· 2 min read · Features

Employer Brand Healthcheck: Toyota Group

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Toyota's suppression of the extent of the problem with its cars has not only damaged its share price but also its employer brand. Experts agree the car-maker will find it harder to recruit. Peter Crush reports.

It was Mark Twain who observed that autocrats may have power but are powerless 'to stop a sneeze', and so, it seems, the world's largest car-maker, Toyota, has caught the cold it deserves, after months dabbing away at the problem of faulty brakes as if a tissue would make it go away. In a very public dressing-down by Japan's transport minister, Seiji Maehara, Toyota Motors' president, Akio Toyoda, was accused of tarnishing the image of Japanese dependability by failing to take proper leadership - specifically allowing country-only recalls when the problem needed worldwide action, and not being open about the extent of the problem with other models such as the Prius (hybrid). In the UK Toyota is under fire for failing to understand crisis communications (it has not hired a crisis agency), while it blamed managers for not training staff fast enough. Meanwhile rivals must be licking their lips at the prospect of poaching Toyota employees who may be thinking twice about working for a company that only confronts problems when forced to. It was 500 years ago that Machiavelli, wrote: 'Good news should come out slowly, bad news should come out all at once.' How visionary he was.

Expert View

DAVID HAIGH, Founder, Brand Finance

"Toyota's market capitalisation was beginning to return to its 2008 $200 billion high, so it's no wonder it didn't want to admit the bad news. Its command-and-control structure was ultimately to blame for suppressing the story, and it is also the reason it has turned into such a scandal. Other car brands are recalling products but Toyota is getting the lion's share of bad press because of its internal culture of revealing only the minimum. Pre-scandal we estimated its brand value was $27.3 billion. This episode will knock $3 billion off. But the employee impact could be worse. Its autocracy will have confirmed many a potential employee's fears, and now would be a great time for others to poach staff. Maehara was rightly worried about the light this episode casts on the rest of the car industry - of the world's top 20 car brands, six are Japanese. All of these will suffer recruitment difficulties as they end up being part of the backwash of this."

GRAHAM HALES, MD, Interbrand UK

"When you've built your long-term brand equity on reliability, any product defect will hurt, but combine this with the role the culture of this Japanese company played in bringing about this situation and things only get worse. Our own studies have revealed employees get most pride working for companies where they know the products and services they are helping to create are of the highest quality. So now there will be a major question mark in employees' minds. This is worrying. Just before the scandal broke, Toyota was ranked number one in our 2010 Japanese brands list. This will be impacted. It is employees that create a brand and they will have a role to play in its future valuation. Toyota will undoubtedly find it harder to recruit - think what friends will be saying to people now if they know they're going for an interview with Toyota versus what they might have said six months ago. There is a totally different conversation happening."