Employee Suggestions Contribute to
the Bottom Line
by Freda Turner Ph.D.

One of the most efficient and economical ways to increase profitability is to involve employees according to HR Consultant, Marsha Myers of global firm, Lee Hecht Harrison. It energizes them and creates a learning culture.

Here are several examples of organizations that have benefited from incorporating employee suggestions:

A leak. An employee suggestion involved repairing a leak in a cooling system. The system had leaked for years without anyone thinking much about it. One day an employee submitted a repair proposal that resulted in an annual cost savings of $200,000.

First Maryland Bancorp instituted Brainstorm, a program designed to motivate employees to seek out ways to increase revenue or reduce expenses. The program generated $8 million in savings the first year - an incredible savings for the bank.

Electronics. Randy White, an employee of Oregon State Lottery submitted a suggestion to his manager in July 2001. Randy found a solution to upgrade video-lottery terminal equipment so the equipment would accept the new currency issued last year. Randy recommended replacing 2,500 components in terminals at $12.50 each, compared to the manufacturer's proposal of $450 per terminal. Randy saved the State of Oregon $1,200,672 and was awarded $5,000 for his terrific suggestion.

A manufacturing plant in Livingston, Tennessee credits employee participation with keeping the plant open. They have had no layoffs since 1994 and have a turnover rate of only 1.6%. In one year, the plant doubled in size growing the workforce from 70 to 187 employees. In 1999, employees generated an average of 8.5 suggestions each, saving $741,761 in one year. The management team encouraged and rewarded innovation.

Intel. An employee suggestion is responsible for the invention of the first microprocessor, the Intel 4004. Intel received a manufacturing contract to produce chips for calculators. The customer originally wanted to purchase eight chips to perform all the logic of the operations of the calculator. However, it was quickly realized that Intel did not have the resources to produce eight different types of chips. Ted Hoff suggested that Intel should miniaturize the general-purpose computer. This employee suggestion led to the invention of the microprocessor, which eventually took Intel away from its core business of producing memory chips to the world's leading manufacturer of microprocessors.

Consulting. The Arthur Andersen Tax Technology Group in Sarasota, Florida has an employee suggestion program called "Just Say It". Employees have an online form for submitting suggestions. One employee made a suggestion that saved thousands of dollars in consultant travel expenses.

City Savings. Caryn Thompson, who works in the Oakland county Children's Village juvenile detention facility, saved the county about $11,800 a year just when suggesting the youngsters receive a routine medical test at the facility instead of transporting them and the staff to a doctor's office.

Manufacturing. An employee suggestion led to the recycling of approximately 280,000 pounds of methanol during the production of an intermediate product. This saved approximately $31,000 per year in methanol costs and an estimated $40,000 per year in sewer bills.

Furniture Idea: Miller Furniture has benefited from employee suggestions since the beginning of the early 20th century. The owner valued his employees for their innate talents and implemented an employee participation plan that included bonuses for helpful cost cutting suggestions. It was an employee suggestion that led to the creation of the first cubicle office furniture units, now one of their best selling products.

Manufacturing. Douglas Battery Manufacturing Company solicited employee suggestions to address worker strain problems. The organization was able to reduce back injury claims by 40 percent within one year.

Lights. An electrical superintendent for the Department of Transportation in Fresno, California thought of replacing the red lights in traffic signals with light-emitting diodes. The diodes last longer and use less energy.

Sensomatic Electronics Corporation has saved approximately $1.7 million annually by implementing employee suggestions. According to Sensormatic's Human Resources Manager, Sergio Gonzalez, "When the program was implemented in 1998, the goal was to achieve $1 million in savings. At the end of the year, the company had adopted 30% of the ideas submitted far surpassing our initial goal."

Marine Manufacturer. A boat manufacturer used paper in their lamination department to prevent buildup of fiberglass on the floor. Before each shift the floor was covered with paper, then the paper would be discarded at the end of the shift. An employee in the materials management department suggested an alternate supplier who could provide recycled paper at an estimated savings of $500K per year. The organization provided the employee with a check for $3K, and corporate recognition. The community also appreciated their environmentally conscious neighbor.

UPS. Rising energy costs presented UPS with problems. The UPS data centers are tremendous users of electricity and natural gas. Their utility bills averaged $1.5 million per site annually. An employee at the Atlanta site recommended the installation of a plate heat exchanger resulting in a savings of $500 - $900 per day.

According to the Chicago-based National Association of Suggestion Systems (NASS), employee suggestion programs have saved organizations more than $2 billion. Additionally NASS reports that the adoption rate of employee suggestions is 37%, reflecting that " ... employees are submitting very high-quality suggestions that can impact major bottom-line efficiencies," according to Cynthia McCabe, 1992 NASS president and an employee involvement manager for Ohio Bell Telephone Company.

A number of organizations provide ideas on how to run an effective employee suggestion program. According to Tom Jensen, who now runs The Center for Suggestion System Development in Orlando, "Successful suggestion programs all have one thing in common: quick, thoughtful responses. Suggestions should be acknowledged within 24 hours." While most would agree with this sense of urgency, other aspects are just as important, including building trust and integrity into the program. The rules governing the level and type of reward are also important in any program.

In an article in the February issue of Public Relations Tactics, author Grunig suggests the need to "revamp" many existing employee suggestion programs. He says that surveys show suggestions are not answered. "It's like dropping something into the black hole," remarked one employee. In fact, of the 200 employees interviewed for his survey, less than half have ever made a suggestion, and only 10 percent ever received an answer. "I get a form letter saying "Thank you for your letter, blah, blah, blah,'" said one. Adding to this, one worker at a manufacturing firm dropped a note in the suggestion box that said, "Does anybody read these suggestions?" She has yet to get a response.

Unless an organization is prepared to address every suggestion - the suggestion program should be abandoned as it will only demoralize people, according to Marsha Myers of Lee Hecht Harrison. Another look at flawed suggestions programs comes from Geoffrey Lloyd of the Cranfield School of Management. According to Geoffrey, the reason employee suggestion programs most often fail is the lack of senior management support of the process.

Best Practices of Employee Suggestion Programs

  1. Encourage and reward managers who actively solicit employee suggestions. Managers may feel threatened when subordinates receive recognition, therefore employee suggestions never surface. Eliminate fear and reward managers who create a learning environment of better ideas/suggestions.
  2. Open the suggestion program up to every employee. Many organizations are now computerizing their program; however, ensure all employees have access to computers. If not, a traditional box should be installed and MONITORED. If the suggestion program is too complex, employees will not participate. Keep the suggestion process simple.
  3. Suggestions should be reviewed by a cross-organizational management committee not just an HR representative. Once an employee submits a suggestion, they anxiously await the feedback. A senior official should provide immediate feedback on all suggestions.
  4. Suggestions might be categorized as follows: major implementations, which consist of cost/time saving suggestions, revenue producing suggestions and quality of work life issues.
  5. Suggestions should include: the suggestion and its value/ benefit, who it will impact or affect and implementation and cost estimation strategies.
  6. Suggestions must be rewarded. Many organizations award 10-25% of the savings and the CEO acknowledges the contributor in the corporate newsletter.
  7. Ensure the suggestion program includes customers/vendors suggestions and recommendations.
  8. Establish a time line to ensure the employee receives immediate feedback on their suggestion, i.e. 24 hours, 5 working days, etc. When an employee submits a suggestion, they wait, they watch, they hope!
  9. For the employee suggestion programs to work, there needs to be someone senior responsible for the program. The program should acknowledge employee contributions, rewards, debriefings, etc. This person's performance should be evaluated on the number of employee suggestions submitted and accepted. If few suggestions come in, then someone is not stimulating interest in the program.

Many organizations have seen the effectiveness of an employee suggestion program. It can be a positive force to motivate, improve performance, productivity, safety, and add to the bottom line.

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.

Current Issue - Archives - CEO Links - News - Conferences - Recommended Reading