gives insight into the culture and worldview of Toyota employees and, in my mind, clearly demonstrates how the Toyota Production System (TPS) or Lean Manufacturing is not just a set of tools, as some have argued — it is a worldview; a cultural and philosophical perspective, manifest in some of the practices and approaches of TPS.  In their words, there are 3 major documents — “Guiding Principles at Toyota”, “The Toyota Way, and “The Toyota Code of Conduct”.  They explain the differences between the three documents:

The Guiding Principles at Toyota (originally issued in 1992, revised in 1997) summarize the corporate philosophy and reflects TOYOTA’s vision of what kind of company TOYOTA would like to be.  The Guiding Principles at Toyota were created with the expectation that we would understand and share our fundamental management principles, and that we would contribute to society by referring to these principles.

The Toyota Way and the Toyota Code of Conduct serve as important guiding tools when implementing our daily business operations to realize the Guiding Principles at Toyota. Toyota Way (issued in 2001) describes the values and methods to be shared for the people of the global TOYOTA organization.

The present Toyota Code of Conduct (originally issued in 1998, revised in 2006) seeks to provide a basic code of conduct and to serve as a model and compass. It also provides detailed explanations and examples of the actions and issues that we must be aware of when carrying out actual business activities (including in our jobs and daily business operations) and living in our global society.

As a help to the reader, below are the Guiding Principles at Toyota:

1. Honor the language and spirit of the law of every nation and undertake open and fair corporate activities to be a good corporate citizen of the world.
2. Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in the communities.
3. Dedicate ourselves to providing clean and safe products and to enhancing the quality of life everywhere through all our activities.
4. Create and develop advanced technologies and provide outstanding products and services that fulfill the needs of customers worldwide.
5. Foster a corporate culture that enhances individual creativity and teamwork value, while honoring mutual trust and respect between labor and management.
6. Pursue growth in harmony with the global community through innovative management.
7. Work with business partners in research and creation to achieve stable, long-term growth and mutual benefits, while keeping ourselves open to new partnerships.

In Summary, “The Guiding Principles at Toyota” provide a high-level overview of the company Toyota would like to be; “The Toyota Way” explains the tools and approach to satisfying the “Guiding Principles” and “The Code of Conduct” explains the culture — the how and the why Toyota employees believe and do what they do.

Below are the headings and sub-headings of the Code of Conduct.  I personally find the sub-headings very informative, revealing a philosophical and cultural thread all throughout the Code of Conduct:

Creating a Harmonious and Lively Work Environment

– Acting with integrity and in line with sound social norms –

Compliance with Laws and Regulations

– With sound social norms in mind –

Use and Management of Assets and Confidential Matters

– Ensuring asset maintenance and confidentiality management –

Insider Trading

– Act as an investor with sound common sense –

Activities Promoting Safety

– Enhancing vehicle safety –

Environmental Preservation Activities

– Building environmentally and people friendly vehicles –

Research and Development Activities

– Developing vehicles from the standpoint of our customers –

Procurement Activities

– Reasonable and sincere transactions –

Production and Distribution Activities

– Building vehicles that win customer trust and faith –

Sales Activities

– Winning the trust of customers and dealers –

Overseas Business Activities

– To become a global company trusted worldwide –

Profitability Enhancement Activities

– Building a stronger profit foundation –

Corporate Communication Activities

– Communicating facts in an accurate and timely fashion –

– Being Open and Fair –

Philanthropy and Community Relations

– Becoming a corporate citizen trusted by international society –

Shareholder Relations

– Respect for shareholders’ benefit –

Government Relations

– Maintaining proper and transparent relations –

Political and Religious Activities

– Moderate participation –

Traffic Safety Education Activities

– Improve traffic safety awareness of society as a whole –

Disaster Prevention and Crime Prevention Activities

– Creation of a safe society –

Common sense, fitting-in with society, safety, respect for people, responsibility to society, and customer focus are just some of the repeated themes all throughout the Code of Conduct.

The Code of Conduct provides a cultural worldview — a way of being; a way of conducting business.  Most American companies only focus on the Toyota Production System, which is just 1/3 of the equation; the Toyota worldview — as explained in the Toyota Code of Conduct and in the Guiding Principles — provides insight into the Toyota Production System — together, it is a way of being, of doing, and thinking — the Toyota Way.