The Carrot Principle – Recognition at Work

Gostick - the carrot principle

I’m very excited to talk with our guest this week, Adrian Gostick. Many of you may know about The Carrot Principle, so we are going to get to know all the ins and outs about the new book and national bestseller, The Carrot Principle: How Best Managers Use Recognition to Engage Their People, Retain Talent and Accelerate Performance.

Adrian is the author of several bestselling books on corporate culture, including the New York Times, USA Today and Wall Street Journal’s Best Seller, The Carrot Principle. He also wrote some bestsellers; The Integrity Advantage, and the 24-Carat Manager. His research, which I really like, is based on employee engagement and has been called a must-read from modern day managers, by Larry King of CNN; fascinating by Fortune Magazine; and admirable and startling by the Wall Street Journal.

His books have been translated into 20 languages and are sold in more than 50 countries around the world. As a leading expert he has appeared on numerous national television programs including the NBC Today Show and has been quoted in dozens of business publications and magazine. We are going to talk about engagement and how you retain some of your top employees and build a really vibrant culture.

Adrian, welcome to the call.

Adrian Gostick: Thanks, Relly, thank you for having me on.

Dr. Relly Nadler: Aside from what I mentioned about your books, The Carrot Principle, which we are focused on today, and the past books The Integrity Advantage and 24-
Carat Manager, Adrian is also the Vice-President of The Carrot Culture Division, a consulting and training arm of OC Tanner Recognition Company.

Adrian has earned a Master’s Degree in Strategic Communication and Leadership from Seaton Hall University where he was a guest lecturer on organizational culture. One of the testimonials that he has is, “he is the undisputed thought leader in employee motivation.”

Adrian, we always like to start off with this; tell us a little bit about your background, yourself, and then how did you get into this field of leadership and management?

Adrian Gostick: Well, like many of your listeners, I was a manager. I worked for five years in oil and gas as an executive there. I worked another five years in the field of banking, and so I have worked at the vice president level in those different organizations. Like many of us, I just got really busy. We get out heads down, we have bosses to please, we have customers to satisfy, and what I forgot along the way was that my people actually needed motivating.

We get put into positions of authority because we have been there the longest, we have great education, perhaps we are very good technically at what we do, but it doesn’t mean that we actually are able to inspire a team.

So about a little bit more than a decade ago I bumped into Chester Elton, who is my co-author. Chester had been a recognition consultant. He had been working with organizations to build recognition programs. Some of the best companies in the world, like Johnson & Johnson and Avis Budget Group, and others. He said we’ve got all of this data, we have all of this knowledge about recognition and engagement, how can we put this into play and build a practice here that will help other organizations?

About that time we began helping began publishing books. In 2007 we put out our catch stone book which is called The Carrot Principle. In there we had a 200,000 person research study that showed that this is no longer allegorical. It’s no longer just kind of a nice thing to do for your employees to recognize. What we have found is that, and this is published in the Wall Street Journal and Fortune Magazine, these findings show that organizations that are great at recognition were up to three times more profitable than those that were bad at it. It took it from kind of nice to have to a must-have.

Dr. Relly Nadler: So three times more profitable and we’ll get into talking about what some of the recognition programs are. I know in even some of the work that I do, and I think you said it really well, leaders know they should do that but it just doesn’t come to the front of mind. What does is all the pressing needs, pressing tasks, all of the meetings that they have, and then the recognition is, oh, yah, when I get to it I should do that.

Adrian Gostick: Right. You know, this is why we have six month reviews, right. That’s when we catch up. You know, I loved your introduction about most leaders underestimating how much influence they have. A lot of times we believe—look, we hire professionals. They should be intrinsically motivated. And extrinsic motivation that is just for people who may be work on the factory floor, maybe some lower level folks. I actually found out that that is not the case.

People need recognition no matter what level they are in the organization. It does so many things. It communicates what matters most. It helps goals be more clear because we recognize those goals. It holds people accountable but in positive ways. It sends trust levels through the roof when it’s done right.

Dr. Relly Nadler: I know exactly what you are saying. One of the people I was coaching was from the banking business and had his own banking branches, got bought out by a bigger bank, reported to the President; the first time he had reported to anybody. This person was probably in his early 60s, had a ton of stock, worth a lot of money. It was just interesting doing the coaching saying, I never hear how good I’m doing from the President.

I remember thinking, well, you don’t need to know. But just like you are saying Adrian, he did need to know. We all need to know that no matter at what level.

Adrian Gostick: Isn’t that interesting where you say that the President didn’t do this. What we find in organizations when we go in is that the president either thinks they are really good at it and they are not, or they just don’t do it, like you say, they are so busy. But, if it doesn’t start at the top, it doesn’t trickle down.

Dr. Relly Nadler: Good. I know you have some incredible, hands-on principles, things that people can do, in your book. Let me ask you before we get into the specifics: who has been some of the most influential people in your thinking about leadership?

Adrian Gostick: Well, maybe these are a little bit pop psychology for somebody like you who has studied this so deeply, but when we began back in the late 90s, the Gallup organization was coming out with their work, First Break All the Rules; Marcus Buckingham and Curt Coffman, were sort of publishing on that. They had mentioned in their book, because recognition was one of the twelve drivers of great performance. But they never said how you do it, they just said you’ve got to do it.

So, we realized we could come in behind that work and say, this is the how-to. With that, to, we’ve studied the work of Jeffrey Pfeffer at Stanford, and David Ulrich who is a great thinker at the University of Michigan, and others who play in this human space, if you will, and human performance.

What we’ve loved is that every one of the academics says that this is really important but nobody really has the answers as to how you do it. That’s where we have come in. We’ve studied organizations and what really makes effective recognition, and we’ve got the research behind it, as well.

Dr. Relly Nadler: Adrian, can you tell us a little bit about what is the Carrot Principle, how did you get that name, and then we can talk about why it’s so important for companies to know about, especially in these times when people are losing their jobs and the economic downturn.

First of all, how did you come up with the Carrot Principle and then the name?

Adrian Gostick: Well, about a decade ago when we were first writing our first book on employee recognition, we’d worked in the space, Chester and I, my co-author and I, for quite a few years. We wanted to bring it in to an icon, a simple way for people to remember it. There’s the old Aesop Fable that it’s easier to lead your donkey to market with a carrot in front, than it is to beat them with a stick. It was this old metaphor and it had sort of a negative connotation, if you will, of leading with a carrot, but we thought, ok, it’s a simple to remember metaphor. It’s kind of fun, can we make this into a positive? It’s better to lead our employees with carrots than it is to beat them with sticks.

So, that’s where the metaphor began. Now, as we conducted this research and we had again, 200,000 people we looked at for the Carrot Principle, what we found is that in the best workplaces people felt more recognized when they went above and beyond. When they did something that was excellent in their organization. Whether it was in healthcare, they did something outstanding for a patient. In a manufacturing firm, they never missed delivery. The organizations that were great at recognizing specific actions related to their goals, and this is important; you are not just recognizing people for looking sharp or showing up, or being my favorite. You are recognizing people who lived the values that move the organization. That became a Carrot organization. The Carrot Principle was, we’ll talk later about this, when the Carrot was used to accelerate great performance, when there were already good business practices in place, it made a good manager, great.

Now, you asked too about, this economy, we are all kind of afraid right now, there is competition, nobody is make much money. Revenues are down. A lot of people say to us, well you know, we should recognize actually less of the economy, we should be just focused on keeping our heads down, serving our customers, this is not a time for warm and fluffy.

So the end of last year, we worked with Towers Perrin, and we did a 10,000 person new study. We just reissued the Carrot Principle actually, with this data. We wanted to prove that this is actually a necessity in a bad economy. We found that the recognition is actually more important in a time of insecurities, where we are worrying about our jobs, and about what is important to our organization, how we don’t get laid off. Communication is more important than ever. By recognizing people, bringing people up in front of their peers and telling them what great accomplishments they’ve had, is the most important way that we recognize and communicate what really matters most around her.

We found in short, that recognition is actually more important in a down economy to keep our people engaged.

Dr. Relly Nadler: It kind of makes intuitive sense, but I think it’s the kind of thing that easily gets moved aside. Let me just highlight a couple of things that you said, for our audience.

  1. It has to be very specific.
  2. It has to be tied to the goals that people have as far as the organization goes.

Adrian Gostick: We found this out, actually Disney, a friend of ours, Dee Hansford, worked at Disney for many years. More than a decade ago now, on their 25th anniversary of the parks, the corporation was giving no raises out system wide. Dee took over the recognition sort of training and system.

She had 6,000 managers for the Disney organization and she brought them all together and she taught them that they should never, ever say two words to their employees. Those words are good job. Unless they are followed by very specific praise. She said because, managers were walking by the part attendants and saying, “hey, good job Steve.” The response was, yah, yah, no good son of a #@%*$$^^. It wasn’t a positive thing. The manager didn’t know what I was doing, I’ve got eyes in the back of my head, I’ve got kids with cotton candy grabbing me, the rides are breaking down, I’m keeping everybody smiling and laughing, and he walks by and says, great job? He has no idea what I do around here.

As they started implementing this, it became quite powerful. They started saying, “Steve, thanks for keeping everybody in your line when the ride broke down. You were making them laugh and telling jokes.” “Rosemary, we could eat off of these floors here in the restaurant, the health department is going to love this.”

They started getting specific with their praise; employee engagement just soared through the roof. I know it sounds like a simple thing, but rare is the manager that actually does this.

You can listen to the complete interview, above.



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