Employee Recognition Programs: Cost-Saving Suggestions

Some of the greatest process improvements and cost-saving ideas come from those employees that are performing the work every day.

Often, these employees can see problems with processes and procedures that leadership standing outside the process would probably never identify.

To generate innovative ideas, rewards for cost-saving suggestions can be part of your employee recognition program. The suggestions should be practical, measurable and produce substantial cost-savings by either replacing a previous process or procedure or enhancing a process.

Many companies find that employee suggestion recognition works best if a percentage of the cost savings for one year are awarded to the employee submitting their idea. Other companies award a percentage of the estimated five or ten year savings.

If an employee knows they will be rewarded for developing or designing a better way to do business, they are more likely to document, suggest and implement ideas because they know their improvement can gain them a substantial economic award.

In companies where no employee suggestion recognition is in place, often great ideas that could save millions are tossed away because there is no reason for the employee to go through the work of testing the procedure, documenting the old and new methodology and establishing cost saving estimates.

When a reward of a percentage, often 10% or more, of the first year’s cost savings is at stake, it is much more likely that the employees will search for smarter ways to do business and save money.

If your business is medium or large, you’ll want to establish a peer and leadership board to review employee suggestions and verify the information. If your business is very small, you may determine that a less formal method can be implemented, but you should make documentation and measurements mandatory.

You may think an employee suggestion recognition program is not necessary because the process or procedure that is improved is something that belongs to your business already and you are paying a good salary to the people involved in that process.

You may think that the need to share the cost savings with the innovative employee is not necessary. You will, however, find that more truly great suggestions which can save money and change the bottom line will be documented and implemented if the employee knows appreciation will be shown through a recognition and award program.