It seems I’ve been thinking a lot lately about my time in Japan. Usually it comes about when I’m thinking about technology or gadgets. But lately, I’ve been reflecting a bit more on Japanese culture and specifically the culture of the workplace.
In the early 1980s, Japanese business was the dominant global player, easily trouncing the US and its western brethren on profits and efficiency. The seemingly impossible advances and pace set by the Japanese automotive industry and electronics manufacturers became the blueprint that many companies tried desperately to duplicate.
In fact, many modern practices in business find their roots during this period of business growth and change. During our current period of economic difficulty, business uncertainty, and low employee morale, I’ve been thinking about one practice in particular:
kaizen (改善) – Japanese for improvement; comes from the words kai, meaning to change or break and zen, meaning good or better
Kaizen is a system of employee-driven suggestions to improve every aspect of the business. But even this definition falls short. Kaizen is a state of mind, it is ingrained in Japanese business culture. It asserts that all employees are responsible for the quality and profitability of a company. Masaaki Imai is known as the father of Continuous Improvement (CI) in the workplace and recognized as the inventor of kaizen. This practice of employee suggestions dates back much further though, when in 1721 the shogun Yoshimuni Tokugawa issued the following proclamation: “Make your idea known. Rewards are given for those that are accepted.”
Focus on the word “accepted.” In the West, we tend to reward ideas that are “implemented.” In Japan, merely making a suggestion is met with a reward, albeit a very small financial one (something like $5 per idea). A large reason why suggestion programs tend to fail or are ineffective is this emphasis only on ideas that are implemented. Management has the most significant impact on whether an idea is actually implemented, and yet the individual employee only gets recognized (rewarded) if Management actually does something with the idea. Pretty soon, you train the employee to not bother.
Yes, yes, we can talk about establishing programs that empower the employee to take action, but that will be the subject for another article. I leave it for now with the assertion that such an approach is all well and good, but it has to start from the top, from defining the system, allocating the budget and time, and actively engaging in the program. This is one instance where “delegating” or “empowering” downwards is a bit of a cop out.
The National Association of Suggestion Systems (NASS), now known as the Employee Involvement Association (EIA), reports that the average employee suggestion returns about $7000 to the company in profit or savings. In the US, the implementation rate for employee suggestions is about 35%. In Japan that number is more than 70%. The total savings/earnings for companies and state agencies which have employee suggestion programs is in the billions. That’s billions with a “b.” Yet only 3% of companies in the US even have a suggestion program. Successful and sustainable ones are a fraction of that.
There are many spectacular stories of employee suggestions–American Airlines bought a Boeing 757 from the $55M in savings its annual IdeAAs in Flight program delivered–but thinking small in this instance has another positive effect…it creates access. From the Managing Director all the way down to the housekeeping and maintenance staff, anyone can submit an idea. A Managing Director may not be bothered with $5, but a janitor will submit tons of ideas if it means it’ll pay for lunch. Shoot, I’d submit an idea every single day!
Consider what just a few of the following ideas might save your company:
- switch to mugs instead of disposable coffee cups
- change to long-life lightbulbs
- change printer defaults to double-sided printing
- meeting moratorium Fridays
- onsite car wash (vaccinations, oil change, etc)
- workplace dry cleaning and laundry delivery services
- onsite child daycare
Do any of these ideas directly impact your product or service? Probably not. But ask your COO or CFO if they care about their impact on operating margins (they will). Also consider that these handful of suggestions alone mean employees can focus on their work instead, which does impact your product or service. It also instills a culture that every employee has a chance to make a difference and it encourages creativity, which will translate in the way your employees approach their work.
Estimating the impact of such a program on morale and employee retention is extremely tricky and not likely to convince Management on the value of the program. So let’s say such a program retains just one employee. One single employee. I don’t think you’re asking anyone to make too much of a mental leap in accepting that this sort of program could save one employee. Estimating very conservatively, the cost of interviewing, hiring, and training an employee would easily be $50,000. For $50,000, you could fund 10,000 ideas (at $5 each). If ideas average about $7000 back to the company, that’s an additional $70,000. That’s already $120,000 right there.
Here’s my proposal, start an employee suggestion program at $5 an idea. Reward implemented ideas with an additional 0.5% of the total return back to the originating employee. Don’t be greedy, give a half percent back to the employee. You’d rather have 100% of 0? (that’s still zero) Or would you rather have 99.5% of the more than $2B which came from employee suggestions last year? (that’s still $1.99B).
For more reading on kaizen, check out these presentations:
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This post was inspired by an article forwarded to me by one of my team members. Thanks for jogging my memory, K.
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