Staff suggestion schemes

Old-fashioned staff suggestion scheme can be a productive workplace initiative, helping staff feel valued and engaged, says Sam Barrett

Case Study: British Gas

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Businesses thrive on good ideas. They can help shape everything from the way an organisation operates to its next range of products and services. And, because there are no rules over who will come up with a way to revolutionise your business, if you are not capturing employees’ ideas through a staff suggestion scheme, you could be missing a trick.

Steve Proctor, operations director at IdeasUK, a not-for-profit organisation that promotes staff suggestion schemes, says: “There are so many benefits to running a staff suggestion scheme. On a financial level, in 2004, our members saved an estimated £90 million as a result of the 120,000 suggestions they received from their employees. And because they engage employees, they can also have a very positive effect on staff morale resulting in a happier and more productive workforce.”

Proctor’s view is supported by research undertaken by the Institute of Work Psychology at Sheffield University. The research, which was carried out across 120 UK organisations, found that staff suggestion schemes can have an impact on employee creativity. The research also found that the most successful schemes shared a number of characteristics. Professor Stephen Wood, research chair at the Institute of Work Psychology, explains: “They had been well-planned to fit within the organisation’s culture, were supported by top management and regularly publicised. Additionally, these schemes provided feedback to employees, fairly soon after the idea was put forward, and some form of reward or recognition to encourage creative behaviour and increase willingness to share ideas.”

Because of the significance of these characteristics on a scheme’s success, implementing such an initiative needs some careful consideration. Nick Isles, director of think-tank The Work Foundation, says: “I don’t think a staff suggestion scheme [alone] will change the culture of your organisation.”

He adds that although they can be extremely beneficial, schemes work best when they are part of a package of measures that encourage dialogue between employees and management. “It’s got to be a high-trust workplace before employees will feel comfortable about giving you their ideas, so look at other ways to nurture this, such as your internal communications programme, team briefings and forums for exchanging ideas,” he explains.

Rather than implementing a full scheme, employers may want to consider setting up a temporary one to test how well it will be received. Many firms set up schemes with a specific project in mind, for instance a new product launch, or with a particular goal such as improving workflow within a department.

Also consider usability. Employees need to be able to submit their ideas easily and in a way that suits how they work. For example, despite moving to an online suggestion scheme British Gas still provides its engineers and field sales staff with a paper-based system because they do not have easy access to computers.

Rules and guidelines also help to ensure the success of a scheme. With these, simplicity is key. “The more complicated the rules the more they create a barrier to employees putting forward ideas,” says Proctor.

The type of rules employers might want to put in place could include details of when an employee can expect to receive feedback, who will be evaluating suggestions, the type of suggestions that can be submitted and the type that can’t. “If you set up a staff suggestion scheme there is a danger that employees will use it to let off steam. This isn’t necessarily a bad thing but you need to provide another means for them to do this so that the suggestion scheme is purely for ideas,” says Isles.

For this reason, many employers state that personal problems and comments about pay and conditions are off-limits for their suggestion schemes.

Publicity can also make or break a scheme. Training schemes and discussion groups are useful ways to encourage participation and will ensure employees understand the type of input that is expected.

Another part of the process is giving feedback to employees on their suggestions. This needs to be provided quickly, even if it’s simply to let the employee know you have received the idea and it needs to be evaluated further. “It only takes five minutes to look at an idea and assess how it should be dealt with,” says Proctor, who recommends giving feedback within 21 days.

As well as providing feedback, rewarding suggestions is also important: “Recognition for having had a good idea will help to encourage more ideas so some form of reward is important. It doesn’t have to be monetary though,” says Wood.

Proctor agrees and recommends asking employees what form of reward they would like. “Very few employers do this but it is definitely worth doing. Cash will often come near the top but with work-life balance being increasingly important, additional time off may be regarded as even more valuable. And do think before you hand out a reward to an employee. A weekend in Paris may be great for someone in management but it won’t be so good if you give it to [an employee] with debt problems.”

Examples of the types of reward offered include vouchers, points, which can be built up and exchanged for different products, meals out, holidays, certificates and shares in the company.

Unsurprisingly, whatever type of reward employers dish out will have tax implications. Anything given to employees for an idea is treated as a benefit in kind and will be subject to income tax and national insurance.

However, there are some handy exemptions. For example, for an idea that results in genuine financial savings, an employee can be rewarded with up to 10% of the amount saved in the first year, subject to a maximum of £5,000.

Encouragement awards can also be made. These are for good ideas that, for whatever reason, cannot be implemented. For these, a maximum of £25 can be awarded tax-free. Proctor also recommends calculating the return on investment of a scheme, although he adds that with savings often running for many years to come this can mean figures are on the conservative side. “Tot up all the costs of running the scheme and then look at the direct savings you’ve made by implementing staff suggestions in that year. A return on investment in the region of three-to-one isn’t unusual. On average, every employee has one or two good ideas each year. If you’re not capturing these, you’re potentially wasting a lot of money.”

National Ideas Day

National Ideas Day is an annual event launched by IdeasUK to celebrate creativity and innovation in the workplace. Held on 14 March, the anniversary of Einstein’s birth, the day focuses on how to encourage employees to put forward their ideas through staff suggestion schemes and other workplace initiatives.

To mark National Ideas Day, IdeasUK runs a free seminar that examines how to set up and maintain a successful employee suggestion scheme. This is open to all organisations and further information can be obtained by contacting IdeasUK on 0870 9021 658 or enquiries@ideasUK.com.

Case Study: British Gas

British Gas has run a staff suggestion scheme for more than 20 years but, in response to changes in technology and employee feedback, the scheme was revamped a couple of years ago so that employees could use it online.

Alan Firmin, HR business partner at British Gas, says: “This has made a huge difference. It makes the whole process much more transparent. Employees can track their ideas from the point they suggest them right through to evaluation and implementation. It has definitely increased the number of ideas we receive.”

A recognition scheme is in place to reward employees for their ideas. “Depending on the nature of the idea an employee will receive a certificate and maybe a small gift such as a bottle of wine or a pen set. For bigger ideas, employees may receive their award from the managing director and receive an invitation to the company’s annual gala,” says Firmin. There is also a commendation award for good ideas that can’t be taken up.

The scheme adds huge value to the business. Over the last few years, more than £2 million worth of ideas have been put forward by employees and, in 2005 alone, the value of employee suggestions was around £800,000. “Many of the ideas are for internal changes that make a difference to the way we run the business although some will be more visible outside the company,” says Firmin. An example of this is a ladder safety device that was suggested last year. This device, which locks ladders together making it much safer to work at height, is being used in British Gas and will be made available to the public later this year.