What's the Big Idea?
March 06, 2008
To get employees thinking creatively, try building a better suggestion box
By A.E. Smith
Good ideas are big business. The success of high-performing, headline-grabbing companies like Apple and Google has found many executives wishing for an entrepreneurial corporate culture of their own. In an annual survey released in October, The Conference Board lists "stimulating innovation" as one of the top 10 challenges facing management today, identified by 19 percent of CEOs globally as being of the "greatest concern."
But creating an innovative workforce takes more than putting a pool table in the break room or designing an open workspace, and this is where many businesses are falling short. "If you talk to companies, innovation is still not actively part of their business agenda," says Jennifer Rosenzweig, senior director of enterprise engagement at Carlson Marketing Group in Minneapolis. "They say they value it, but they don't do a lot about it." Companies that want to be truly innovative need to change at the core, and to do so, many are looking into using traditional reward and recognition systems to encourage and direct employee-generated improvements.
Jeffrey Phillips, vice president of sales and marketing for Raleigh, N.C., consulting firm OVO Innovation, writes about idea generation programs for the blog Innovate on Purpose. He says that developing creativity within a company requires buy-in from senior executives and managers, who should model the kind of behavior they want workers to display. Training employees in creative methods and processes is another key component, especially in companies where the management approach has been more rigid. Companies also have to have a tolerance for failure: "If you're innovative, you're going to fail a lot," says Phillips. Employees should be recognized for trying out an idea, even if it falls short of expectations, and encouraged to keep thinking.
Results of innovation programs often can seem subjective, but there are ways to quantify a program's effectiveness, whether by tallying the total number of suggestions received or by calculating the value of ideas submitted. Companies can run internal promotions that focus employees' creative skills on particular areas of the business, like safety or product quality. Whatever the program's aim, recognition and rewards should be offered promptly, or the initiative can backfire. "If people generate ideas and they go into a black hole, people feel burned," warns Phillips. "You lose a ton of credibility, and it dampens people's willingness to contribute."
When executed well, an idea suggestion program can generate more than the sum of its suggestions—it can aid in creating a workforce that is more in tune with company objectives and more invested in its fate. "We've found that seeing your idea come to life is really a powerful motivator," says Rosenzweig.
Case Study #1: Xcel Energy
Bright ideas are part of a day's work at Xcel Energy, a Fortune 500 company based in Minneapolis that provides electricity and natural gas to eight Midwestern and Western states. Safety and efficiency are more than just catchwords in a mission statement at this company with stakes in coal, hydro and nuclear plants as well as oil and gas pipelines. But until recently, Xcel was not plugged in to the expertise of its nearly 10,000 employees. Though the company had a standard suggestion system, the results were disheartening—few people contributed, and those who did rarely received just or timely compensation.
"The previous version was too bureaucratic," admits John Torres, Xcel's manager of corporate rewards and recognition. "You would have to have a huge amount of documents prepared to submit your idea, and then it would sit for months before it got reviewed. Very few of the ideas were implemented, [in part because] the wrong people were reviewing them." Instead, managers wanted a program that would simplify participation; they also wanted to be directly involved in judging the viability of ideas for their own departments.
To develop a new system, Xcel turned to Salt Lake City–based O.C. Tanner. "They really wanted to elevate the caliber of their managers, and additionally, of their employees," recalls Michelle Smith, vice president of business development for the recognition company. "They also wanted to make the suggestions more strategic."
The result was Xpress Ideas, an online application that is open to any employee. (An initial version of the program was paper-based, and workers still have that option, though 99 percent of suggestions now are submitted electronically.) The program's strength is how it directs suggestions to specific areas of the business, by offering greater rewards for ideas that deal with those topics. "They really keep the program and the recognition very targeted," says Smith. "For example, if there's a cash crunch, they will recognize ideas that generate revenue."
Another improvement of this new system is its responsiveness, to employees as well as to business objectives. Once an employee submits an idea, it is immediately sent to a manager's attention, and the interface allows the manager to track the idea as it proceeds through the approval process. In marked contrast to the previous suggestion program, today 74 percent of ideas are processed within 30 days. This reinforces trust in the program, says Torres: "The sooner a manager responds to an employee's suggestion, the employee is more apt to participate again."
Xpress Ideas rewards with points: An employee receives 30 points just for submitting an idea, then additional points if an idea is approved. A sliding scale offers more points for ideas that relate to specific objectives—like safety or billing or improved work space—identified by the company as most crucial. Collected points are then exchangeable for catalog items or for cash, up to $1,000.
Under the old system, an employee who suggested an idea that was implemented was awarded 10 percent of the cost savings—potentially a substantial sum. The new system ensures that a greater number of employees are able to share in the rewards, though at a smaller level. Torres thinks the old system emphasized the wrong priorities—employees saw the 10 percent as "a takeaway" rather than as recognition for a job well done. And in many cases, the award would be tacked to a paycheck as a bonus, long after the initial submission; its impact diluted.
Over time, Xpress Ideas has been embraced by employees. In 2004, one of the most successful years, approximately 7,600 suggestions were submitted, leading to a savings of $17 million. About 15 percent of the workforce participated, and 74 percent of the ideas were approved or not within 30 days. The program has since survived several corporate reorganizations, and at midyear in 2007, had received 4,600 suggestions. Torres intends to improve and update Xpress Ideas, along with all of Xcel's recognition programs, in 2008. He plans to survey participants and compare the safety and output records of teams with the most suggestions to those with fewer new ideas. "I think there has been real improvement in engagement," he says.
In fact, Torres believes the new suggestion system has led to an overall culture shift at Xcel, with employees taking more ownership in the business and seeking out ways to improve the way they work. "I have an engineer manager who said, [before,] he had a group of good folks. Now these same employees come to work saying, 'How can I do the job better?' They understand how their work spends budget dollars." At the same time, he says, having the program makes teams more cohesive: "As employees start to participate, managers have the opportunity to see the employee's point of view. In addition to the other improvements, here's a communications improvement."
Good Idea: Safety is sure to imprive due to an employee's suggestion that Xcel replace the heavy, steel wrenches used by many workers with a lightweight aluminum model less likely to cause injuries.
Case Study #2: Honda of America Manufacturing
Automotive giant Honda Motor Company may have made its name selling compact cars to American consumers, but the company has stayed on top by knowing how to think outside the box. A perennial on BusinessWeek's list of the 100 most innovative companies (number 12 in 2007, up from number 26 the previous year), Honda also ranks among the world's top 20 companies for patent applications, applying for a total of 836 in 2006, according to IFI Patent Intelligence.
This spirit of innovation originated with the company's founder, Soichiro Honda, who began his career as a mechanic. Honda's management style has been to develop employees, called associates internally, who know how to think creatively and speak up, regardless of their rank.
This is no more true elsewhere in the international company than at the four plants that make up Honda of America Manufacturing. "The purpose of our involvement program is education of the associate," says Pilate Bradley Jr., head of Honda's Involvement Department in Anna, Ohio. "If we have associates here who don't know how to problem-solve out there on the line, we're not going to be as competitive as a company."
Honda Manufacturing has a three-tier idea generation program, with one level— open to non-exempt employees—for issues of safety and efficiency, another level for teams of three or more associates who work together on a problem, and a third for individual employees who go "above and beyond" to find and fix problems with product quality.
An essential aspect of the program is that the employee's participation doesn't end after a suggestion is made. Once an employee fills out a form with the idea, it is entered into a database by a manager and sent electronically to upper management. If approved, the challenge of following through is then put back on the employee. "They implement the idea," says Bradley. "They might need a coordinator and some other people to assist, but they stay with it until it gets done." This involvement extends to reporting on the success of the suggestion, by having the employee collect before and after data on the time, cost and savings of the process. By doing so, the employee is able to see the impact of his contribution to the company overall, and at the same time develop skills that may pertain to other areas of the business.
Depending on the scope and success of their ideas, employees are eligible to win grade, department, plant and presidential awards. One of the perks of these awards is face time with upper management: Anyone who wins a plant award can tour the plant with the plant manager and showcase his idea in action. Similar events for other award levels involve department managers or senior company executives. Participants also receive points for each award level, and these can be combined with other recognition points for benchmark awards. At 300 points, associates receive a trophy; at 2,500 points, they can choose to take home a Honda Civic or a VTX motorcycle. Those who accumulate 5,000 points are awarded either a Honda Accord or a Goldwing motorcycle as well as two round-trip airline tickets, two weeks of vacation and four weeks' base pay.
Honda of America's suggestion program has been around since 1985, though the company has made many improvements to it during that time. The next iteration will be to create a fully electronic version that employees can access from plant floors. With the current program, Bradley says he sees around 2,500 submissions a year from the approximately 10,000 eligible employees, with a 68 percent implementation rate. "It's not about getting one hundred percent participation," he says. "We want quality participation."
The greatest benefit of rewarding good ideas, as he sees it, is that it shows employees how doing what they do better can impact other aspects of the business: "These are the associates that are going to be our next leaders," says Bradley. "Our programs prepare their knowledge level for that. They need to understand that their role is not just coming in and hanging a transmission every day. It's understanding how what [they] do is affecting the bottom line."
Good Idea: Three Honda of America associates—Anthony Blamer, John Ayer and Steven Augustein—teamed up to find a solution to a design problem in the cars they were building: water leaks at the beginning and end of window seals. By reconfiguring the sealer application tip, they reduced the leaks by 85 percent, and by 100 percent at the dealer. Their creative thinking garnered them the Overall Idea of the Year award for 2006 from the Employee Involvement Association.
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