An Overview Of Employee Suggestion Schemes Commerce Essay
|✅ Paper Type: Free Essay||✅ Subject: Commerce|
|✅ Wordcount: 5454 words||✅ Published: 1st Jan 2015|
Innovations are becoming increasingly important for organizations to remain competitive in the dynamic business environment. Employee Suggestions Systems plays a key role for organizations wishing to become more innovative. It is a useful tool used in the organization to elicit employees’ creative ideas. Over the past decades, suggestion schemes have been studied from many perspectives. The objective of this paper is to present the history and evolution of suggestion schemes, from their early beginnings to sophisticated computer based systems that are widely popular in many countries. We start by discussing the origins of suggestion systems, followed by discussing how they have evolved over the years, and understand a typical process involved in suggestion system. We would like to discuss the future model of suggestion system that can sustain and contribute significantly towards the success of the organizations. Through a literature review, we describe the existing research on suggestion schemes to understand the critical drivers and barriers for the success of the suggestion schemes. This paper also cites and illustrates the well-known suggestion systems used by UAE organizations and their benefits. The literature, while extolling the many virtues of suggestion programs makes it clear that achieving the expected results from the programs is quite challenging as it involves organizational as well individual level factors and needs to focus on creativity and as well transformation of the creativity into innovations. The paper provides the list of driver and barriers to suggestion schemes mainly stemming from creativity, innovation and suggestion system literatures.
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The suggestion making and suggestion implementation are two crucial stages and both are equally important for the success of the scheme and are influenced by a number of factors. Organizations must therefore identify these critical factors to nurture both these stages. The schemes can be applied in any sector to elicit employee creative ideas but must have a formal mechanism to action this. Managers need to be aware critical success factors that are essential for the success of the schemes. It is clear that suggestion schemes will not yield results without the active involvement of everyone in the organization, and the required resources and support from top management. The future of suggestion scheme is bright as a tool for fueling innovation. Organizations need to recognize and evaluate their schemes to yield its potential benefits. There need to be sustainability in suggestion schemes. Organizations need to assess their schemes to recognize if right conditions exist for their schemes to flourish.
This paper should be of value to practitioners of suggestion schemes and to academics who are interested in knowing how this program has evolved, and where it is today and what future it holds. Although much research has been conducted on identifying these critical success factors to the author’s knowledge, little focus has been directed towards sustenance of the suggestion system. This paper makes the contribution for identifying the research gap in the suggestion schemes and has assimilated the existing knowledge on suggestion systems to provide a quick run through to the field and has extended the search for drivers and barriers to suggestion scheme from creativity and innovation literature.
Key Words: Employee, Suggestion System, Creativity, Innovation, Employee Involvement, Ideas Management
An Employee Suggestion Scheme (ESS) is described as a formalized mechanism that encourages employees to contribute constructive ideas for improving the organization in which they work (Milner et al., 1995). Another elaborate definition explains “suggestion schemes elicit suggestions from employees, classify them, and dispatch them to “experts” for evaluation” (Cooley et al., 2001). After this, the suggestion might be adopted, in which case the suggestion maker will be rewarded. But even if a suggestion is rejected, the suggestion maker may still be rewarded with a token gift. So the managers or dedicated committees evaluate the suggestions and implement the one that works (Chaneski, 2006). The reward may range from a certificate to a reward commensurate with the savings generated by the suggestion. Researchers in this area explain that the suggestion scheme is a mechanism or a tool that fosters creativity, elicits untapped reservoirs of ideas and fuels both product or process innovations, triggers a work place improvement, improves process effectiveness, saves money or helps generate new revenue and increases organizational commitment and accountability among employees (Carrier,1998; Buech et al., 2010; Fairbank and William,2001; 96. Townsend,2009;Islam, 2007;Arthur et al., 2010 Lloyd,1996). Thus they are structured to have many goals and purposes (Kanna et al., 2005).
There are others who view suggestion systems as mechanism to improve quality as well (Islam, 2007; Kanna et al., 2005). It is a known fact that no one would know the job, its specific processes( Darragh -Jeromos, 2005) better than the employees themselves as they are on the shop floor and are experiencing the advantages of what they are doing(Du plessis et al., 2008). Therefore, the suggestion scheme can be an advantageous way to gather suggestions in the work place by fostering this concept and taping into all employee creativity (Darragh-Jeromo, 2005).
Over the past decades, suggestion schemes have been studied from many perspectives. In this paper, our objective is to present the history and evolution of suggestion schemes, from their early beginnings to sophisticated computer based systems that are widely popular in many countries. We start by discussing the origins of the suggestion system, followed by how it has evolved over the years, and understand a typical process involved in the suggestion system. Through a literature review, we describe the existing research on suggestion schemes in order to understand the critical drivers and barriers for the success of suggestion schemes. This paper also identifies future research opportunities in this field.
The History and Evolution of the Suggestion Schemes
In 1721, Yoshimune Tokugawa, the 8th Shogun, placed a box called “Meyasubako” at the entrance of the Edo Castle for written suggestions from his subjects (Arif et al., 2010). Although this is the most basic system known, an industrialized suggestion systems origin traces back to the 19th century. In 1880, William Denny, a Scottish shipbuilder asked his employees to offer suggestions in order to build ships in better ways (Islam 2007). Following this, the Kodak company became pioneer in this endeavor with its program being introduced in 1896 (Carrier, 1998). Industry associations, such as the Employee Involvement Association (EIA), then came into existence and they have contributed greatly to the increased formalization, objectivity, and professionalism of suggestion programs (Townsend,2009). Formerly, the National Association of Suggestion Systems, the EIA has instituted educational, statistical, and professional development programs to raise the bar of best practices in the encouragement, evaluation, development, and implementation of ideas that add value to their organizations. The IdeasUK, UKs foremost association for the promotion of employee involvement programmes was founded in 1987, its prime purpose being to assist organizations in both the public and private sector, an organization with more than 100 members worldwide. On the other hand in Japan the program was well known as the Kaizan Program. While Kaizen-oriented suggestion systems are primarily interested in generating many small improvements, western suggestion systems encourage the pursuit of innovation (Ohly et al., 2006). Simultaneously, suggestion schemes also became popular in many countries and they have a considerable history that includes USA, Europe, Asia and the Middle East (Cooley et al., 2001).
The well-known suggestion schemes have been in existence for over 60 years and companies like Japans Toyotas and India’s Tata Steel Mill represent a usage of these historic systems. Around the 1990s suggestion schemes became increasingly popular. In 1994, one employee suggestion alone saved British Gas £4.4 million. The research around 1996 reported that the world class suggestion systems are exceeding 40 ideas per person annually, with greater than 80 percent implementation rates and high levels of participation (Savageau, 1996). The ETA 2004 annual suggestion program provided statistics from 41 of its member organizations in the United States. From this limited sample, a total of more than $811 million in savings and other benefits were realized as a result of employee suggestion programs (Townsend,2009). The latest 2009 Annual Survey of IdeasUK highlighted the following benefits amongst their membership organizations such as Boots, HSBC, Ministry of Defence and Dubai Aluminum.
Cost savings of over £100m with the average implemented idea worth £1,400.00.
Return on Investment of at least 5:1.
Employee involvement increased with average participation rates of 28%
The trend of cost savings due to employee suggestions continues till today.
The Existing Research on Suggestion Systems
An illustration of a formal process involved in the suggestion schemes
Suggestions systems have come a long way (Arif et al., 2010) transiting from anonymous postboxes (Crail, 2006) or suggestion box to a sophisticated computer based electronic suggestion system (Fairbank and William 2001; Ahmed, 2009). The suggestion system is a process of two or more stages comprising mainly the suggestion making, the evaluation and implementation of the idea (Van and Ende, 2002; Prathur and Turrel, 2002; Lipponen et al., 2008; Bakker et al., 2006; Marx, 1995;Griffiths et al., 2006). There has been a negligence of research on the initial ideas generation phase that precedes the innovation, mainly because one major group of researchers who consider organizational creativity is fostered through the personal characteristics and motivations of creative individuals turned its attention to context and organizational factors(Carrier,1998). However the common process involved in the suggestion management system is depicted in fig 1:
In recent times the suggestion schemes have also been known as Idea Capture Systems or Idea Management Systems. Leach (2006) claims that the Idea capture system can fall into four categories:
Centralized suggestion schemes,
De-centralized suggestion schemes,
Work based systems
Literature shows that the subject of suggestion schemes is multidisciplinary. Broadly the theoretical base for suggestion schemes emerges from the literature on creativity and innovation. This is mainly because the researchers describe suggestion systems as tools that stimulate creativity or innovation (Carrier,1998). Innovation begins with creative ideas (Amabile et al., 1996) and thus creativity and innovation are interlinked and the process in the suggestion system is mainly focused on eliciting the employee’s creative ideas and implementing them to fuel innovations. The main focus of the research then goes to the factors that trigger creativity and innovation. Researchers have examined these factors from three points of views (Buech et al.,2010) The first considers work environment. A second stream of research, focusing on the features of suggestion systems, weighs the influence of feedback about suggestions, management support of the system and rewards for successful suggestions, the third deals with the characteristics of the individuals. The creativity and innovation literature also highlights these contextual, organizational and individual factors that foster creativity and innovation but it is also evident that the contextual factors that foster creativity and innovation would also foster the suggestion making as well (Ohly et al.,2006). The factors cited to be drivers to creativity, suggestion system and innovation are identified below.
Factors fostering Suggestion Making, Creativity and Innovation
A good suggestion scheme should play a vital role in improving communication and promoting and enhancing the sense of common purpose (McConville, 1990). People need social, informational, and economic support to be able to create something new (Majdar, 2005). The creativity in an organizational context emerges from a process of sharing information with other people within the organization (Bakker et al., 2006). Although the social networking alone cannot be considered as an important source of information for innovation(Bigliardi et al., 2009), the high quality social exchange relationships (Kudisch, 2006), social influences(Klijn et al.,& 2010),collaboration(Björklund,2010; Fairbank et al.,2001), and diverse group exchanges(Shalley et al.,2004) can stimulate employee creativity. Even in a field where innovation is essential, most of the acute challenges do not concern innovation skills, but rather the organizational context of innovation – the work communities’ culture, habits, and practices (Björklund, 2010). Creativity and innovation will only be sporadic occurrences and will not thrive without a supportive environment and culture (Malaviya & Wadhwa, 2005;Amabile et al.,1996). Every organization has its own culture and needs and its suggestion system should be molded around that (Marx, 1995). The organization structure often hinders tacit knowledge sharing by establishing wrong authorities (Alwis et al., 2008). Several studies have shown how certain organizational structures facilitate the creation of new products and processes, especially in relation to fast changing environments (Lam,2010). Organization structures have to be modified in different industries so that the organizational structure of a company or a department supports transfer and transmission of tacit knowledge in the best way (Alwis et al., 2008).
Management practices of the organization play a role in the success of the suggestion programs (Carrier, 1998). Management has a responsibility to satisfy the need for employee participation and they are required to create a culture which is supportive of employee involvement in the decisions which affect their work (Reychav et al., 2010). Senior management ought to demonstrate their faith in the scheme, promote and support it and encourage all managers to view it as a positive force for continuous improvement (McConville, 1990). Management must get actively involved by creating the opportunities for employees to submit their ideas, get those ideas properly evaluated, give recognition when it is due and implement them as soon as possible (Du plessis, 2008). Converting managers, particularly those in the “middle” is crucial (McConville,1990). Undoubtly, people will produce creative work when they perceive for example that the management is required to encourage (Amabile et al., 1996). Therefore a visible commitment from top management can encourage employee active participation in the scheme.
Studies have shown that a traditional, autocratic management style results in low levels of employee engagement and motivation (Hayward, 2010). Empowering leadership has the capacity to positively influence employee psychological empowerment -an element of importance in affecting creative outcome (Zhang, 2010). On the other hand leadership styles that include threats, intimidation, and coercive tactics appear to universally discourage creative behavior on the part of employees (Anderson et al., 2008). The coworker support (Madjar,2008;Majdar 2005;Shalley et al.,2004;Arif et al., 2010) is another important element that can trigger employees to make suggestions. Tatter (1975) notes, the best way to kill a system are to let an idea remain in limbo for four, five or six months. The goal should be to completely process a suggestion in about 30 days – and in no more than 60 days. To handle employee creativity effectively, it is important to organize the process of idea extraction to idea follow-up properly, otherwise employees will not be motivated to put their ideas forward and many ideas will be lost (Van & Ende, 2002). The knowledge possessed by individual employees can only lead to a firm competitive advantage if employees have the motivation and opportunity to share and utilize their individual knowledge in ways that benefit the organization (Arthur et al., 2005). Therefore the development of an infrastructure (Marx 1995) with simple methods (Hultgren, 2008) for submitting suggestions (McConville, 1990) is a key aspect of the suggestion scheme. The companies’ lack of action on suggestions provided by non-managerial employees can de-motivate employees from participating in employee relation programs (Cho and Erdum 2006). Fairbank (2003) argues the formal Employee suggestion Management systems(ESMS)s are superior to the stereotypical suggestion box because they make it easier for employees to submit ideas that will eventually be implemented, provide a transparent process for evaluating the suggestions, and generate timely feedback regarding the fate of the suggestions and any rewards they earn. Such a system can help to monitor the progress of the scheme on a regular basis (Hultgren, 2008). The more comfortable employees are with the format, the more suggestions will be received, and the more money will be saved (Mishra, 1994).
Good ideas can come from anyone, at any level, any place, anytime (McConville, 1990; Majdar ,2005). Therefore a suggestion scheme should make all its employees at all levels eligible to participate (McConville, 1990; Lloyd, 1996). The involvement can be increased if employees develop a sense of belonging to the organization (Cruz et al., 2009). Empowerment is necessary so that the workers evaluate their own ideas before making a suggestion, as suggesting many ideas do not necessarily mean greater cost reduction and at the same time, it would be an added cost to process and may cause delays (Wynder, 2008). The biggest obstacles in the suggestion cycle lie in the area of review, evaluation and guidance. Insensitive comments of proposal reviewers can sometime kill an employee’s improvement initiative (Neagoe et al., 2009). When the review, evaluation and guidance aspect of the system functions properly, it can be a great motivating force that will attract many excellent proposals (Neagoe et al., 2009). If ideas are made public, these ideas, good and bad, could have started other creative ideas elsewhere in the organization (Stenmark, 2000). A modern well-managed suggestion scheme lies not in the immediate financial returns, but in the contribution made to achieving greater involvement and team- work (McConville,1990). Creative ideas are more often the product of social interaction and influence than of periods of thinking in isolation (Majdar, 2005) The cash rewards and recognition alone will not make a suggestion system successful (Strane,2000). Employee morale should be boosted by creating success stories and measuring the success of the scheme through the implementation of ideas (Marx, 1995; Hultgren, 2008; Lloyd, 1996; Cho & Erdem 2006).
A suggestion system is clearly a money saver in an organization (Mishra, 1994). There needs to be various strategies in place to avoid employee boredom and to consider the life cycle of the system, employees must be rewarded not only with tangible but also intangible benefits (Ahmed 2009). Incentives are important for employees to feel that submission of their useable ideas will be rewarded (Du plessis et al., 2008). It was also found that the volume of employee suggestions over time will be positively related to the amount of payout (Arthur et al., 2010). Depending on the attention given to advertising the schemes and how participation is rewarded, organizations could improve the return on the idea capture system (Leach et al., 2006).
Individuals have the greatest possible number of characteristics that positively influence their creative performance (Muñoz-Doyague, 2008). Keeping workers intrinsically motivated is the key part for improving creativity and performance. No doubt, intrinsic motivation is a universally important and substantial factor (Suh et al.,2008). Sending individuals to state-of- the-art seminars, training programs, and conferences as a reward for their creativity might increase the positive impact (Griffiths-hemans et al., 2006). This will be the energy of renewal and the drive to a successful future.
The Barriers to suggestion systems
Research also reports on barriers that could hinder the success of the suggestion scheme. They are mainly cited as work load pressure, task reutilization, task standardization, unsupportive climate, aversive leadership, co-worker mistrust, coworker incompetence, budget problems, impractical idea, technical issues, competition, delay in assessment, controlled supervision, lack of support, fear of evaluation, free riding, lack of self confidence, low commitment to organization and system, rigid rules,self-interest, challenge of the work and resistance from middle managers(Alwis & Hartmann 2008;Amabile et al.,1996;Anderson & Veillette 2008;Bakker et al., 2006;Carreir 1998; Oldham and Cummings 1996;Lyold 1999;Mclean 2005;McConville 1990;Toubia,2006;Sadi,2008;Wong& Pang
Finally, the existing research also evidences that although the interest and practice in Continuous Improvement (CI) are widespread in many organizations, many of them have major problems in sustaining success in their CI programs (Rapp and Eklund, 2007),). Many organizations are faced with problems associated with both the implementation and sustainability of their CI programs. There is no study which gives account of the design features for frequency of feedback or extent to publicity (Leach,2006).Despite the increasing popularity of the gain sharing plans, evidence for their effectiveness has remained mixed(Arthur et al., 2010). Suggestion systems should not exist primarily as a means to recognize employees only (Darragh – Jeromos 2005) but to utilize the scheme to its fullest extent. So a well designed system will accomplish both these goals resulting in tangible as well as intangible benefits (Ahmed, 2009). Overall suggestion system is a great mechanism that involves individual and teams in improving the organization performance (Crail, 2006) and they have a strong and significant effect on both process and product innovation (Townsend, 2009). It perfectly matches today’s market need to deal with knowledge based workers who expect their involvement to be recognized and utilization of their skills to its fullest (Kesting et al., 2010).
Mclean 2005;Marx 1995;Shalley & Gilson 2004;Tatter 1975;Frese et al 1999;Lloyd 1996;Ohly et al 2006;Arif et al 2010;Hardin 1964
Co worker support
Madjar 2008;Majdar 2005;Shalley & Gilson 2004;Arif et al 2010
Top Mgt Support
Huang & Farh 2009.;Amabile et al 2004;Carreir 1998;Egan 2005;Jong & Hartog 2007;Marx 1995;McConville 1990;Du plessis 2008;Ahmed 2009;Mishara 1994;Powell 2008;Prather & Turrell;Rice 2009;Zhang 2010;Khairuzzaman;Bell 1997 ;Unsworth 2005;Hayward 2010.
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Implementation of suggestion
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Suggestion systems have evolved from a traditional suggestion box to sophisticated electronic systems aiming to encourage all employees to take part in suggestion schemes and to rapidly process the ideas received from the employees and put to practical use. Large organizations are focusing on achieving bigger goals at company level as well as at employee level to accrue the tangible as well as intangible benefits. However company’s need to carefully implement the program as every organization has its own culture, it needs to tailor the program to meet their organization needs and what they expect from this system must be clearly known. While suggestion schemes have evolved over the decades, the main underlying factor driving this engine is to pursue workplace improvements, process or product innovations.
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Research in this field has been mainly focused on features of suggestion schemes, guidelines for implementation and critical success factors and critical barriers encompassing the organizational as well as the individual contexts. Research also evidences its contribution as to how organizations have utilized the tool to obtain small workplace improvements through to good sized innovation and if implemented they contribute in building organizations innovation capability.
The suggestion making and suggestion implementation are two crucial stages and both are equally important for the success of the scheme and are influenced by a number of factors. Organizations must therefore identify these critical factors to nurture both these stages. The schemes can be applied in any sector to elicit employee creative ideas but must have a formal mechanism to action this. Managers need to be aware of critical success factors that are essential for the success of the schemes. It is clear that suggestion schemes will not yield results without the active involvement of everyone in the organization, and the required resources and support from top management. The suggestion schemes are here to stay mainly because they are the vehicle for innovations. Today we live in a knowledge economy where innovation is not only significant but a key corner stone for an organizations growth and sustainability. The future of the suggestion scheme is bright as a tool for fueling innovation. Organizations need to recognize and evaluate their schemes to yield its potential benefits. There needs to be sustainabil
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