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Ideas Aren't Always Free
Cash and nonmonetary one-time prizes are not clear indicators of employee motivation and can, in the long run, have negative effects on a company.
By Eve Tahmincioglu
We all know that workers on the front lines are often the ones with the
best ideas to help boost productivity and sales
 e
all know that workers on the front lines are often the ones with the best ideas
to help boost productivity and sales. But setting up a reward system for every
bit of worker wisdom based on what each idea is worth might spell trouble.
Alan G. Robinson, co-author of Ideas Are Free, due
out this month, teaches at the Isenberg School of Management at the University
of Massachusetts. He says his research has found that cash and nonmonetary
one-time prizes are not clear indicators of employee motivation and can, in the
long run, have negative effects on a company. In fact, he believes that such
reward programs can lead to greed and fraud, and could end up costing more than
they are worth.
He offers three examples:
A worker in one of Europe’s largest
wireless-communication companies stumbled across an error in the organization’s
billing software that was costing some $26 million per year in lost revenues.
While he pointed out a simple way to fix it, the company’s CEO worked behind
the scenes to block the idea. Why? The sizable reward to which the worker was
entitled through the company’s suggestion system would have drawn embarrassing
attention to the oversight.
Two
workers at a top U.S. airline came up with an idea that brought in $3 million
in additional profits each year. When they were given a paltry $1,000 instead
of the 10 percent reward to which they were entitled, they took the airline to
court. The case reached the California Supreme Court--twice, no less--and
directly involved the airline’s CEO. The company ultimately abolished its
suggestion program because of disputes over rewards.
At a midsize electronics company, a
special committee selected the best employee suggestion on a quarterly basis.
The worker with the winning idea was rewarded with 10 percent of the total
cost-savings from the suggestion. It was later discovered that the committee’s
chairperson, a top manager, had actually been gaming the system behind the
scenes and, in turn, getting half of the amount awarded to each winner. By the
time he was caught, he had ‘stolen’ nearly a quarter of a million dollars.
Workforce Management, April 2004, p. 44
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Eve Tahmincioglu is freelance writer in Wilmington, Delaware. To comment, e-mail editors@workforce.com.
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