A suggestion system is designed to solicit, evaluate, and implement suggestions from employees and then reward the employees for worthwhile ideas.69 Although the reward is often monetary, it does not have to be. It might instead be public recognition, extra vacation time, a special parking spot, or some other benefit. Suggestion systems have been successfully implemented in such diverse organizations as hospitals, universities, the U.S. Postal Service and other branches of government, and private-sector companies such as BP, Eastman Kodak, Black & Decker, Simon & Schuster, and Lincoln Electric Company.70 Firms that use suggestion systems in the United States average approximately 10 suggestions per 100 employees. Although this yield of suggestions appears modest, management experts indicate that many incremental workplace improvements are normally made outside of a formal suggestion system.71

Managers should adhere to certain guidelines when designing a suggestion system. They should:

• ▪ Provide a simple, easy process for submitting suggestions.72

• ▪ Use a suggestion evaluation committee to evaluate each suggestion fairly and provide an explanation to employees why their suggestions have not been used.

• ▪ Implement accepted suggestions immediately and give credit to the suggestion’s originator. The company newsletter can be used to publicly recognize employees whose suggestions have resulted in improvements.

• ▪ Make the value of the reward proportional to the suggestion’s benefit to the company. For example, a loan manager at Bank of America who made a suggestion that saved the bank $363,520 per year received a cash award of $36,520 for her idea.73 The average award that companies paid per employee suggestion was $235, according to a survey by the Employee Involvement Association. The survey also reported that the value received by employers from these suggestions was about 10 times greater.74

• ▪ Let the HR department track and manage the suggestion program by taking a coordinating role to ensure that employees buy into the program.75

Suggestion systems, long a part of U.S. business, have become more popular globally in recent years. For example, Japanese companies such as Toyota, Honda, and Mitsubishi have successfully gathered numerous suggestions from their employees resulting in significant improvements in their products (including automobiles). At Honda, employees who provide suggestions that result in quality improvements earn points that can be applied to prizes such as a new Honda Accord or two international airline tickets.76 Companies that depend on innovation should reward employee suggestions liberally, as explained in the Manager’s Notebook, “Good Employee Suggestions Should Be Rewarded Substantially.”

MANAGER’S NOTEBOOK Good Employee Suggestions Should Be Rewarded Substantially

Customer-Driven HR

Companies that offer substantial rewards for innovative suggestions can expect to see a substantial increase in the number of workable innovations. All too often, rewards for suggestions do not inspire employees to share their ideas with the company because of the modest size of the reward.

At Interminds, a consulting firm founded by Bill Townsend in the San Francisco area, employee suggestions can be well rewarded. An employee who comes up with an idea to save money while promoting the company’s vision gets half of the first year’s savings. The suggestion policy was instrumental in obtaining a great idea from an executive assistant who earned a salary of $38,000 a year. Her process improvement was to automate the manual system of tracking 900 field representatives. She was able to prove her concept’s validity to an individual in the finance department, who then implemented her suggestion. The company saved $304,000 in the first year from this suggestion, which earned the employee a $152,000 bonus. By publicizing this success story within the company, Interminds saw the number of workable suggestions increase by 20 to 40 percent.

Sources:Based on Carini, G., and Townsend, B. (2007, April). $152,000 for your thoughts. Harvard Business Review, 23; Conlin, M. (2009, March 23). The case for unequal perks. BusinessWeek, 54–55; The Economist. (2009, September 19). A market for ideas, 75–76.▪▪

Recognition awards give public credit to people or teams who make outstanding contributions to the organization. These people or teams may become role models for others by communicating what behaviors and accomplishments the company values. McDonald’s Employee of the Month award consists of a notice posted in each restaurant for all employees and customers to see. IBM employees who make major contributions are recognized in a host of different ways, ranging from a simple thank-you letter from a division manager to a cash award of $150,000 (given to two company scientists who won the Nobel Prize in science).

The recognition of teams and people who make important quality contributions can be either monetary or nonmonetary. For example, FedEx allows supervisors to confer instant cash awards to employees for quality efforts.77 FedEx has earned the Malcolm Baldrige National Quality Award, the highest recognition of quality that a U.S. company can receive.

An employee recognition award can be as simple as a thank you for a job well done. At KeySpan, which is now part of National Grid USA, a large U.S. distributor of natural gas, CEO Bob Catell sends a personal voice mail message of gratitude to employees who are selected as one of the company’s “unsung heroes.” Administrative assistant Elizabeth Kousidis indicated she was “surprised and happy” when CEO Catell recognized her as an unsung company hero.78

A recognition award can be initiated by a manager or by an internal customer of an individual or a team, with nominees evaluated by a recognition and awards committee. To emphasize that quality improvement should be continuous, there should be no limit on the number of times that a person or team can receive a recognition award. At Yum! Brands, a global corporation of fast food restaurants, recognition is given to the employee or team right away and it is always personalized. For example, at Pizza Hut (one of Yum! Brands’ restaurant chains) an employee can be recognized for doing good work on a particular day with a cheesehead (a funny hat shaped like a slice of cheese) and have a personal note written on it.79

A recognition award should be a celebration of the team or individual’s success that encourages all organization members to work toward the organization’s goals.80 Recognition awards that focus attention on team or individual accomplishments include:

• ▪ A company-paid picnic to which all team members and their families are invited.

• ▪ T-shirts, coffee mugs, or baseball caps with a team insignia encouraging team commitment.

• ▪ A company-paid night on the town (such as dinner at a nice restaurant or tickets to a concert or sports event) for an employee and his or her spouse.81

• ▪ A plaque engraved with the names of individuals or teams that have made outstanding contributions.

• ▪ A donation in the name of an employee to the charity of his or her choice.

Recognition programs can serve purposes other than providing positive feedback to employees.82 A Phoenix-area hotel rewarded employees who made outstanding contributions with a free night’s stay at the hotel. Not only was this a valued prize, but it also gave employees the chance to view their organization from the customer’s perspective. Management hoped that this experience would prompt new suggestions for improving customer service.

Although public recognition can be a powerful tool to sustain employee and team motivation, the Manager’s Notebook, “Guidelines for Public Recognition Rewards,” shows managers how to avoid pitfalls with public recognition awards. For example, when a reward appears to be motivated by favoritism or becomes a popularity contest rather than clear recognition of excellent performance, it can depress rather than improve company morale.83

MANAGER’S NOTEBOOK Guidelines for Public Recognition Rewards

Customer-Driven HR

Public recognition rewards can have a high upside impact on employee and team levels of motivation if they are administered well. Most employees find it very rewarding to be recognized and honored in front of their peers. However, a public reward that is poorly administered due to favoritism or being perceived as a popularity contest can demotivate employees and embarrass the recipient of the reward. Here are some key points to keep in mind when administering public recognition rewards to employees:

• ▪ Have clear reward criteria Reward criteria that are clear, unambiguous, and well communicated to employees beforehand are likely to result in an employee perception of fairness and deservedness of the reward on the part of its recipient.

• ▪ Ensure that judges of the recognition reward are not personally related to the recipient The individuals on the committee who determine the winner of the public recognition reward should have an arm’s-length relationship to the reward recipient. For example, if an employee’s supervisor or coworker is on the rewards committee, this person may need to excuse himself or herself from the voting to avoid a perception of favoritism.

• ▪ The presentation of the reward should be given on a sincere basis The speaker who presents the reward to the recipient in front of peers should focus on giving a sincere message of appreciation to the employee being honored. The presenter should avoid engaging in theatrics and exaggerated gestures that make the recipient feel undeserving and embarrassed.

• ▪ Try to personalize the reward if possible Rewards that are personalized to the needs of the recipient have the greatest impact on motivation. An employee who loves sports will probably appreciate tickets to a baseball game more than tickets to hear an orchestra play classical music. A personalized plaque given in a public ceremony will have longer-lasting memory value than cash because the cash is soon spent whereas the plaque remains in an employee’s office or in his or her home.

• ▪ Recognize multiple top performers Avoid limiting the recognition reward to only one person if several employees have made contributions that deserve to be recognized.

Sources:Based on Buchanan, L. (2011, July). And the award goes to . . . Rethinking annual honors. Inc., 108–110; Wiscombe, J. (2002, April). Rewards get results. Workforce, 42–48; Ginther, C. (2000, August). Incentive programs that really work. HRMagazine, 117–120; Demos, T. (2010, April 12). Motivate without spending millions. Fortune, 37–38.▪▪