By John Tschohl
What would you say if I were to hand you a check for $25,000? $250,000?
Before you get too excited, I’m not going to do that, but I am going to tell you how you can find that kind of money and add it to your bottom line. No, it’s not by terminating employees or instituting pay
cuts, two methods companies throughout the world are using in an effort to survive the drastic downturn in the economy.
If you want to
cut costs and save thousands, if not millions, of
dollars each year, the most effective method—and one that will have long-term benefits—is to do so by eliminating waste, not people. How do
you do that? Simple: Ask your employees.
There is waste in every organization. The challenge is to identify that waste and then eliminate it. Your employees are the experts. They see where the waste is—in time, procedures, and materials—throughout the organization. You need to ask them to identify that waste and to make suggestions on how to eliminate it. When you do, you will build morale by making those employees feel like you value their ideas—and you will improve your bottom line.
Many employee
suggestion programs fail for one major reason:
Executives are only interested in ideas that will save the company $100,000 to $1 million. They fail to identify the low-hanging fruit, the small savings that quickly add up to big money. Let me give you an example. My company, the Service Quality Institute, offers a program called BAD—Buck a Day—that asks each employee to identify a way to save just $1 a day. It has been used successfully during the past 30 years by 3,000 companies throughout the world.
Executives are only interested in ideas that will save the company $100,000 to $1 million. They fail to identify the low-hanging fruit, the small savings that quickly add up to big money. Let me give you an example. My company, the Service Quality Institute, offers a program called BAD—Buck a Day—that asks each employee to identify a way to save just $1 a day. It has been used successfully during the past 30 years by 3,000 companies throughout the world.
Right now you are probably thinking, “Why in the world would I go to the trouble of instituting a cost-savings campaign if it’s only going to result in savings of $1 a day?” I’ll tell you why—because that $1 a day adds up to a lot of money, money that can make a huge difference in your bottom line.
Consider this:
There are 250 working days in a year. If you have
1,000 employees and they each identify a way to save $1 a day, you are
looking at a yearly savings of $250,000. If your company has 100
employees, your annual savings would be a respectable $25,000.
If you doubt the
impact of cost reduction and waste elimination, look at service leaders like Amazon, Costco, Wal-mart, and Southwest Airlines. They are successful for many reasons, including their ability
to reduce costs at every level of their organizations. Then they pass those savings on to customers through reduced prices. The result?
Increased market share and increased profits.
When it comes to instituting an employee suggestion program that
will be successful, I have some suggestions of my own that I’d like to share with you:
1. Keep it short. A short campaign keeps enthusiasm high.
2. Make it fun. Dry, dull campaigns get little attention, which means
they get few results. On the other hand, when you incorporate fun and humor, employees become more involved.
3. Build it on
recognition. You don’t have to offer monetary rewards
or trips to Las Vegas
to get employees to participate. Recognition is a much stronger motivator than money. Recognize employees in a timely
manner through public praise. That might include an article and photograph in the company magazine or a simple pizza party.
4. Involve
everyone. The backbone of a successful employee suggestion
program is to get all employees involved. That means everyone from
frontline employees to executives. The idea is to get everyone to
consider his or her job and ask, “Is there a better, less-expensive way to do this?”
5. Implement
ideas quickly. Nothing will kill a suggestion program
faster than a long lag time in implementing employees’ suggestions. If you don’t implement ideas quickly, employees will lose interest—and
faith—in what you are trying to accomplish.
In today’s
dismal economy, if you want to survive and grow, you must look for ways to dramatically eliminate waste and reduce costs. Ask your employees to help you and you will be amazed at the results.
Contact Shoppers, Inc. at www.insightyoucanuse.com
for information on cost reduction programs.
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