SHRM Poll: Employee Suggestion Programs Underutilized

By Rebecca R. Hastings, SPHR Nov 17, 2010

When asked if they have a formal employee suggestion program and, if so, how well it works, 39 percent of Society for Human Resource Management (SHRM) members said they have such a program, but 36 percent of those that do said that top leaders do not see the program as a critical contributor to innovation.

However, a greater proportion of respondents reported that their organization’s suggestion program and strategic planning process were linked. More than one in five (22 percent) said the two were linked “to a large degree,” although more than half of respondents (52 percent) said the link between the two was “slight” or nonexistent.

SHRM gathered feedback from 523 U.S.-based SHRM members in October 2010. Of those who reported that their organization had a suggestion program, just 6 percent said employees use the system “to a large degree” and 9 percent said employees don’t use the system. The vast majority of respondents fell somewhere in the middle—44 percent said they use the system “to some degree” and 41 percent said they use it “to a slight degree.”

Jim Smith, CEO of Enterprise Management Group (EMG), a consulting firm that specializes in rapid, significant cost reductions, said there are a number of reasons why “typical suggestion program approaches” don’t work. For example, CEOs rarely sponsor such programs personally, he said, “So that’s the employee’s first clue about how committed management is to the program.”

Others disagree.

“Suggestion systems today are much more sophisticated than they were ten years ago,” said Larry Truax, immediate past president of the not-for-profit Ideas America (formerly known as the Employee Involvement Association). In some companies, such systems are an integral part of business strategy, he said. They provide opportunities for employees to help reduce costs, eliminate waste, enhance product quality and improve customer satisfaction.

In addition, Truax said, suggestion systems can lead to:

  • Improvements in production and management processes.
  • Employees who feel a sense of ownership in their tasks.
  • Customers who benefit from a culture of continuous improvement.

Response Time Is Critical

Truax, who is ideas administrator for Grote Industries, LLC, a vehicle safety and lighting company in Madison, Ind., said the company “works tirelessly to try to implement 90 percent of our suggestions in 40 calendar days.”

Most organizations are quick to review employee suggestions, the SHRM poll found. A quarter of respondents said they review incoming suggestions daily, 30 percent said they do so weekly and 28 percent said they do so monthly.

Similarly, SHRM respondents said employees receive feedback about their suggestions in a fairly prompt time frame. More than a third (34 percent) said employees hear back in a week, and about the same percentage (36 percent) said they hear back in a month.

Employee Participation

According to a poll by Right Management, generated using a sample from the social media web site LinkedIn, 57 percent of the 614 employees who responded said they make suggestions on a regular basis, and 27 percent claim to offer more than 20 suggestions every year.

“Making suggestions signals they are thinking about the performance of the organization and want to contribute over and beyond the requirements of the job,” said Deborah Schroeder-Saulnier, senior vice president of global solutions at Right Management, in a statement issued Feb. 23, 2010. “And this can be seen as a great opportunity by employers—if they know how to take advantage of it.”

“The test of a suggestion program should be the rate of input and employee enthusiasm it generates,” Smith said. For example, he said that one EMG client, a large power producer, challenged employees and management to come up with suggestions to improve earnings. Although the year-long project yielded $24 million in savings, it was far short of the objective. By comparison, after 10 weeks under the EMG system, the company’s employees identified $300 million in savings and reduced planned layoffs by 50 percent.

Truax said that nearly 70 percent of Grote employees make at least one suggestion a year. “We receive about 80 suggestions for every 100 employees,” he said. “And we save at least 4 percent of our cost of sales every year.”

Are Incentives Necessary?

On May 1, 2009, the University of St. Thomas, Minnesota, announced that three employees had each received $500 for a pair of employee suggestions estimated to save the university over $220,000 that year. Eligible suggestions are those that result in greater efficiency, savings or new revenue of $50,000 or more.

Awards can be in the form of time off or of a cash award of between $500 and $1,000.Suggestions are evaluated by committee members and subject matter experts and are verified for cost savings or revenue generation and feasibility. Edna R. Comedy, SPHR, associate vice president for human resources, told SHRM Online that the university receives many suggestions each year but few satisfy all program criteria.

Yet the SHRM poll found that a significant number (44 percent) of respondents said employees receive no form of incentive to offer suggestions, and of those that do incent such behavior, the predominant form of incentive is recognition at staff meetings or in company communications (40 percent). Other forms of incentive include merchandise gift cards and other tangible rewards (23 percent) and cash bonuses (21 percent).

Smith said that financial incentives are “rarely successful” because the typical incentive is too low to motivate employees to risk their job by making controversial suggestions: “A $2,000 prize won’t get an employee to risk their job by suggesting that the ZYX department produces no value and should be eliminated, even if it’s true,” he explained.

Yet a large incentive can motivate some and might lead to sizeable company benefits.

Peggy Duncan said she earned a $40,000 award for a suggestion she submitted as an IBM staffer in the early 1990s. “At IBM—back then—you could receive up to $250,000 of the savings in time or money,” she told SHRM Online. “It made me constantly rethink everything I did; developing faster, smarter ways to get things done,” skills that she uses now as an Atlanta-based personal productivity expert.

“IBM had a full process in place for submitting your suggestion. … I did my homework and made sure my report was complete,” she explained. It took several months to complete the process, partly to allow time to assess the savings, which totaled close to a million dollars a year. But for Duncan, the financial incentive was a powerful motivation.

IBM spokespeople did not respond to queries from SHRM Online about the present availability of financial incentives for employee suggestions.

Just 3 percent of SHRM respondents said they award employees a percentage of the revenue raised or cost saved from the suggestion, even though nearly half (45 percent) of respondents said they track the financial value of suggestions that are implemented.

But employees don’t submit suggestions merely to gain recognition, Truax said. It’s because they want to solve problems. “Nearly 100 percent of the suggestions we receive are initiated by the employee because something they are doing is more difficult than it should be or is wasteful of resources or causes some other kind of problem later in the process,” he said.

“The reward to the employee is to see the company stop doing things that have no value,” Smith agreed.

Kylie Hughes, a Charlotte, N.C.-based freelance employee, said that when she worked for Honeywell Australia in 2000, the company had what she said was the best employee suggestion program she has ever worked with. It was a system called OFI (Opportunity for Improvement), a companywide database that allowed any employee to identify a problem and assign it to a person they believed could fix it.

“Managers were ultimately held accountable for completing OFIs in their departments,” Hughes told SHRM Online, “An OFI would remain active in the system and monitored until the solution was accepted by all of the relevant stakeholders.”

Honeywell did not confirm whether the program is still in effect.

Obstacles Exist

“There should always be a place for employees to express their perspective and get their questions answered,” said Rusty Rueff, a career expert with the jobs web site “But to believe that everyone in the workplace feels safe and secure in providing suggestions would be naïve,” he said.

“Many times, employees will not make suggestions because they are afraid of repercussions from management or their peers, or they feel as if their opinion does not matter,” said Katie Weaver, spokesperson for Awareity, an online incident reporting company.

By implementing an anonymous and online system, organizations can try to ensure that suggestions are received, reviewed, acknowledged and documented, she said.

“Culture and politics always prevail when an employee contemplates a sensitive suggestion,” said Smith. “More unfortunate is the fact that the recipient of the suggestion (usually HR) frequently applies their own evaluation and allows politics or culture to impact their decision to ‘fight’ for the change.”

EMG’s process creates “a safe haven for even the most uncomfortable suggestions to gain a fair and impartial hearing before the CEO and his officers,” he said.

When SHRM members were asked to list who evaluates suggestions, the largest number of respondents (27 percent) selected HR, followed by 22 percent who said management-level employees of the affected function are involved. Others mentioned executive-level staff (19 percent), a cross-organizational committee (15 percent) and the CEO or president (10 percent).

The largest percentage of poll respondents (29 percent) said it was HR’s job to notify employees regarding the outcome of a suggestion.

The Vancouver, Canada-based franchised business 1-800-GOT-JUNK? has its IAAP (It’s All About People) Committee gather employee suggestions and communicate them to company leaders.

“It is a successful system because, although casual and somewhat informal, it has enough parameters that ideas can be heard, vetted and escalated in a timely, efficient and clear manner,” said Sarah Letain, people manager for the company. “It also creates accountability through having a systematic ‘middleman’ to clarify, report, summarize and respond to the person or people making the suggestions.”

Suggestions are encouraged through other channels, Letain added, including a monthly, companywide Alignment Forum. “The policy is that there is no such thing as a silly question and all members of the group are welcome to contribute, make inquiries and challenge others’ ideas in an interactive, safe setting,” she told SHRM Online.

“The best ideas come from people who work at the coal face, in the shop, on the manufacturing floor, with customers, using the product and delivering the service,” Hughes said. “If you choose to ignore those people, you choose to ignore opportunity. Worse still, you end up with a workforce of automatons with no inclination for initiative, self-motivation, creativity, problem-solving or independent thinking.”

Other Issues

Chris Perry, a Parsippany, N.J.-based associate brand manager in the consumer packaged goods industry, said that traditional suggestion systems are “too open-ended for most employees” because “most people need a prompt that incites criticism or brainstorming.”

He suggests that employers give employees the opportunity to share anonymous ratings or opinions on specific topics, issues, programs or policies rather than through an open suggestion system. One way to do that, he said, is by hosting cross-organizational brainstorming sessions targeting a given issue or challenge.

A lack of resources can be a problem.

Eighteen percent of SHRM survey respondents with suggestion systems said a lack of resources, such as time, money and staff, justifies a choice not to implement an otherwise worthy suggestion “to a large degree,” while 20 percent said a lack of resources justifies such a decision “to some degree.”

Truax said that in his experience “the frequency and quality of results is directly related to the commitment of resources.

“It is one thing to gather employees’ suggestions in a box,” he explained. “It is quite another to identify the internal resources needed to evaluate [suggestions] quickly and then push the effort to implement the suggestions that employees have made.”

“Whether a suggestion program works or not depends on the goal,” Smith told SHRM Online. “Is management expecting incremental savings or transformational savings? It’s probably reasonable to expect some level of savings from even an average program, but certainly not transformational change.”

Done well, employee suggestion programs can serve as “a powerful innovation tool and one that motivates employees to continuously find ways to improve their work world,” said Dawn Adams, PHR, president of HResults, a Hartland, Wis.-based consultancy.

If a program is not working well, however, “It is not necessarily an HR issue,” said Adams, who serves on SHRM’s Employee Relations Special Expertise Panel. “In many companies, the program comes from another department, such as Quality or Continuous Improvement.”

Adams noted that employers should set expectations appropriately when designing or modifying such a program: “Consider which improvements are common expectations of the employee in their job and which ones will allow the employee to be rewarded in some way,” she said. “A reward or bonus is very motivating to employees, but it should not be given for doing what is expected in an accountable environment.”

Rebecca R. Hastings, SPHR, is an online editor/manager for SHRM.

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