Many local governments on paper have a Employee Suggestion Review Committee, but few actually utilize such committees successfully. The Town of Amherst, NY as I mentioned in a previous post has such a Committee along with wooden suggestion boxes, which had not been opened in years.
According to an Arizona Republic news article at the local level in Arizona several municipalities have tapped into the power of obtaining ideas from their employees. The city of Phoenix has saved more than $15.3 million through its program during the past four years. Maricopa County’s program has saved the county more than $11 million over the past 17 years.
A state representative has taken notice of the success at the local level and is seeking to enact a program whereby employees can earn a bonus in the amount of 10% of the cost savings generated by their idea in one year. Through a previous state program, $100,000 was provided in 1981, but by the end of its life, the program had paid out only $17,000 to employees in $1,000 increments.
In the Arizona Republic news article, Will Humble, director of the Department of Health Services stated “When an agency is as big as mine, (2,000 employees) it makes it difficult for good ideas to filter up,”. “This seems like a short-circuit way for people to come up with ideas that, through the normal process, probably wouldn’t make it up the ranks.”
Since fiscal year 2003-04, Phoenix has received nearly 1,100 ideas through its employee-suggestion program. The city has implemented nearly 200 of those ideas, saving more than $15.3 million and paying out more than $163,000 to employees.
In Phoenix a five member committee decides how much compensation employees receive for their cost savings ideas. Employees can receive 5 percent of the first year’s savings, up to nearly $16,700. City officials give those with intangible ideas $50 to $750.
Alan G. Robinson, a professor at the Isenberg School of Management at the University of Massachusetts, conducted research which determined that the average U.S. employee’s ideas, big or small, are implemented only once every six years!
Employees who are engaged and encouraged to contribute ideas can be a tremendous asset to any organization. IdeasAmerica, an association for “suggestion administrators,” who manage suggestion submissions, surveyed 31 of its 125 members last year. The study found that submitted ideas saved respondents more than $110 million dollars in time, materials, labor or energy, an average of $1,256 per suggestion.
Toyota’s success as a company is in part due to its ability to engage employees who contribute ideas on how to improve operations. According to the book All You Gotta Do Is Ask by Chuck Yorke and Norman Bodek, Toyota implements an average of nine ideas per employee per year.
It is shocking to me how little effort is put forth by many local governments to encourage and obtain ideas from their employees. I think through a sincere and focused effort ideas can be obtained without paying for them, as people truly welcome the opportunity to be heard and to make a difference through their work.
What do you think about paying people a portion of the cost savings their ideas generate?