Need good ideas? Ask you your employees!
By John Tschohl
Sunday, 17th July 2005
If you want to grow your business and improve your bottom line, turn to the experts—your employees.

In most cases, those employees know better than most of your managers and executives how you can improve your products, services, and customer relations and where you can cut costs without sacrificing quality. Unfortunately, too many companies hire high-priced consultants to come in and analyze their businesses, only to have those consultants tell them what their employees could have told them—if only they had been asked.

Cutting costs and improving service is critical today, as businesses face increasing competition from around the world. In face of that competition, companies must identify ways to cut costs and enhance their bottom lines without increasing prices. Companies that successfully do so are rewarded with higher sales and greater profit margins.

The folks at State Bank in La Grange, Texas, recently turned to their employees for help in identifying areas in which they can cut costs—and realized a savings of $185,209 when those ideas were implemented. Using the Buck-A-Day (BAD) program, which was developed by the Service Quality Institute, State Bank was able to garner ideas from a whopping 91 percent of its 350 employees. That compares with a typical participation rate of 1 to 6 percent for employee suggestion programs.

State Bank employees quickly jumped on the BAD bandwagon and offered up 511 ideas that resulted in a savings of $429 per employee. When you realize that the cost of instituting the BAD program was a mere $44.43 per employee, you can see that the bank realized a tremendous return on its investment.

State Bank of Texas is one of more than 2,000 organizations that have used the BAD, a 30-day campaign that asks each employee to identify a way to save $1 a day. While that might not seem like a goal that can have a major impact, consider that, if your company has 1,000 employees and each of them saves you $1 day, with an average of 250 working days a year, you will realize a savings of $250,000 annually. If your company generates net profits of 5 percent, those savings are the equivalent of a $5 million increase in sales. Considering that it could take some $4 million in capital to generate that $5 million, you can see that it is much less expensive to reduce costs.

Many companies have employee suggestion programs, but those programs fail because executives are interested only in ideas that will save $50,000 each. BAD proves that even $1 a day in savings can have a major impact. The ideas generated by State Bank employees ranged from using the back of used calculator tape rather than Post-Its to write reminder notes, which resulted in an estimated annual savings of $350 to having branch staff members fill the on-site ATMs rather than using an outside firm, which resulted in an estimated annual savings of $45,000.

BAD, which is available in English and Spanish, works on the principle that employee involvement leads to commitment and that front-line employees have ideas that are vital to the success of any organization. The campaign involves five categories: reducing costs, identifying recurring problems, improving quality, eliminating delays, and generating revenue. It is built on humor, recognition, and involvement. An added benefit is that when employees submit ideas to cut costs in the areas in which they work and, if those ideas are instituted, it creates an immediate buy-in.

Although the idea-collection phase of BAD lasts only 30 days, the cost savings generated by the program have a permanent impact on the organization. In the process of developing and implementing those ideas, the campaign improves communication and develops a spirit of cooperation that lasts long after the program has been completed.

Employees are asked to look for relatively simple savings, small steps that can be taken to cut down on materials or the time involved to complete a particular task. The emphasis is on cost-saving ideas that can be easily implemented and that will have an immediate payoff. The idea is to get employees to consider each job and then ask, "Is three a better, less-expensive way to do this?"

If you would like to implement an employee suggestion program, let me offer some suggestions to make that program work for you:
  • Make the program fun and non-threatening.
  • Get total commitment from employees.
  • Publicize the program.
  • Recognize employees whose suggestions are accepted.
  • Give timely feedback to employees who make suggestions.
  • Use recognition, not just money, as an incentive.
  • Celebrate and immediately implement all cost-savings suggestions your employees share with you.
If your business is to succeed, you must identify every possible way to eliminate waste and save money. Service leaders are brutal when it comes to controlling costs and eliminating waste. They know it is critical to the survival of their companies. They also know that consumers no longer will accept increased prices passed along to keep companies in the black. More importantly, your competitors won't allow it. If you want to survive and grow, you must identify ways to dramatically eliminate waste.

John Tschohl is an international management consultant and speaker. Described by Time and Entrepreneur magazines as a "customer service guru," he has written several books on customer service, including e-Service, Achieving Excellence Through Customer Service, The Customer is Boss, and Ca$hing In. John also has developed more than 26 customer service training programs that have been distributed and presented throughout the world. His weekly strategic newsletter is available online at no charge.
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