A review of THE CARROT PRINCIPLE in Financial Executive Magazine

The Carrot Principle: How the Best Managers Use Recognition to Engage Their People, Retain Talent and Accelerate Performance; revised edition. By Adrian Gostick and Chester Elton.

In this, their second look at the use of corporate carrots--the first edition was a big 2007 seller--authors Gostick and Elton offer further evidence that praise and recognition belong in every manager's toolkit. In fact, they write, in the long-standing recession, "the Carrot philosophy has never been more relevant."

Indeed, finding ways to recognize people and honor their work doesn't require new resources, just new ways of thinking. Recognition isn't simply the softer side of leadership, they write, but a "secret ingredient that great leaders add to their companies for [a] direct impact on profits."

Organizations that more effectively recognize and reOward excellence, according to a 10-year study of more than 200,000 employees cited in the book, had triple the return on equity as companies that did the worst at recognition. And of employees reporting the highest morale, more than 94 said their managers were good at recognition.

These numbers stand in sharp contrast to others evincing the general sorry state of recognition efforts. Almost two-thirds of North American workers cited in the study said they had no recognition at all in the past year, and 79 percent of top performers who left their companies said "lack of appreciation" was a key reason.

The authors do a superb job of sketching out how and why recognition programs work, citing companies like Quest Diagnostics, KPMG, WaltDisney Co., Avis Budget Group and DHL. As they write, "Smart companies have realized that workers are being asked to do more than ever, and find work less fulfilling. Recognition that builds motivation is essential to keeping them and to getting the most from them."