How an employee with tin shears and cookie sheets saved IBM money
You say you know a more efficient way to do your job - but that your boss just won't listen? The complaint is becoming rarer. More and more employees with money-saving ideas are seeing them not only acted upon, but alsorewarded with cash.
Consider IBM's Michael Brown. While working with high-speed printers as a customer service representative in the Chicago area, he noticed a recurring problem with ribbons which occasionally jammed and broke.
One evening he sat down in his apartment living room with a pair of tin shears and some of his wife's cookie sheets - and began experimenting with solutions. Within an hour or so, he designed a protective metal device. IBM's management eventually ordered it as an engineering change on all its printers.
Mr. Brown has been awarded $100,000 from the company for his idea. With it, he bought his family two new cars, a videocassette recorder, and, of course, a new set of cookie sheets.
It is the 1980s' variation on the old company suggestion box. Workers, cutting through the thicket of bureaucracy, are finding better, more economical ways of doing what they're assigned to do.
Though the number of companies and government agencies with formal suggestion systems is still only a small fraction of the nation's total, many are saving millions of dollars through worker ideas. And the employees are smiling all the way to the bank.
General Motors, which has had a suggestion program for 41 years, has paid out more than $344 million to employees for money-saving ideas in that time. Eastman Kodak, which has the oldest continuing suggestion program in the United States, saved $15 million under it just in 1982. For some companies, the suggestion system has become routine. Honeywell Inc. of Minneapolis sends out 200 checks to award-winning workers each month.
Governments also save. The State of Wisconsin has saved more than $7 million under its 20-year-old suggestion program. Award-winning ideas include a showerhead for bulldozers to allow them to move closer to forest fires they fight. Another employee found a way that existing heating pipes, rather than a new set of pipes, could be used to air condition the state capitol. Thanks to another worker, the Wisconsin Department of Natural Resources now uses a ''no-cry'' tool rather than the human hand to hold stakes as they are hammered into place to reinforce banks of swampy areas.
''It tends to be the people from larger departments who make most of the suggestions,'' says Lewis Stark, coordinator of the Wisconsin State Merit Award Program. ''Our participation overall has been low but steady.''
Oliver Hallett, executive secretary of the Chicago-based National Association of Suggestion Systems (NASS), a 37-year-old organization with 650 companies and government agencies as members, says government employers tend to be more ''chintzy'' in award sums despite often sizable savings.
The average worker with a winning suggestion gets about 17 percent of the first year's savings, and some companies (including John Deere, Diebold Inc., and the Stanley Works) will pay up to 50 percent. But most government agencies, according to Mr. Hallett, pay less than 5 percent.
Last year, for instance, two postal employees suggested an efficiency improvement on letter-sorting machines which is saving the US Postal System close to $17 million a year. They split an award of $17,950.
NASS grew out of worker suggestions for shifting from peacetime to military production during World War II and a wish to develop standards for rewarding good ideas. Currently its membership is about two-thirds businesses and one-third federal agencies. But only 11 states and Puerto Rico and 23 cities or countries are members.
The city of Phoenix, Ariz., which revived a suggestion program about four years ago, is considered a stellar example of how a city program should work. Awards have gone out to workers suggesting everything from a more mechanized garbage collection system (cutting 26 positions from the department) to having gas stations rather than the police fill out the required forms when self-service customers drive off without paying - a $60,000 annual saving in police time.
''The returns we get are just phenomenal - about $25 for every $1 we pay out, '' says Ed Schlar, operations analysis administrator in Phoenix. ''We have a quarterly awards ceremony and give the program a lot of visibility so each winner knows his contribution is important.''
Many suggestions are highly technical. Urging consolidation of parts, testing procedures, or assembly steps is common. Other recommendations sound almost too obvious to deserve an award. Yet savings can be considerable. One Honeywell employee took home an extra $2,198 for recommending that parts of a lead frame be reused rather than discarded as scrap metal. And Iowa's Maytag Company recently gave its maximum $5,000 award to a worker who suggested reducing the number of screws used to mount a control panel on the back of washers and dryers.
On the average, about one of every four ideas submitted is usable. And many companies and agencies have found that once an employee makes a first suggestion , he soon makes a second and third. Take IBM's Hernando Escobar, a customer service representative in Tampa, Fla., who last year won the NASS suggester-of-the-year award. He has averaged 84 accepted and awarded ideas each year since 1968 and has effectively added $5,000 a year to his annual salary.
The employer can gain not only direct dollar savings by heeding suggestions but improved two-way communication with workers as well. Though productivity gains are strongest in a manufacturing business, Mr. Hallett says the communication factor may explain why the number of paper-shuffling insurance companies in NASS has increased so markedly in recent years.
''It's a chance for the management to see what bothers the entry-level worker at a time when it's considered better to hang onto a worker than train a new one ,'' he says.
To protect itself, he says, a company must respond to every worker suggestion , so the employee knows whether or not his idea is eligible for an award and where it stands. The process can be time-consuming and expensive. But thorough documentation can serve as insurance. Mr. Hallett cites a 1975 case of two United Airlines employees who said they had suggested reducing fares during hours and days of lighter traffic but had not been properly reimbursed for United's use of the idea. Though a jury awarded the workers sizable damages, an appeals court two years later ruled that the jury had ignored evidence, fully documented by United, that the company had been working on the idea for four years before the employees formally suggested it.