TPS Benchmarking

How Much Should We Pay for Kaizen Ideas?

By Jon Miller Published on February 27th, 2007

“How much should we pay for kaizen ideas?” This is a question we often hear during a kaizen class. The type of kaizen we are talking about here is the everyone-everyday kind, otherwise known as the soikufu system in Japanese, or not-so-aptly named suggestion system in English.
At companies like Toyota, the job description includes following standard work and finding a way to make it better. Doing your job and improving your job are one and the same.
Either by legacy or by design, kaizen ideas at Toyota do receive a monetary reward, but the reasoning is given is that these ideas are written up and tested on the workers’ own time.
Paying for ideas is not a bad thing, but it can create a disincentive. If you have a very traditional company, you train your people in Lean and kaizen, ask them to improve their work, and pay them based on ideas implemented, these people might make out like bandits for the first few years while there is plenty of low-hanging fruit.
There is nothing wrong with that as long as people don’t lose interest as it gets harder to find small improvements, or as new employees hear of the “good old days” when you could stumble across kaizen ideas without using your wits.
This can be avoided if you combine the suggestion system approach with management-led TPS transformation and solid, industrial engineering-based technical kaizen efforts to take out large chunks of waste, leaving the day-to-day kaizens as an ongoing picking of smaller fruits by everyone.
It’s odd when you think about it. Should we pay extra for asking people to make use of a particular body part? Walking at work? That uses legs, so pay me an additional $1 per hour, please. Nose? Five cents per odor detected. Spleen? I won’t even go there.
Why shouldn’t everybody be asked to use their brain when they are at work? It’s not as though your brain wears out with use. In fact, quite the opposite. And why should we pay extra for kaizen ideas? You give them work, which inherently contains problems, and challenge them to use their wits to solve the problems. Kaizen is the natural byproduct of minds at work.

  1. Mark Graban

    February 28, 2007 - 3:24 pm

    In my first podcast with Norman Bodek, he said that Toyota was paying Georgetown employees $20 for submitted suggestions, but then realized that some people were taking home a lot of money for ideas that weren’t that great, so they quit paying. Then the # of suggestions decreased.
    It’s also been my understanding, at Toyota, that there are formal suggestions (actually written down) but there are many more “just do its” implemented with a team leader.
    Is this your understanding also, Jon?
    Personally, I don’t think we should pay for kaizen ideas. The artificial extrinsic incentive destroys the intrinsic motivation that should have been there the day a person started their job (especially if you hire carefully. You can nurture kaizen from the beginning, but I don’t think you create it where it hasn’t existed for 30 years (see GM). I worked with too many UAW guys who had been told “don’t think” for too many years to suddenly respond to a call for kaizen ideas.

  2. Jon Miller

    February 28, 2007 - 9:38 pm

    I had missed the $20 Georgetown story. I’ve never heard of implemented ideas getting more than 100 to 500 yen ($ to $5) in Japan, prior to being ranked and awarded based on impact. The initial reward is usually a token, not a financial motivator.
    My impression was that there is an emphasis on writing down nearly all ideas implemented, whether they are part of soikufu (suggestion scheme) or other types of kaizen.
    There are probably improvements made in the course of work that are so small they are not written down, but that raises the question of “If it doesn’t make it into Standard Work, was it actually kaizen?”

  3. Mark Graban

    March 1, 2007 - 2:30 pm

    I might not have been clear in my language, by “actually written down” I meant on a kaizen/suggestion form. I assumed most implemented changes (without a written suggestion) would still have something written on the standard work, indicating the change was made.

  4. Jon Miller

    March 2, 2007 - 7:11 am

    I see. That’s most likely true. The suggestions form tends to be used for “one’s own work” so if a major change is made to a line as part of a technical kaizen, or kaizen is done in a QC Circle type of context, it would not be documented in that form.

  5. Jim Beswick

    March 2, 2007 - 10:24 am

    A different way of phrasing the question is to ask are your employees motivated to improve by money or by the empowerment of experiencing their idea being implemented?
    If you look back at your own posts on Motivation you will see that once most people have the money they need (need for safety and security) they are looking for different motivation (self esteem and recognition). That motivation in my experience is the reward of experiencing their ideas being used. And those who want the money, make those your sales people.

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