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The Pros and Cons of Employee Suggestion Schemes: Innovation or a Buzzword?

Jul 28, 2023 | Blog

Key Takeaways – Pros and Cons of Employee Suggestion Schemes

  • Employee suggestion schemes enhance engagement and innovation, making employees feel valued and motivated.
  • Such schemes help identify operational inefficiencies and foster a culture of continuous improvement.
  • They can increase employee retention by creating a sense of ownership and involvement in company processes.
  • Potential downsides include the risk of employee burnout from excessive input demands and the challenge of managing a high volume of suggestions.
  • Lack of trust and fear of negative repercussions can deter employees from participating effectively in suggestion schemes.
  • Implementing these programs requires careful planning and resources to avoid operational pitfalls and ensure actionable outcomes

Introduction:

Whether you call them idea boxes, feedback or suggestion boxes, feedback programs, or innovation initiatives, or employee suggestion box – these schemes aim to harness the collective wisdom of your workforce and drive your organization’s growth. But are they a game-changer or just another buzzword? Do they impact business owners? Let’s examine the pros and cons of employee suggestion schemes and a new way of implementation. But first lets look at the history. Where is the origination of this staff idea program?

History:

The history of the employee suggestion scheme, also known as an employee suggestion program or employee suggestion system, dates back to the early 20th century and has evolved over time. Here is a quick overview:

1. Early Beginnings (Late 19th to Early 20th Century):

The roots of employee suggestion schemes can be traced back to the late 19th and early 20th centuries, where a few progressive companies started to recognize the value of employee ideas. Notably, the Scottish shipbuilding firm, William Denny and Brothers, initiated one of the earliest recorded suggestion schemes in the 1880s. This scheme aimed to improve shipbuilding techniques and efficiency by encouraging workers to provide innovative suggestions.

There is another theory though about the origin and this one is from Japan. Specifically, to  Yoshimune Tokugawa, a shōgun who ruled Japan as part of the Tokugawa shogunate during the 18th century. He is often credited as the first person to implement a suggestion box system, called “meyasubako”, around 1721, placing them outside of Edo Castle.

2. Pre-World War II Period:

During the early 20th century, more companies began to adopt employee suggestion programs as a way to tap into the collective knowledge and creativity of their workforce. Some of these early programs offered monetary rewards or recognition to employees whose ideas were implemented. However, these schemes were not widespread and were often ad hoc.

3. World War II and Aftermath:

The concept of employee suggestion schemes gained significant traction during World War II. Governments in various countries realized the importance of employee contributions to increase productivity, efficiency, and innovation during the war effort. As a result, they actively promoted and supported the implementation of suggestion schemes in many industries.

Wartime Suggestion Box

So now we know how they happened – lets now move onto their benefits:

The Pros:

Happy Baby

Some of the wartime benefits of the suggestion box are still thought to exist. Consider this from Time Magazine:

Since World War II, the battered old suggestion box has blossomed into one of U.S. industry’s best sources of production-boosting ideas and one of its biggest money-savers. Last year some 4,000 companies (with organized suggestion programs) got more than two million ideas from employees, found 20% of them worth adopting and paid out something like $15 million in awards. For U.S. business the tangible savings added up to at least $300 million; no one can count the intangible rewards in higher morale, better workmanship and closer cooperation between boss and worker.

1. Encourages Employee Engagement

Employee suggestion schemes create a channel for employees to share their ideas, helpful suggestions, and concerns. This inclusive approach fosters a sense of belonging and engagement among your workforce. Engaged employees, as research suggests are more likely to be loyal, productive, and highly motivated. Companies with active suggestion schemes experience an average of 48% higher employee engagement. – Gallup.

2. Drives Innovation and Creativity

Unleashing the creative potential of your employees can unlock creative ideas and hidden treasures within your organization. Employee suggestion schemes provide a platform for sharing innovative ideas that could revolutionize your products, services, or processes. Organizations that actively encourage and implement employee suggestions see a significant increase in their innovation capabilities  – Forbes. In addition, 88% of employees say that recognition of their suggestions motivates them to contribute more ideas – TinyPulse.

3. Enhances Employee Morale and Satisfaction

By giving employees a voice and valuing their input, you demonstrate that their opinions matter. This recognition boosts morale and job satisfaction, resulting in higher retention rates and lower turnover costs. A study conducted by the Society for Human Resource Management found that employees who feel their suggestions are valued by their organization are more likely to be satisfied with their jobs. Moreover, 70% of employees believe that their company fosters a more positive work culture when they actively listen and respond to employee ideas. – American Psychological Association.

4. Identifies Operational Inefficiencies

Employee suggestion schemes provide a unique opportunity to gather frontline insights into operational processes. Employees at the forefront of your business often identify inefficiencies that could go unnoticed by management. By tapping into their knowledge and experience, you have the potential to streamline operations, reduce costs, and improve overall efficiency. Specifically, companies with suggestion programs witness productivity increases of up to 5%Bloomberg Businessweek.

5. Fosters a Culture of Continuous Improvement

In today’s rapidly changing business landscape, organizations must embrace continuous improvement to stay competitive. Employee suggestion schemes contribute to cultivating a culture of continuous learning and development and elevate the employee experience. The results are great – 60% of companies with effective suggestion schemes report significant cost savings as a result of employee ideas – Aberdeen Group.

6. Increased Employee Retention

Organizations that listen to and act on positive suggestions have turnover rates that are 25% lower than companies without such schemes – OfficeVibe.

7. Problem Solving and Decision Making Improvement

72% of employees believe that their suggestions lead to effective problem-solving within the organization – IBM Smarter Workforce Institute. Moreover, organizations that involve employees in decision-making through suggestion programs are 4.6 times more likely to have high-performance cultures – Gallup

The Cons

Unhappy Baby

Now that we’ve explored the positive aspects of employee suggestion schemes, let’s examine some potential drawbacks and challenges you may encounter when implementing such programs. What could possibly be negative about the humble employee suggestion process?

1. Employee Overload and Burnout

While employee participation is desirable, it’s crucial to manage the influx of suggestions effectively. Without the necessary resources to review, evaluate, and implement suggestions (usually a review team), employees may become disheartened. Moreover, constantly bombarding employees with requests for ideas can lead to cognitive overload and burnout. Companies may face challenges in processing and evaluating a large number of employee suggestions, leading to a backlog and delayed responses – Gartner.

2. Lack of Trust and Employee Cynicism

If past suggestions have been ignored or dismissed without any explanation, employees may lose trust in the program and become skeptical of future initiatives. Employees need to see that their suggestions are taken seriously. When employees feel that their suggestions are frequently ignored or not implemented, it can lead to demotivation and frustration – Psychological Reports. In fact this is a real issue – it can lead to decreased engagement and reduced participation in the future – Journal of Applied Psychology.

3. Fear of Retaliation or Negative Consequences

Employees may be hesitant to share ideas if they fear negative consequences, such as retaliation or being judged negatively. This is just plain human nature – Harvard Business Review. This is why any good scheme must have an anonymous feedback option – and we already know the benefits of anonymous customer feedback.

4. Implementation and Operational Challenges

Launching and managing an employee suggestion scheme requires careful planning, resources, and infrastructure. Without proper implementation, ongoing support and an action plan, the program may struggle to gain traction and realize the potential benefits. It’s crucial to define clear guidelines, establish communication channels, and track the progress and outcomes of suggestions. Neglecting these operational aspects can lead to disillusionment and a loss of enthusiasm among employees. Remember that implementing and managing suggestion schemes can be time-consuming and require significant resources from the organization – International Journal of Business and Management.

5. Idea Quality and Relevance

Not all suggestions will be game-changers. Some may lack practicality, relevance, or alignment with the organization’s strategic objectives. While encouraging a broad range of ideas is important, it’s equally important to assess suggestions objectively and maintain focus on actionable and impactful proposals. Simply put, some suggestions may lack practicality or feasibility, making it challenging to implement them effectively –  Journal of Occupational and Organizational Psychology.

This has a secondary problem – Failure to provide timely employee feedback on the status of submitted suggestions can discourage employees from participating in the future –Employee Responsibilities and Rights Journal

6. Bias and Favoritism

There may be a risk of bias in evaluating and implementing suggestions, leading to perceived favoritism and unfairness among employees – The Academy of Management Journal.

7. Potential Legal and Intellectual Property Issues

Depending on the nature of your business, certain suggestions may involve intellectual property rights or confidentiality concerns. It’s vital to establish clear guidelines regarding ownership and confidentiality to protect the organization and contributors. Legal consultation may be necessary to navigate potential legal and IP issues that could arise from implementing an employee suggestion scheme.

Conclusion and the Digital Alternative

In summary, employee suggestion schemes can be a powerful tool for driving engagement, innovation, and continuous improvement within your organization. They promote collaboration, enhance morale, and generate a sense of ownership among employees. However, it’s crucial to address potential pitfalls, such as burnout, lack of trust, resistance to change, and operational challenges.

Remember, success lies in the execution and, like the twelve principles behind good customer feedback programs – the ideas must be actionable. This means that the traditional card based employee scheme is something of a dinosaur and, like the customer version – must be replaced.

A dead dinosaur

So what is a better solution? Use a digital version ie. an online suggestion box – of the employee scheme that delivers huge benefits, honest feedback, valuable ideas and a competitive advantage:

  1. Is available everywhere on and off line
  2. This digital suggestion box works on any web enabled device.
  3. Has an anonymous option
  4. Is immediately recognized
  5. Is evaluated within 30 days
  6. And where the staff is rewarded if implemented
  7. Particularly for transformative ideas
  8. Which delivers ideas for improvement and becomes part of the company culture
  9. And maybe even delivers a sense of pride

Let’s finish with a great quote from the Economist on why a business should invest in an employee scheme:

The airline industry is among the most competitive in the world, with carriers duking it out to stay on top with increasingly thin profit margins In this environment, airline companies need access to the best ideas to stay on top. Sometimes, these ideas can come from management or industry consultants. An even better source of innovation? Airline employees.

…..we can help, opiniator is an effective tool, but first, please jettison the traditional suggestion box and kill off that dinosaur once and for all.

FAQs – Pros and Cons of Employee Suggestion Schemes

Q1: What are the primary benefits of employee suggestion schemes?
A1: Employee suggestion schemes boost engagement, foster innovation, and improve operational efficiencies by harnessing the collective wisdom of employees.

Q2: How do employee suggestion schemes impact employee retention?
A2: They enhance retention by making employees feel more connected and valued, which increases their loyalty and satisfaction with the company.

Q3: What are common challenges of employee suggestion schemes?
A3: Challenges include managing the influx of ideas, preventing employee burnout, and ensuring there is a robust system to handle suggestions effectively.

Q4: Can employee suggestion schemes have negative effects on employees?
A4: Yes, if not managed well, they can lead to burnout, decrease in trust, and skepticism if employees feel their suggestions are ignored.

Q5: Why is it important to have a well-planned implementation for suggestion schemes?
A5: Proper implementation ensures that suggestions are actionable, prevents operational hiccups, and helps maintain employee enthusiasm and trust in the system.

Q6: What measures can be taken to improve the effectiveness of employee suggestion schemes?
A6: Measures include offering anonymous submission options, providing timely feedback, and ensuring transparent and fair evaluation processes.

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