A Tale of Two Suggestion Systems
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Toyota got the idea for an employee suggestion system from Ford. No one knows where GM got the idea from. My guess would be a consultant. Here's the result of a comparison of the two systems.
The GM employees share less than one suggestion per year each. The company uses a quarter of them. By contrast, Toyota workers make 17.9 suggestions per person per year. Eighty percent are implemented.
Run those numbers out and you see that GM gets less than 200 workable suggestions a year from a thousand workers. Toyota gets 70 times more, or 14,000.
If you make a suggestion at GM, you fill out a form and submit it. It often takes GM a year to respond. If your suggestion is accepted, you get a cash payment.
At Toyota, management and supervisors encourage suggestions. Workers are rewarded by having their idea used and by making things better for themselves, their colleagues, and the company. There are no cash payments.
There are three big differences in the design of these programs.
Toyota thinks people are valuable and have brains. GM thinks that the people with brains are the ones somewhere further up the org chart.
Toyota thinks there's an intrinsic reward in helping the team and the company do better. Suggestions are valuable ideas to be tried quickly. GM thinks that you have to bribe people to contribute and that every suggestion from below requires careful review. The idea is to buy suggestions for as little as possible.
The job of a Toyota supervisor is to help people and the team succeed and improve. The job of a GM supervisor is to enforce the rules.
Boss's Bottom Line
Find ways to encourage your people to share the ideas they have for making things better. Thank them for the suggestion. Try it quickly. Recognize them for lots of suggestions and for the ones that really make a difference.
Wally's Working Supervisor's Support Kit is a collection of information and tools to help working supervisors do a better job. It's based on what Wally's learned in over twenty years of supervisory skills training. Click here to check it out.
Categories: Supervision,Management,Leadership
Tags: Supervision Management Leadership
Market leading organizations understand and encourage feedback from those team members on the front line.
Market losers tell their teams to “overcome” objections…so they do not listen, and therefore do not provide the needed feedback.
The number one reason buyers do not buy is ; the salesperson does not listen. I discuss this in my post : WARNING: Buyer’s say what salespeople do wrong?..PRICE is not on the list! http://nosmokeandmirrors.wordpress.com/2009/04/23/warning-buyers-say-what-salespeople-do-wrongprice-is-not-on-the-list/ The same rule applied for internal as well as external buyers that we serve.
Great post,
Mark Allen Roberts
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Thanks for stopping by, Mark. I think you're right that there are parallels between the way we deal with our customers and with the people who work for us.
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Now that is an interesting metric of success. Pretty much describes GM's entire employee relations history in one simple suggestion box.
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Thanks for that comment, Fred. Short, sweet, and accurate.
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Wally, again I read your blog with interest. And, this time I brought my husband into it. My husband worked for both GM and Toyota (in management positions). I ran your numbers by him and asked him “does it seem right to you that about 1 idea per employee is suggested per year on the GM side and 17.9 ideas are suggested per year at Toyota side.” He believes that the numbers you presented seemed high for both sides. He was particularly interested in the Toyota number. He said he would agree with your 17.9/80% numbers if they described Toyota Motor Corporation (Japan staff) rather than the Toyota Motor Sales (US based staff). Having been on the US staff side, he believed that the number of suggestions and the percentage acted on US staff side would be much lower. If it is TMC (Japan side), he believes that what you are seeing is a cultural difference between Japan and US people/companies rather than a systemic difference in how employees are treated/valued. Can you please shed some light on your Toyota numbers? Thanks!
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I think you're husband's insights are mostly right. To clarify, the study looked at Toyota as a whole. Figures for US v Japan were not broken out. That said, I'm sure that the figures are higher in Japan than in the US because of the cultural reasons your husband cites. I did find one study, done by researchers from the Netherlands that assessed the transfer of "Kaizen-oriented suggestion systems" to places outside Japan. The researchers concluded that organizational culture was more important than national culture in effective transfer.
I was unable to find anything that compared US Toyota with US GM. There may be a reader out there who can help.
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The difference between these 2 systems seems incredible to me. Yet...there are some similarities -- both are using positive reinforcement for giving feedback (cash for GM, implementing ideas for Toyota). However, a big difference seems to be in the length of time to response. Basic psychology would suggest that a positive reinforcer a year out isn't really much of a reinforcer at all. Do you think that, maintaining a cash reward system, but getting to suggestions quicker might change the culture at GM?
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Thanks for the thoughtful comment. I'm guessing that the problem at GM is the culture. I'm sure that speeding up response would change things a bit, but that wouldn't affect the encouragement of supervisors/managers or the ability to see results in your own work and immediately, it wouldn't value the suggestion itself, instead of just the effectiveness of the suggestion.
Basically, I think what you suggest would make the GM system better, but not get at the core. The GM system is programmatic and based on external rewards. The Toyota system is cultural and offers intrinsic rewards.
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A great story. The numbers are very impressive. It would be fascinating to hear GM's response to the data: would they challenge the numbers or challenge the conclusion?
Building a work environment in which people feel psychologically safe to make comments up the line is doable but requires an effort. A good place to start is focusing on the relationships among colleagues and with first line supervisors. Then you help it grow.
Michael
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Thanks for adding that, Michael. I agree with what you say and I think a key word is "start." There are pockets of excellence in otherwise awful companies because no one toward the top of the chart seems to be willing to create the environment you describe. The result is that it only happens in individual teams with supervisors that care.
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This just goes to show how most people are more encouraged by the intellectual reward--the fact that their idea is taken seriously and possible implemented then by monetary rewards. To me, the monetary reward is almost insulting. GM is assuming that people will not participate unless they can win a prize. And I guess, without the reward, why would you at GM since its unlikely your suggestion will be implemented, and even if it is, you will not hear anything for up to a year. I think you have hit the nail right on the head here--an approach like GMs just tells the employees you do not value them or really care what they think. My reaction to the GM approach is that GM is just trying to put on a front of acting like they are interested in employee suggestions because they think its good for morale, and in doing so, have created a system where it seems likely that they do not really care at all. The end result? Employee morale suffers. Employees see right through this kind of stuff, and it only serves to kill morale.
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Thanks for sharing that, Patrick. The type of reward and speed of the reward is certainly part of the issue. But I think that there's a valuable insight in the middle of your comment. You note that GM is assuming that workers will not participate unless there is an economic reward. You can debate whether this is mostly the fault of GM management or mostly the fault of the unions. I think that's a chicken-egg question, but I think both bear some responsibility.
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This study is extremely valuable and telling. A couple points shout out to me.
First. Deming, who played a critical role in the Toyota process and culture didn't believe in incentives. And over time, I'm inclined that incentives are tricky and can create many problems.
Secondly, if employees believe their suggestions are valued, they'll submit them - if not, they won't.
If anything, this study points out the variances in culture, and what the organization (the leadership) believes is really important.
I guess one could say, it's pretty Black & White.
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Thanks, Rodney. That's a good summary. As I get older, I'm inclined to question the value of cash incentives in many situations. Here, I think the key is value. If you know you've valued and your ideas are valued, you're more likely to share them.
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I agree. People want to feel valued. There is definately a time and place for financial rewards, John Maxwell has stated that monetary rewards are one (if not the best) way to show somebody that they are valued. However, I don't think giving people a little bonus check for an idea a year after they submit a comment would be nearly as effective as a quick response, implementation of the idea, and recognition in whatever way is meaningful to that person.
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Thanks, Jason. I don't have a problem with financial rewards. But research and experience seem to point to the idea that money is not a motivation factor for most people. That's not an argument for not paying a fair or good salary or for skimping on the benefits package. It's just that the most powerful motivators involve intrinsic rewards.
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I agree that everyone would benefit from a working suggestion box. There are so many companies that are out that could care less about what their employees think. Manager think that as long as the work gets done why bother making it better for the workers. Who knows one suggestion could make the work get done faster and the company would be more profitable. One must wonder how much these suggestions boxes are helping. By this article on Toyota one only needs to look at the recent bankruptcy hearing for GM to decide which suggestion box is working better.
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