All Press Releases for March 07, 2005

Need Money-Saving Ideas? Ask Your Employees

Eliminating cost is critical to all service role modeles. It is critical that employees be involved in ways tgo eliminate small savings each day if your organization is to succeed.

    / March 6, 2005, Minneapolis, MN - The folks at State Bank wanted to make sure they were running their operation as efficiently as possible, so they turned to the experts—their employees. They asked for suggestions on how the bank could save money while not sacrificing quality and were rewarded with a tremendous response.
The bank's 350 employees made 511 suggestions that resulted in savings of $185,209, says Erica Vasek, executive assistant and program coordinator. Those suggestions, which averaged $529 per employee, ranged from having bank branch employees fill ATM machines instead of contracting out that task—saving some $45,000—to extending the life of toner cartridges by shaking them once a week when the "toner low" notice appeared—saving an estimated $500.
State Bank, which is headquartered in La Grange, Texas, realized something most companies don't—that, in order to be successful, employee suggestion programs don't have to result in ideas that save at least $50,000 each. Every idea, no matter how much it saves the company, is valuable. And even small savings can add up and have a huge impact on the company's bottom line.
State Bank used a program developed by the Service Quality Institute in Minneapolis, Minnesota, called Buck-A-Day, or BAD, which asks each employee to identify a way to reduce costs by at least $1 a day. The campaign lasts just 30 days, which helps to keep enthusiasm high and reinforces the idea that employees are the best source of cost-savings idea for any company. They know better than executives how you can increase revenues, reduce waste, and improve customer service.
The idea behind BAD is to get employees to look for relatively simple savings, to get them to consider each job or task and ask, "Is there a better, less-expensive way to do this?" The program has been used by more than 3,000 companies throughout the world and has a participation rate that ranges from 60 to 80 percent. That's impressive, considering that the typical suggestion system has a 1 to 6 percent participation rate.
Why is BAD so successful? It's fun, it's built around recognition, and feedback is immediate. One of the recognition devices BAD uses is a poster with a mug shot of each employee who makes a suggestion that is implemented. That photograph is printed on a Wanted: More Cost Reducers poster that lists the employee's name, suggestion, and savings to the company.
Adding to the success of the program is that it doesn't intimidate employees. By asking them to make suggestions that will save just $1 a day, they know that all ideas will be considered and that they won't be ridiculed for making suggestions that don't carry with them astronomical savings.
Reducing waste is more important today than ever before, as companies face competition not only from businesses down the street but from around the world. Look at it this way: If your company has 1,000 employees, and each of them identifies a way to save the company $1 a day, with an average 250 working days in a year, you will realize annual savings of $250,000. And, if your company generates a net profit of 5 percent, those savings are the equivalent of a $5 million increase in sales. Considering that it would take approximately $4 million in capital to generate that $5 million, you can see that it is much less expensive to reduce costs.
If you want to know what's wrong with your business, don't hire expensive consultants, ask your employees. Set up an employee suggestion program. And, when you do, you might want to consider these suggestions for ensuring a high rate of participation—and savings
Make the program fun and non-threatening.
Get total commitment from employees.
Publicize the program.
Give timely feedback to employees who make suggestions.
Recognize employees who suggestions are implemented.
Use recognition, not just money, as an incentive to drive the program.
It has become more critical in recent years, particularly with so much business being conducted via the Internet and increasing competition throughout the world, that you identify every possible way to eliminate waste and save money. You can no longer merely increase prices to remain profitable. Consumers—and your competitors—won't allow it. If you want to survive, you must identify ways to dramatically eliminate waste. When you do, you will be rewarded with higher sales and greater profit margins.

John Tschohl is an international service strategist and speaker. Described by Time and Entrepreneur magazines as a customer service guru, he has written several books on customer service, including e-Service, Achieving Excellence Through Customer Service, The Customer is Boss, and Ca$hing In: Make More Money, Get a Promotion, Love Your Job. John also has developed more than 26 customer service training programs that have been distributed and presented throughout the world. His bimonthly strategic newsletter is available online at no charge. You can reach John at

The global leader in customer service
John Tschohl is a service stategist and customer service guru.

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