Employee Suggestions are Profitable -
Do You Listen?

by Freda Turner Ph.D.

It is believed that the workplace suggestion box started with 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.”

Below are some examples of organizations that have listened and rewarded employees, and have benefited:

In 1890 Johnson & Johnson was primarily a supplier of gauze and medical plasters. When patients developed an irritation from the gauze, an employee suggested putting talc between the gauze and skin. To the company’s surprise, customers soon began asking to buy the talc directly. J&J responded by creating a separate product called “Johnson’s Toilet and Baby Powder” which is now a famous household staple around the world. J&J got into the baby powder business by listening to an employee suggestion - and that business accounts for 44% of J& J’s revenues today.

Here it is, 280 years after the Japanese suggestion idea, however, only 3 percent of U.S companies are taking advantage of employee suggestion systems. Bank of America is in the 3% group and started listening to employee suggestions in 1928 when the chauffeur for the bank founder, A.P. Giannini, suggested that the bank issue customers some sort of currency they could use while traveling. The chauffeur explained to his boss that this would be much safer to carry than cash. The chauffeur¹s idea became the basis for the travelers' check business, and Giannini gave him a $1 reward for the suggestion.

Food Industry:
J. Willard Marriott started out with a chain of nine profitable A&W root beer stands according to the book, Marriott. One of the restaurants was located near the Washington, D.C. airport that attracted traveling clientele. One employee noticed that passengers on their way to catch a flight would purchase meals and snacks stuffing the food into their carry-on luggage. The trend continued to grow and the employee mentioned it to his boss. This communication with an employee resulted in the store establishing a delivery of prepackaged box lunches directly onto the tarmac. Several months later, the service expanded to American Airlines catering to 22 flights a day. This airport food service has now evolved to more than one hundred airports.

Sensormatic Electronics Corp. in Puerto Rico pays employees for producing ideas that help the company be more efficient. Employees are paid $500 or 5% of the savings of implemented suggestions. In 1998, the goal was to achieve $1 million in savings from employee suggestions. At the end of the year, the company had adopted 30% of the ideas submitted and surpassed the goal.

An aerospace manufacturer in Kalamazoo, Michigan, had been forced into employee layoffs in the past. Through the employee suggestion program, jobs were saved and the company was able to attract more business and remain competitive. Now in its fifth year, the company has saved more than $8.5 million by listening to employees’ ideas of how to streamline and save money.

Employee, Art Fry, was singing in the church choir when he had a creative moment. To make it easier to find the songs being sung at each Sunday’s service, he used little slips of paper but when they would fall out, he felt frantic. He put a little adhesive on these bookmarks and today we know this employee’s idea as Post-it notes.

International Marketplace:
In the 1950s, a Sony employee requested permission to make a "pocketable" radio that could fit into a shirt pocket. In the 1950s, radios depended on vacuum tubes and to build such a miniature radio required significant innovation. Additionally, transistors were only used for defense purposes, making them quite costly. Sony finally gave the employee permission to work on the transistor project. He made a break-through in the development of transistors that eventually led to a Nobel Prize.

Insurance Industry:
Another successful employee suggestion program comes from the Ceres Group Inc. that has 1,100 employees nationwide specializing in the health and life insurance industries. Their “Improvement Movement” program generated suggestions that saved $340,000 in cost savings the first few weeks of existence – at a total cost of $25,500 in awards back to employees.

Airline Industry:
The airline industry benefited when an airline officer suggested that air cargo be repositioned toward the rear of the airplane. This idea saved the airline $458,000 in its first year of use and the employee received a bonus of $45K.

Assembly Line:
Monarch Marking System, a manufacturer of labeling, identification, and tracking equipment in Ohio, trimmed the square footage of an assembly area by 70%, reduced past due shipments 90%, and doubled productivity in the organization after implementing employee suggestions.

Listening to employees can have profound effects on profitability and growth if supported by top ranking officials of the organization. Teams that are given the autonomy to make important decisions, initiate improvements, and implement changes can improve specific target areas and impact the entire organization.

Does your organization listen?

Freda Turner, Ph.D. is a researcher of best business practices and is affiliated with the University of Phoenix Doctoral and Graduate Studies Programs. She may be reached at fturner@email.uophx.edu.

Articles by Freda Turner | More like this in The HR Refresher and Creative Leadership in The CEO Refresher Archives


Copyright 2001 by Freda Turner. All rights reserved.

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