What employer couldn’t use a way to save $30 million?
A struggling national airline got help by going to experts who often are overlooked—its employees.
"Managers said, ‘You guys are essentially the experts in your area,’ " says Joe Johnson, Northeast practice leader for Right Management, a talent and career management consulting firm that did work for the airline, whose name he would not disclose.
The workers split into teams with cleaners, bag handlers, ground crew and ticket counter agents in separate groups, for instance. Each team was linked by a website for brainstorming and voting on ideas. The suggestions were consolidated by a few managers, and the best ones were used—saving money andgiving workers the sense that their contributions are important.
"Employee suggestions can have a significant impact on business productivity, revenue and overall effectiveness of the organization," says Johnson, whose company is owned by employment services firm ManpowerGroup Inc., based in Milwaukee.
For Chief Executive Officer Jeff Gunther, an employee suggestion helped him retain top workers. Gunther is a Charlottesville, Va.-based entrepreneur with 30 employees and three companies, including Meddius, a health care technology firm.
A middle manager at Meddius asked why Gunther tracked workers’ sick days and vacation time, but not the extra hours they put in. Gunther soon scrapped all tracking of hours and told employees that he’d evaluate them on whether they meet goals, not when or where they work. Employees now make their own schedules and have the power to implement their own ideas.
"These are not just cogs in a machine," he says of his employees. "The best idea wins. I don’t care if that idea comes from me or someone else on the team."
Not all suggestions are created equal, says Jim Harter, chief scientist for workforce management and well-being at Omaha, Neb.-based Gallup Inc., which provides research and consulting services. Gallup researchers have polled 20 million workers in the past 15 years to determine whether they are engaged in their work. The researchers ask whether workers know what is expected of them, have the right resources for their jobs, are in positions where they can do what they do best and are recognized for good work.
Harter says when Gallup researchers conducted an employee engagement survey for an energy utility company serving 10 states, they found that each idea offered by less engaged workers saved the company $4,000 on average. Each suggestion offered by the most engaged workers saved $11,000 on average. And more of the ideas from engaged workers were implemented than those from the less engaged employees.
"If you solicit ideas from people who are engaged, they provide more-useful ideas," says Harter, author of Wellbeing: The Five Essential Elements (Gallup Press, 2010).
Whose Opinions Count?
The sandwich chain Subway has shown that franchise companies can find terrific ideas from franchisees, even though they aren’t employees.
The ubiquitous "$5 footlong" ads for Subway started with a man in Florida trying to cope with sluggish sales at the start of the recession.
Kevin Kane, a company spokesman at Subway’s headquarters, says this "is a great example of how this company embraces suggestions from the field."
The struggling franchisee pulled out a pad of legal-size paper and wrote: "Any Footlong Sandwich for $5." He posted the page in his window. The idea spread when a regional manager saw that the promotion hiked sales. Company co-founder Fred DeLuca noticed the promotion on a trip to Florida and turned it into an international ad campaign.
Kane says another suggestion from the field came when a Houston franchisee drew up a flier about the health benefits of Subway’s low-fat offerings. "A franchisee in Chicago then recommended they hire a college student named Jared Fogle, who lost 248 pounds while incorporating Subway sandwiches into his diet, to appear in commercials," he explains. Fogle soon became the public face of the company.
"People need to be listened to even if their ideas don’t work or don’t make sense," explains James Campbell Quick, professor of organizational behavior at the University of Texas at Arlington. "By not listening, it makes people psychologically withdraw and you may miss … the million-dollar suggestion."
On average, Harter says, one-fifth of workers say their opinions count at work. Bumping that up to one-third increases profitability by 6 percent and improves safety, customer satisfaction and employee retention.
An online poll of 388 employees conducted in late 2010 and early 2011 by Right Management showed that only 6 percent of workers said they don’t offer suggestions at work. More than half said they offer more than 20 suggestions a year.
Yet in a recent poll by the Society for Human Resource Management (SHRM) about employee suggestion programs, only about two in five companies had formal employee suggestion systems. Twenty-seven percent of HR professionals polled said HR was in charge of reviewing and responding to those suggestions.
Stay Open to New Ideas
Fostering a corporate culture that is open to suggestions starts at the top.
Quick says too many CEOs are focused "on being the center of the known universe. They’ve got to know everything and be in charge."
Leaders need to respond to suggestions without defensiveness and negativity. "Everybody’s watching," Quick says. Anger and frustration follow if suggestions are dismissed without explanation.
The flip side is an opportunity—an epidemic of idea sharing. When employees "see someone’s ideas are being used, they are willing to share more," Quick says.
Gunther helps to create a sharing culture by making all of his employees stockholders in the company. "When you move people from being employees to being investors, it aligns everybody’s interests and suggestions come very naturally," he says.
Larger companies are more likely than smaller ones to offer tangible rewards like gift cards for ideas that are actually used, according to the SHRM poll. Overall, the most common rewards include:
Public recognition (40 percent of respondents).
Tangible gifts (23 percent).
Cash (20 percent).
Smaller percentages of companies said they give rewards such as prime parking spaces or paid time off.
Ways of attracting suggestions can differ based on the demographics of the workforce and the type of industry. Manufacturers have lower levels of employee engagement and suggestions, Harter says, perhaps because of the way people have been taught to manage. Financial and service companies, where contact with customers is important, tend to see more employee suggestions.
To answer employees who question what’s in it for them, Johnson says one global manufacturer responded by offering employees 1 percent of whatever savings their suggestions created. A team of about 10 workers saved the company $20 million and split a reward of $200,000.
Training managers is one way human resource professionals can help encourage future suggestions. Harter of Gallup says employee engagement—and therefore the likelihood of good suggestions—correlates more to how an employee feels about his or her manager than to how he or she feels about the company. It’s "amazing how much it varies by manager," Harter says.
He suggests picking managers with a natural ability to connect with people and managers who can clearly tell workers how their jobs relate to company goals. "Most people come to work really wanting to make a difference," Harter says. Good managers tap into that inherent need.
HR professionals should train managers in how their most talented peers solicit suggestions and should measure whether managers are listening to workers’ ideas.
Kelly Holl, HR director at information technology companyBarling Bay LLC, in Charleston, S.C., gives employees a range of ways to communicate their ideas through their managers or through the HR department—from e-mail to phone calls to meetings.
Barling Bay, a government contractor, has workers throughout the world. Employees are "with the client getting that feedback. It may not be something we’ve thought about," Holl says.
Members of her department try to make sure managers know the importance of employee suggestions and understand how to get ideas considered and implemented. Holl also stresses the need to let employees know when their ideas will be weighed and what happens to them.
At Barling Bay, two kinds of suggestions bubble up from workers—random ones and ones solicited on particular topics.
The company has grown to 217 workers from just 70 in 2008, so quarterly all-hands meetings represent one place employee suggestions get a hearing.
Other ideas come in because Holl makes herself and members of her department available by e-mail and asks managers to copy her when they get suggestions from workers. Then suggestions are discussed at the next managers’ meeting. One program manager, for instance, e-mailed Holl to ask the company to set up a transit fare account for workers in the U.S. Capitol. Holl found out it was free to the company, except for minimal paperwork, and employees were happy to save money by paying their transit costs with pretax dollars.
Some ideas need to be culled because they aren’t financially realistic or they veer off topic. Even those can be useful, however. Holl recently asked workers whether the company should change its tuition reimbursement benefit. She received a flood of emotional comments about the medical and dependent care flexible spending accounts being capped too low. Holl says it’s important to look through all suggestions.
Holl accepts suggestions on any topic. But she only actively solicits them in areas where the company is ready to act. Employees "can see the difference between ‘We really want your feedback’ and ‘We don’t,’ " she says.
For example, when her company changed benefits brokers shortly before open enrollment, she didn’t ask for suggestions on what benefits to change because there wouldn’t have been time to implement anything new.
Thinking Outside the Box
Companies such as Barling Bay have moved far beyond suggestion boxes full of slips of paper.
Harter says good managers hold regular meetings to hear ideas. Some do it daily, others weekly.
"On the surface, it seems pretty easy. But it isn’t something managers practice on a regular basis," Harter says. The conversations spur suggestions that wouldn’t have been offered otherwise, and the manager finds out what employees are seeing in the field.
The airline with the $30 million savings in operating costs during a 14-month period divided the brainstorming by function so that employees were offering ideas about areas of the company they knew best.
"When it’s well-focused within your functional area and your company is valuing your expertise, it works the best," Johnson says.
Each of 12 brainstorming teams voted online for its favorite idea after several weeks of online debate. A couple of employees in each group were appointed to weed through and consolidate the proposals.
That organizing function was key for eliminating ideas that had been dismissed by company leaders as unworkable in the past or were barred by government regulation, Johnson says.
The airline’s executives were specific when they asked for ideas—they wanted ways to save money. "Help employees understand what you are looking for," Johnson says, whether it’s process improvements, morale boosters, cost savings or something else.
Quick says it’s important to be transparent about the criteria for suggestions and who’s in charge. Workers want to know their ideas got a fair and open review.
One risk of promoting employee suggestions is raising expectations. Asking for suggestions gives business leaders an obligation to respond. If workers see that nothing happens when they make suggestions, the company risks "creating a higher level of cynicism" in its employee base, Johnson says.
"There’s nothing more frustrating than to make a suggestion where everyone thinks it’s a great idea and then it goes into a corporate black hole," Holl says.
Skipping the response to employees can discourage the sharing of future ideas.
"Everyone gets the benefit of a response—why it does or doesn’t make sense," Holl says. "That encourages people to make the suggestions."
Though suggestions can be helpful, they come into a culture where there are boundaries and lines of authority, Quick says. "Work organizations are not democracies—one person, one vote. There needs to be appropriate deference to rank and authority."
Harter says the ingredients for encouraging employee suggestions and engagement transcend industry and other demographics. "There are basic human needs that don’t need to be reinvented for every company," he says.
The author is a freelance writer in the Washington, D.C., area.