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Good Ideas Get Government Employees Extra Cash

Most states have employee suggestion programs that financially reward workers for improving services and saving money. Here's how one works.

Just about every state has an employee suggestion program, and in many cases, employees get financially rewarded if their suggestion is implemented and saves the state money.

In West Virginia and Washington state, workers can get up to $10,000 for an implemented idea. In Alabama, which recently reignited its program after eliminating it in 2007 due to the economic downturn, employees can get $1,000 for an implemented suggestion or up to $5,000 when a suggestion results in extraordinary savings. In North Carolina, employees can get either money for a suggestion that results in savings or increased revenue, or up to 24 hours of extra paid time-off for quality improvements.

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California, which has one of the more generous programs, started theirs in 1950 when such programs were becoming increasingly popular around the country. The California public employee union backed legislation to get the state one of its own, and today, government workers can offer their ideas for increasing revenue, improving state operations and eliminating safety hazards.

I spoke with Kari Ehrman, the merit award program manager, to find out more about the program and how much it's saved the state. Her responses have been edited for clarity and length.

What is the overall goal of the program?

The main goal is to show employees that management is listening. A lot of suggestions are from people on the front lines who say they talk to their supervisors but feel like they aren't being heard. With this program, the suggestion is logged, and it has to be evaluated. So it's a way for these voices to be heard. The monetary reward is icing on the cake.

How popular is the employee suggestion program?

It really hit its heyday in the 1970s. In 1971, 2,283 ideas were submitted, and of those, 21 percent were implemented. From when the program first started through 1975, the state was getting 2,000 to 4,000 suggestions per year. But so far this year, we've received 471, and out of that, 11 were adopted. Basically, we get around 400 to 600 each year now, and of those, we implement 2 percent to 3 percent.

Why was it so successful?

The main reason was because it received top management support. The governor signed all of the certificates, and when the awards were given, each person took a photo with the governor. It was given a lot of attention and publicity. Department directors would send letters to staff encouraging them to submit their ideas. Then in the '80s and '90s, it became old hat and floundered a bit. The program used to be centralized and run by the Department of Personnel Administration [the precursor to CalHR]. Now, we've opened it up and told each department to run their own program and then report back to us. It's a complicated process now, and ideas can take a long time to implement.

Do you still conduct any outreach to remind employees to submit their ideas? 

I did a webinar  that gives a basic overview on how to submit an idea. Some departments have a webpage where employees can check the progress of their suggestions. Other departments have merit award administrators who don't have the time to promote the program or learn the best way to run it. In the past, I published sample suggestions online because employees told me they weren't sure what kind of ideas were being submitted.

What are some examples of implemented ideas?

A Department of Transportation employee suggested replacing incandescent lighting with LEDs in the red light traffic signal heads as LED's consume less power, last longer and are as bright as incandescent illuminations. The Department of Transportation implemented this idea statewide and realized a first-year savings of over $4 million.

Some other implemented ideas have included eliminating paper forms or storing contracts and other paperwork electronically. In 2011, the Department of Fish and Game changed utility rate schedules, and the suggestor received $4,926. Other improved procedures, which resulted in a minimal monetary award, have included creating a link to help veterans find employment office locations.

How do you determine which ideas to implement?

When an employee suggestion comes in, it goes to the appropriate department's merit award administrator. That person tries to find an expert who can evaluate the suggestion and determine if it's doable. If the suggestion affects multiple departments, it goes to CalHR and then we send it to the different departments. Every state department is unique, and what doesn't work for one might work for another. For example, we had a suggestion that corrections decided not to adopt but the hospitals did.

Are there restrictions on the type of submissions that are accepted?

Suggestions have to be something you couldn't implement on your own.

Do suggestions traditionally come from groups or individuals?

Most suggestions are from individuals. When I talk to the suggestors, they say, "I was doing the same thing over and over and I thought there had to be a better way." 

Do ideas tend to come from older or newer employees?

It seems to me that suggestions come most often from new people who left the private sector or people coming from one department and going to another, saying "there's a better way to do it; we did it a different way in my old department."

How much can an employee receive?

If the state adopts an idea and any tangible cost savings are less than $500, which is the most common, the employee receives $50 to $100. If there are significant savings, say if someone saved their department $81,000, then the employee gets 20 percent of the captured savings. We have to wait for a year to determine what the cost savings will be and then do a cost comparison against the old procedure to determine the total savings. There is a payout cap of $50,000.

How are awards paid out?

Awards are paid out from each department's savings. If a suggestion would be used by multiple departments or would have a cash award of more than $5,000, it has to be approved by the Merit Award Board and the CalHR director before it can be implemented. If there would be a significant monetary award of more than $5,000, we have to seek a legislative bill to pay the balance. The last bill was a concurrent resolution in October 2013. Altogether at that time, the savings were calculated at $189,460 from three separate suggestions. 

Since it first started in 1950, how much has the program saved the state?

Approximately $95 million.

Heather Kerrigan is a GOVERNING contributor. She pens the monthly Public Workforce column and contributes to the print magazine.
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