Companies Turn to Employee Ideas To Cut Costs and Improve Products
Popular since 1930s, suggestion programs are being revitalized
CISSY EVERSOLE, manager of an employee suggestion program at Siemens Industrial Automation, an electronics and software company in Johnson City, Tenn., used to receive more than 3,000 suggestions a year from the company's 600 employees.
Typically, it took 12 steps to process just a portion of an employee's suggestion, such as using battery-operated screwdrivers instead of manual ones to save time and help avoid injury. Two years ago, Ms. Eversole and a colleague made their own suggestion: introduce computers into the process to cut down on time.
Eversole asked Siemens's software department to develop software for the suggestion program, estimated its cost, and asked her supervisers to provide funds to implement the program.
Siemens agreed. Four months later, the company began receiving employee suggestions electronically. Eversole's suggestion saved Siemens $15,000 the first year and eased her burden. Thanks to the computer program, it now takes only four steps to process a suggestion.
Company suggestion programs - asking employees to generate ideas for cost-cutting and product improvements - have been popular since the 1930s. In recent years, many companies have been trying to revitalize these programs because, as Dow Scott, a management professor at the Virginia Polytechnic and State University in Blacksburg, Va., says, ``Companies believe [their] workers can make substantive contributions to improve productivity [through the suggestion programs].''
United States companies saved $2 billion in 1993 by implementing employee suggestions, estimates the Arlington, Va.-based Employment Involvement Association, which promotes employee participation in the workplace.
The old method of filling out a form and putting it in a box has become outdated. About half the companies reporting to the EIA in 1983 used computerized suggestion programs. Last year, 257 of 299 reporting companies employed computers.
Companies also are making more of an effort to promote their suggestion programs. Many display posters in their offices to make employees aware of the programs; companies also provide information in company newsletters.
Bob Stoltz, managing director of IdeAAs in Action, a suggestion program at American Airlines in Ft. Worth, Texas, says his company invests about $15 million a year in the program. Employee suggestions that are implemented save the airlines about $55 million a year, he says. ``We look upon it as running a business, as well as providing a benefit to our employees,'' Mr. Stoltz says.
Three years ago, in an effort to save money that would be used to purchase a new aircraft, the airline ran a year-long suggestion campaign called ``IdeAAs in Flight.'' At the end of the year, the airline bought a $50.3 million Boeing 757 with money it saved. The purchase shows the ``power of employees' ideas,'' Stoltz says.
In order to get suggestions that are feasible to implement, companies offer seminars and lunchtime meetings to make employees more ``business literate,'' Professor Scott says.
In many cases, workers are simply expected to do their job well and are not required to understand fundamental functions of a business operation, he says. But if they don't know how the business functions, workers cannot make workable suggestions, Scott says.
Toyota Motor Manufacturing USA Inc. in Georgetown, Ky., for example, offers management-level employees a class called ``suggestion system training'' six times a year. Jim Sandidge, assistant manager of the Employee Involvement Program at Toyota, says if many suggestions are turned down, managers study the rejected suggestions to try to find out why they couldn't work; managers then attempt to get workers to generate better ideas.
Another way to get workable suggestions is through a team approach, says Alan Cohen, vice president of academic affairs and the dean of faculty at Babson College in Wellesley, Mass. If workers form a group to generate suggestions, they tend to come up with better-analyzed and more mature suggestions than they do individually, Professor Cohen says.
``The real key [to the success of the suggestion program] is trust,'' says Joseph Weintraub, a management professor at Babson. In order for companies to establish trust among employees, they must respond to suggestions quickly, he adds. ``If nobody gets back to you, it discourages employees.''
For a long time, companies had a ``bad tradition ... of not listening or being defensive about ideas that managers didn't like themselves,'' Cohen says.
At AT&T Universal Card in Jacksonville, Fla., suggestions are forwarded to company evaluators within a day and responded to within two weeks if they are not adopted.
It's important for companies to show appreciation for employees' ideas, Professor Weintraub says. As a sign of recognition, Toyota gives its employees a star pin noting how many of their suggestions the company has been implemented.
``We believe that person who's actually doing the process is an expert,'' Mr. Sandidge of Toyota says. ``They know more about the process than anybody else.''