GreenNurture » Incentives

Part 2 of a series on the evolution of the suggestion box. (check part 1 here)

Simple slips of paper put into a box was just the starting point for more advanced suggestion systems. As businesses began to understand the value of employee input, their suggestion systems became more sophisticated.

NCR was one of the first US companies to implement a company-wide suggestion system, under the leadership of its legendary founder, John H. Patterson. Patterson set up a program based on written suggestions for improvement from his factory workers. Patterson believed that the company could be viewed as having a “hundred-headed brain.” In 1894, the employees received $30 for the best ideas and the factory magazine published the names and photos of the winners. By 1897, award amounts grew rapidly to $500 in gold!

Perhaps more importantly, Patterson also worked hard to create a good work environment, pioneering the “daylight” factory (using glass walls) and installing safety devices, ventilation, bathrooms, and lounges. He also subsidized hot meals (which paid for itself with reduced absenteeism), kept medical personnel on-site, provided on-site laundry services, and established a daily period of mandatory exercise. NCR offered extensive night classes on a wide range of subjects (for a mere $1 per class), from mathematics to tool design, and those attending classes became more eligible for advancement. In short, Patterson worked hard to create an environment that lent itself to total employee engagement. And this was more than a century before Google!

Curiously enough, Patterson was also known for his dictatorial style, readily firing employees. Ironically, this side of Patterson accounts for his influence on American business: one estimate concluded that between 1910 and 1930, one-sixth of the nation’s top executives had been trained and fired by Patterson, including his one-time sales manager, Tom Watson, famous for his role in building IBM.

Lincoln Electric Company, a manufacturer of arc-welding supplies and equipment, was another company known for its effective solicitation and implementation of employee input. In 1929, the company instituted a rewards system that compensated employees with half the first year savings of any improvement idea. But this rewards system was only the tip of the iceberg of Lincoln’s employee suggestion/engagement system. Fifty percent of the company’s stock was owned by seventy per cent of the employees.

There was little distinction between management and employees in terms of compensation and offices. There were specific processes for communication between management and labor. Employee bonuses, based on a variety of factors, often approximated an employee’s annual wages. Indeed, in 1946, while Lincoln boasted that its wage rates “were higher than those in any other manufacturing activity in the world,” it had the lowest labor costs per dollar of sales than any other company in its industry.

James T. Lincoln, the founder, provided one of the earliest articulations of why suggestions and employee engagement systems are so necessary in his Lincoln’s Incentive System, published in 1946:

“Management, if it is to be the best obtainable, must be the collective intelligence of the whole organization. No one man, or even a small group of men, can have sufficient knowledge, experience, and wisdom to make decisions that can be as sound as they would be if these decisions represented the collective intelligence and experience of the group. The problem is to get this collective intelligence and experience to bear on decisions as they are made.”

More than 60 years later, the terms “collective intelligence” (and its cousin “crowdsourcing”) have become new buzz words, and, in 2006, MIT created the Center for Collective Intelligence.Hungry for feedback and intelligence, business are turning to social media applications for this.

Next: Today’s Idea Management Systems