An Effective Employee Suggestion Program Has a Multiplier Effect
Empowered employees who actively submit improvement suggestions, give an organization a competitive advantage in generating cost savings, improving productivity and increasing efficiencies when/if a program is properly implemented. This article tells how a maintenance worker, a construction crew member and even teams have submitted suggestions resulting in very positive contributions to the bottom line. It is estimated that approximately 37% of submitted suggestions do have merit by saving an organization money, time and/or identifying strategies for increased effectiveness.
An empty suggestion box or ineffective employee involvement program is a sign of a toxic culture.
One of the earliest examples of the workplace suggestion box came from the Japanese in 1721 when the eighth shogun, Yoshimuni Tokugawa posted the following note: “Make your idea known . . . Rewards are given for ideas that are accepted.”
Today, the Japan Railways (JR) East, the largest rail carrier in the world, continues to benefit from listening to their employees. For example, this rail carrier was cutting tunnels through Mount Tanigawa for a new bullet-train route. They hit water that caused problems for the construction efforts. The engineers developed plans to drain the water away. Construction crews started drinking the water and sharing how good the water tasted. A maintenance worker submitted a suggestion that the organization start bottling and marketing the water as premium mineral water.
His idea was accepted and the water now appears on the market under the brand name Oshimizu. The rail carrier has now installed vending machines in every one of its thousand stations and their advertisements emphasize the purity of the water that percolates through the snow-capped mountains picking up healthful amounts of minerals. The JR East Rail Company water is so popular that they now have entered the home delivery service of the water. Water sales recently exceeded $47M (Robinson & Stern, 1998). The idea came from a maintenance crew worker.
Do you listen to your employees?
In 1880 a Scottish shipbuilder, William Denny and Brothers, then one of the most admired companies in Great Britain, implemented an employee suggestion system that proved to be a success. Initially his system was passive – he just waited for proposals to emerge but then Denny later stimulated creativity by offering rewards for employee ideas. By 1887, more than 600 ideas had been received, 196 which were implemented. Denny’s employee suggestion system quickly generated great interest and was widely copied throughout Great Britain and Europe.
Seventy years later, the kaizen tenian system emerged adding a new dimension to the employee suggestion program. The aftermath of the Second World War left Japan devastated and at a low point in their history. Under the command of General Douglas MacArthur, and his seven-year-long postwar Allied Occupation, the U.S. troops were faced with eliminating Japan’s potential to make war and rebuilding the Japanese industry. These managers were eager for any useful advice.
A more refined employee suggestion system arose called kaizen tenian. This system evaluates participation rates of employees and helped put Japan on a path that quickly resulted in national performance that exceed the U.S. in many areas. In 1945 when the last survey was taken, eighty-six percent of the companies in Japan reported an increase in production of at least 25 percent as well as a 25 percent reduction in grievances. Employee participation rates can be examined from these 1995 national stats:
The participation rate of employees submitting suggestions are 10.7% while the Japanese enjoy 74.3% employee participation.
The adoption rate of U.S. suggestions are 38.0% while the Japanese have a suggestion adoption rate of 89.7% (Robinson & Stern, 1998, p. 63).
In the business world today, companies need new clientele to stay competitive. PNC Financial Services Group, Inc. (PNC) is a nationwide diversified financial services organization headquartered in Pittsburgh, PA. This year, they too learned the value of employee suggestions and involvement. A program was launched called “The Chairman’s Challenge.” The intent was to encourage all 24,000 employees to help the organization obtain new business. More than sixty percent of the non-sales staff got involved resulting in thousands of new accounts and more than $100 million in new business.
Employee suggestion programs can work in smaller organizations as well. Galactic Ltd (with only 9 employees) decided to design an Internet-based system called Ideaworks. This system would electronically allow a client’s employees to submit suggestions on costs savings and other revenue generating ideas for improvements. Upon completion of the program, Galactic first piloted their Ideaworks program internally. The savings in their own company totaled $2.3 million dollars even after they subtracted the costs it took to develop the program.
J. Willard Marriott of the Marriott Hotel Chain originally started out with a food service called Hot Shoppes that grew into A&W root beer stands according to the book, Marriott. As the Marriott family business continued to expand, a food-stand attendant located near the Washington, D.C. airport noted that a number of business travelers would purchase hot coffee and food on their way to catch their flight. The trend continued to grow and the attendant mentioned his observation to his boss. This communication with an employee resulted in a delivery of prepackaged box lunches directly onto the airport tarmac. In 1937, the Marriott family pioneered airline catering serving Eastern, American and Capital Airlines. This airport food service has now evolved to more than one hundred airports thanks to this employee and the boss who listened (Marriott and Brown, 1997).
The 1965 discovery of NutraSweet, a billion-dollar low-calorie sweetener product, would never have happened if it were not for a creative employee at Searle Pharmaceutical Company. A research scientist named Jim Schlatter was working on a new anti-ulcer drug. Some flecks of a solution splattered onto his bare hands and the drops didn’t really register in his consciousness. He later licked his finger to separate some paper and noted an extremely sweet taste. He retraced his steps to identify the source of the amazing taste – a taste 200 times sweeter than sugar. The chemist shared this information with two other friends and the three knew they were dealing with something very important that could compete with the two other sweeteners on the market: saccharin and cyclamate. Schlatter’s efforts and suggestion are responsible for one of the most profitable products in the company’s history (Robinson & Stern, 1998).
In the book, The Phoenix Effect (2002), the authors say, “One of the least expensive, yet most frequently overlooked weapons in the corporate renewal armory, is altering the functional processes of a business.” Ordinary process improvements are cheap, fast and sometimes ideal in restructuring or crisis resolution situations. Implementing them takes nothing more than a careful eye and determination. Unlike the comprehensive modifications that are part of reengineering, such ordinary changes involve simple transitions from less efficient to more efficient methods. The payoff can be huge (Pate & Platt, 2002, p. 11).
Improving processes is exactly what Bayer Pharmaceutical Employees did recently. Bayer developed a team they called the “Drug Discovery Process Improvement Team.” The team brainstormed various opportunities that would help the organization meet business objectives of accelerating drug development. Through process mapping, the team identified a bottleneck. The employees’ recommendation reduced the project timeline by 4.5 months with an estimated saving of $2.04 million! The fact that the product could start producing revenue 4.5 months earlier than scheduled led to an additional $94 million based on estimated annual sales of $200 million. The team recently won a Continuous Improvement (CIP) award from Bayer and is a proven example of Pate and Platt’s “Change the Process” strategy using one’s own employees ideas.
General Motors Corporation is making astonishing improvements in their manufacturing operations. They attribute their increased efficiency to a new initiative called Global Manufacturing System (GMS). GMS is designed to improve performance in the areas of people, safety, quality, responsiveness and cost. Employee suggestions are vital to the successful implementation of GMS.
GM workers suggested 44,000 ideas in just one quarter and one plant saved $900K using employee suggestions. Employee suggestions have been effective in reducing the time it takes to assemble a vehicle by 15%. Another idea implemented initially appeared simple. It added a cart to a workstation to prevent workers from having to walk back and forth between the production line and their workstation. The idea reduced the time necessary to complete a task by 2 seconds. This seems to be positive proof that implementing an employee suggestion program can be a very lucrative endeavor for both employer and employee.
The following tips are best practices in establishing a program within your organization that can have a mulitipler effect:
1. Top Management Support
Have a big program kick-off with top management clearly letting the employees know his/her stance on the value of this program. For example, the CEO could record a personal video message communicating his commitment. The CEO of South West Airlines sent a personal letter to each employee to their home encouraging their participation in this new initiative (Nelson, 2002). Within six weeks Southwest had millions of dollars worth of money saving recommendations.
According to a March 2001 article reported in USA Today, a survey developed by OfficeTeam found, “Only 38% of working men and women feel their managers are very willing to listen to new ideas and suggestions for improvement.” Top management should let everyone on every level know that top management is fully supportive of the employee involvement concept and that employee participation is instrumental to organizational success.
2. Program Administrator
Designate an individual to administer the program — not to accept or reject suggestions but to act as a liaison between employees and management. Develop a process that includes responding promptly to each suggestion, whether it is adopted or not. For the employee involvement program to work, there needs to be someone senior responsible for the program. A poorly run system will demoralize employees. The program should acknowledge employee contributions via rewards, debriefings, etc. This administrator’s performance should be evaluated on the number of employee involvements submitted and accepted. If few suggestions come in, then someone is not stimulating interest in the program.
Put all ideas accepted on a bulletin board in the cafeteria to stimulate thought and discussion. Establish a need for improvement. Ensure employees realize the competitive reasons to improve and the value of their suggestions. Open up the program for ways to improve processes, eliminate waste or to be more competitive in the global market place. Some organizations include this employment involvement message in new hire orientation and the recruiting process. Some invite employees who have accepted suggestions to tell of the impact of their contribution either personally or on video.
4. Eliminate Threatened Manager Syndrome
Historically, there have been managers who fear subordinates looking too good, and employee ideas have been suppressed and even stolen. Keep employee involvement programs on the front burner to reap competitive opportunities. Encourage and reward managers who actively solicit employee involvements. Managers may feel threatened when subordinates receive recognition. Eliminate fear and reward managers who create a learning environment of better ideas/suggestions.
5. Open Program to Vendors/Customers/Employees
Open the suggestion program to every employee, vendor/customer. A vendor of a barbershop suggested moving hair care products in a barbershop to a wall opposite the barber chair. As the client’s hair was being cut, they would be facing the products. Retail sales increased 200%.
Many organizations are now computerizing their programs; however, if you do this, ensure all vendors/employees/customers have access to the computer suggestion program or web site. If not, a traditional box should be installed and MONITORED. If the suggestion program is too complex, individuals will not participate. Keep the suggestion process simple.
6. Rotate Suggestion Advisory Committee Members
Set up a cross-functional advisory committee that represents corporate departments to evaluate the merit of the suggestion. Provide training before the program is rolled out. Credibility is lost if initial efforts of those in charge are tentative. Rotate membership semi-annually but arrange it so all new members don’t show up at once. Having new members presents new energy and ideas. Retired members are still great marketers for the program and should be given a honor title of ‘suggestion mentors.’
Reward employees with 10-20% of the first year’s savings that their suggestion reaps. Additionally, employees still value recognition and often enjoy having lunch with a senior member of the management team. This also provides a good marketing opportunity as the employee will tell others of their experience further marketing the employee involvement program. Many organizations ensure the corporate newsletters include information regarding accepted suggestions and have a ‘honor wall’ or ‘wall of fame’ that acknowledges employee contributions and keeps the message exposed to visitors and employees.
8. Timely Feedback
Employees need to know that their suggestions are taken seriously and that they can have a very large impact on the work environment. By quickly reviewing and implementing suggestions that have merit, management sends a strong positive message.
9. Keep the Submission Process Simple
Suggestions should include a business case for implementing the suggestion. Keep the process simple but the suggestion should include its value/ benefit, who it will impact or affect and implementation and cost estimation strategies.
10. Suggestion Mentor Program
Another bonding strategy used by some organizations is to have individuals mentor prospective suggestors. American Airlines initiated a mentor system to increase employee participation in its “IdeAAs in Action” program. Mentors receive one day of training and then work with others to encourage cost-savings ideas.
11. Anonymity Option
Provide a confidentiality option in unionized environments. Many unions disapprove of employee involvement programs as some suggestions may result in lost jobs. Some organizations have implemented the following practice: Upon receipt of a suggestion, the name of the suggestor and any other marks of information that might reveal the suggestor’s name are removed, and thereafter the suggestion shall be known only by its identification number until the Committee has reached a decision as to its recommendation.
12. Review Suggestion Program Annually
Review the suggestion process annually to monitor its effectiveness. The administrators of the program can post “FAQ” lists to help employees better understand the process. This annual review should be a line item in the corporate culture survey.
Today’s knowledge age is the time for empowered employees, quality improvements, internal communications, team-based work systems, lean production and organizational learning to give an organization a competitive advantage. An employee involvement program is a method that can generate cost savings, improve productivity and increase efficiencies if properly implemented. Smart organizations realize that everything can be improved, every person is capable of generating improvement ideas and a formal system can best manage ideas. It is estimated that approximately 37% of submitted suggestions do in fact have merit to save an organization money, time or become more effective. An empty suggestion box or ineffective suggestion program is a sign of a toxic culture.
Corbett, B. (2002). Getting it right. Ward’s Auto World, 38, 46. Retrieved September 5, 2002, from UOP EBSCO Host data.
Marriott, J.W., Jr., and Brown, K. A. (1997). The Spirit to Serve, Marriott’s Way. New York: HarperCollins.
Nelson, B. (March, 2002). Making Employee Suggestions Count. Bank Marketing.
Pate, C. & Platt, H. (2002). The Phoenix Effect. New York: John Wiley & Sons, Inc.
Robinson, A.G. & Stern, S. (1998). Corporate Creativity. San Francisco: Berret- Koehler Publishers, Inc.
Teaching the World a Lesson ; Face Value. The Economist (US) (June 8, 2002). Retrieved September 1, 2002 from Pro Quest.
Freda Turner teaches at the University of Phoenix and Embry-Riddle Aeronautical University in Daytona Beach, Florida. She may be reached at email@example.com.