Friday, March 23, 2007

Ask more of, and raise rewards for, employee idea-generators

Innovation via employee-generated ideas fails at most companies. Employees generate a number of ill-thought-through concepts that management, to its embarrassment, must quickly discard. "Winners" get a handshake, a plaque, perhaps a $100 check. Eventually comes a suspension, termination or petering out of the idea-generation initiative, which then finds its way into the lore of company failures, never to be repeated.

I've seen that happen at more than one company. Gary Carini and Bill Townsend, writing in the April Harvard Business Review (free link through April 2007), suggest two fundamental changes in these programs: (1) require employees to flesh out their ideas and develop realistic business cases for them and (2) increase the rewards for those ideas that work to more than symbolic levels.

The authors write:

Companies that required employees to present business cases for their ideas and offered substantial rewards saw the number of workable ideas rise significantly...[increasing] in the 20% to 40% range.

They suggested rewards such as half the first year's savings for a cost-reduction idea. For one administrative assistant, that was worth $152,000. For that kind of potential reward, I'd put my thinking cap on, no matter what my job.