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."

Engage Employee Heart-Power - Not Just Brain-Power

We've heard that some companies believe there are more important ways to drive engagement than appreciation. Did you know that the number one driver of engagement is "opportunity and well-being"? But how do you add that? The right question might be.. what creates a sense of "opportunity and well-being"? The answer is appreciation..

Here's an interesting article from Harvard Business dated November 11, 2009 that speaks to engaging hearts through leadership.

On any given Sunday in the NFL, the heart power of the players is at least as important as the brain power of the game plan. On any given workday, the same can be said for businesses. But companies lack confidence when it comes to creating heart power in employees. They're not sure how to do it well. So they concentrate brain power on the game plan of translating top-line dollars into bottom-line profit.

Creating heart power starts with management's style of running the company — how much of the time executives spend leading and how much time managing. Managing has to do with matters of the brain; leading has to do with matters of the heart.

Leading is about making sure, first of all, that the company is engaged in changing people's lives for the better. When that's the case, employees' awareness that they have a lot to do with the company's work lights their fire from within. That inner flame causes them to bring their imagination and creativity to the enterprise. They feel it's "their" company, and they take ownership of the customers.

Most companies do change people's lives for the better, if only in the sense that they pay a good wage, provide opportunities for creativity and betterment, and help workers save for retirement and put their kids through school — in addition to benefiting the community in myriad ways. Other companies, such as the one I work for, go much further. For example, to provide people with a good education, the founders bought a bankrupt college years ago, got it into shape, and donated it to the state — it's now known as Ball State University. A business that is engaged in improving lives is the kind of company people want to sell for.

Another word about heart and leadership: A lot of big companies tell new employees to bring their brains and their effort to work but leave their emotional baggage at home. In essence, they tell them to cut their hearts out and leave them on the doorstep to be reclaimed when they get home. "We have enough problems of our own; we don't need your personal problems here" is an example of a style where the "managing" function dominates.

Other companies, generally small businesses that excel in the "leading" functions, hire the whole person, heart and soul, mind and brain. When problems occur in the home, a company support group forms to help get the employee through the trauma. That generates dedication and loyalty, which rub off on customers. And because the employee's life is changing for the better, he or she makes sure the company's corporate life changes for the better as well. Companies neglect employee heart power at their peril.

Clif Reichard is a sales consultant for Ball Corporation, which he has served for 36 years in capacities including vice president of sales. He is in his 55th year selling rigid packaging substrates. This post is one in an occasional series.

Employee Engagement Rooted in Managers' Leadership Skills

To drive higher levels of employee engagement, companies should work on improving the leadership skills of frontline managers, says a new report from Aberdeen Group. "Employee engagement is something world-class organizations need to be effective at in today's competitive environment," says Mollie Lombardi, an Analyst at Aberdeen. "Learning programs provide individuals and managers with the skills and tools to align goals and priorities, and give a strong foundation which organizations can build on in order to achieve success."

According to Beyond Satisfaction: Engaging Employees to Retain Customers, more than half of best-in-class organizations provide training and tools to managers to help them better engage employees, and nearly all of the rest (45%) are planning to extend this type of training in the future. The report also found that two programs – onboarding and development plans agreed to by manager and employee – are critical to building high levels of engagement. Onboarding ensures that employees are aligned with the organizational mission and priorities from their earliest days, and development plans ensure that employees and managers remain in alignment when it comes to their role in achieving organizational success.

"This study is important because it highlights the need to develop strong leadership skills at all levels in the organization, not just in the corner office," notes John Ambrose, Senior Vice President of Strategy, Corporate Development and Emerging Business at SkillSoft, which conducted the research along with Aberdeen Group. "The challenge comes in finding ways to deliver leadership training that are cost-effective and scalable."