The Carrot Principle

Seth’s Takeaways

MOGUL ADVISORY GROUP

November 23, 2010

Authored by: Seth Olson
 The Carrot Principle
Seth’s Takeaways

Study Results show that when recognition is considered effective, managers:

1. Have lower turnover rates

2. Achieve enhanced business results

3. Are seen as much stronger in what we call the Basic Four areas of leadership:
a. Goal Setting
b. Communication
c. Trust
d. Accountability

 Some estimates to replace a departing employee range up to a stunning 250 percent of that person’s annual
salary.
o Just a 5 percent increase in employee loyalty can increase profits by as much as 50 percent.

 Leaders should see missions and goals as verbs, not nouns.

 Leaders who effectively communicate:

o Set clear guiding values and goals
o Discuss issues facing the company and the team-not just the big decisions and announcements
o Pass on all useful bits of information to employees, especially those that involve change initiatives
or that personally affect employees
o Make time for employees and listen intently when they express opinions and concerns
o Welcome open discussion from team members about rumors they hear
o Respond promptly to team member requests for more information
o Go up their own chain of command to fill I the details they don’t know
o Introduce employees to other key individuals in the organization, sparking dialogue
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o Give employees online access to relevant databases

 A leader who is trusted:

o Publicly owning up to his mistakes
o Keeping her word and commitments
o Surrounding himself with people who can be trusted
o Consistently taking the high road in ethically gray areas
o Refusing to participate in any level of deception
o Actively contributing to the positive reputation of the firm.

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  We communicate to the masses, but we manage to the one.

Pg. 45: Messages sent by the Manger and how they are received:

1. I saw how you helped that customer

o My boss notices what I do
2. This is a perfect example of our value of
o I belong to a firm worth working for.
3. We have another reason to celebrate as a team
o We are winners and we are winning
4. This really is one of your strong points
o I have pride in my work and can do even better.
5. I know you can accomplish this
o I can do this and will be rewarded for my hard work
6. I’d like to thank you for five years of extraordinary
o This is where I belong
7. Thanks for staying late to get that out
o I’ll do anything to help the team succeed.

Pg. 56-57 Altruists: were found to have cared instinctively about their employees as individuals and took the
time to find out what motivated each. They also recognized more often and were prompter in celebrating great
behavior, and that made their efforts vastly more authentic with employees and much more successful in spurring
greater achievement.

 Altruists:
o Have a deeper understanding of and higher regard for the underlying human need for
recognition in their team members.
o Are compelled to improve the overall lives of their employees and in turn reap greater loyalty,
respect, and trust from their people.
o Are able to achieve better performance for the company than Expector managers and non-
recognizing managers, but that is secondary to their sensitivity toward the individuals in their
charge.
o Are either driven internally or influenced by a senior leadership group that uniquely cares for
their people and gives managers the tools to effectively recognize. The Carrot Principle | 11/23/2010

Today’s Employees Are:

1. Insecure
o Working hard doesn’t ensure success
o They have no assurance of job stability, promotion, or pay increases.

2. Stressed
o They face pressure from “productivity” and increased competition
o Insecurity fosters the idea that performance is never enough
o They are working harder than ever before.

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 3. Discontent
o More than 50 percent of workers are dissatisfied.
o Less leisure time increases reliance on work for fulfillment
o Intrusion of work into home life creates resentment
o Employees feel a lack of empowerment

4. Disloyal
o More employees today view work merely as a job
o Employment is viewed as temporary, and employees are often on the lookout for better work.

Pg. 65 Effective managers create work-life success for their employees when personal goals are
linked to work well-being.

Pg. 67 Rational-based management vs. Emotional-based management:

 In a rational based system:

o Employees give to the company only when the company offers something in return (for
example, in exchange for compensation, employees give to the company only the time and
effort required by their contract – sometimes less but never more)
o When nothing more is offered by the company, nothing more is given by the employee (since
the company is free to lay off an employee at any time, employees feel no loyalty and follow
the highest bidder).
o If the employer takes anything away, the employee makes a corresponding reduction in
contributions (for example, when an employee is charged for parking that once was free, he
may feel justified in taking a longer lunch or spending more time sending personal e-mails).
 With emotional-based management, a leader is aware of each employee’s desire for self-
realization. She understand that each employee seeks to accomplish goals inside and outside work time
and to that end, tries to offer the right work assignments, skill development, increased responsibility,
and advancement.
 Recognizing and developing the potential of individuals is the real path to leadership.

Pg. 75: Managers who invest in choosing relevant awards suddenly find themselves becoming much
more relevant as well.
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Pg. 79: Satisfaction and Engagement:

 A satisfied employee is happy with current pay, benefits, and atmosphere – so happy, in fact that he may be
reluctant to change the status quo through initiative or achievement.

 Engaged Employees demonstrate the following qualities:

o Innovation and creativity
o Taking personal responsibility to make things happen
o Desiring to contribute to the success of the company and team
o Having an emotional bond to the organization and its mission and vision.

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  3 Priorities on Management lists:
o Engagement
o Attracting and retaining talent
o Building Leaders

 Engaged employees give their all to achieve company goals. They are your above-and-beyond performers,
your go-to people. We certainly want more like them. But they too have a dark side: they are the most
sought after people you have. With so many career options open to them, engaged employees are most
likely to be the first out the door if they are unhappy with salary, management, or resources.

 Engagement and Satisfaction can’t work alone by themselves, must incorporate both.

 Pg. 87: Strong Indicators of Employee Engagement

o Employees in my department consistently put in extra effort beyond what is expected
o Employees in my department are highly motivated to contribute to the success of the organization
o Employees in my department consistently look for more efficient and effective ways of getting the
job done.
o Employees in my department have a strong sense of personal accomplishment from their work.
o Employees in my department understand how their roles help the organization meet its goals
o Employees in my department always have a positive attitude when performing their duties at work.
o My manager does a good job of recognizing employee contributions.

 Pg. 87-88: Strong Indicators of Employee Satisfaction

o At work, I have the opportunity to do what I do best every day.
o My performance is evaluated in a manner that makes me feel positive about working
o Conflicts are managed in a way that results in positive solutions.
o My opinions seem to matter to my manger.
o My managers share all the information my coworkers and I need in order to feel part of the team.
o I receive the information I need to do my job.
o The organization has developed work/life policies that address my needs.
o I trust my immediate manager.
o During the past year, communication between leadership and employees has improved.
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o My manager does a good job of recognizing employee contributions
o I have recently received praise for my work.

Pg. 100-124 The Building Blocks of Recognition:

 Day-to-day recognition
o Frequent – every seven days
o Specific – unique to the person / persons – more valuable *see 105-106 for example*
 General praise has no impact
o Timely – to reinforce the right behaviors, we must reward them in a timely fashion.

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  Above-and-beyond recognition: 86% of workers aren’t willing to go the extra mile.
o Pg. 111 Value, Impact, Personal to reduce the % of workers not willing to go the extra mile.
 Value Awards should be presented for:
 Significant achievements: great performances, excellent results, and actions that
further your team or organization’s core values.
 Ideas: generating a cost-saving or improvement idea that provides real financial
benefit to your organization
 Sales: Achieving overall or area sales targets, winning new accounts, retaining
your best customers, upgrading existing customers, selling a specific product,
and so on.
 Impact:
 The perceived value of the award equate to the impact of the achievement – at
least symbolically.
 To have impact, an award should fairly represent the impact of the achievement.
Assuming it does and assuming that during its presentation you link the impact of
the person’s accomplishment to the company value demonstrated, you are two-
thirds the way home. All you need to remember is the third component
(personal)
 Personal
 Everything should be about the person, find an award that matches the
employee’s interests, tastes, and sensibilities.
o Employees value input from their direct supervisors more than direction
from anyone else.
o Tell a specific informed story about the accomplishment:
 Situation
 Action
 Impact
 Link to company values
 Pg. 117:-123 Career recognition
o You’ve been here three months now. Let me ask you, have we lived up to our promises to you?
After all, when we recruited you, we told you that this would be a great place to work. We said
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you would do cool things, work with fascinating people on fun projects. Are we what we told you
we would be?
o What do you think we do best here? I think I know what we do best, but you have a fresh
perspective. I want to know what you think we do best.
o At your other jobs, I’m sure you saw things that worked really well. Is there anything you’ve seen
elsewhere that we might be able to use here to make our company better?

 Celebration events

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Pg. 125-138: Reasons as to why we don’t recognize

 “I’m afraid of jealousy if I recognize”

 “It’s too easy to be inconsistent”
 “If I recognize too much, it will lose meaning.”
 “I don’t know what to give for what achievement.”
 “We catch up with them at raise time.”
 “Why would I recognize them? Aren’t they just doing their jobs?”
 “They want only cash as a reward”’
 “My tax department says we need to report the cost of an award on the employee’s W-2 and then withhold
taxes.”
 When I recognize above-and-beyond behavior, it’s most often outside their job scope. I’m more interest in
driving performance within their job scope.”
 “She already gets too much recognition.”
 “Employees say they’d be embarrassed if I recognized them.”
 “I don’t know how much of my budget to allocate to recognition.”
 “We’ve tried this before. We had a recognition program that started well, but it lost momentum.”
 “I don’t want to recognize someone in one area of their performance when they aren’t living up to
expectations in other areas.”
 “I tried handing out movies tickets for recognition, but my employees got sick of them.”
 “I don’t have time to recognize.”
 “Professionals don’t need recognition. If I need to recognize my employees, then I hired the wrong people.”
 “I’m good at recognition already.”
 “I don’t want to play favorites.”
 “I don’t want them to lose respect for me.”
 “They’ll be suspicious of my motives.”
 “They’ll ask for more money.”
 “They’ll expect more recognition.”

Page 196; in the beginning, recognition can feel awkward, disorienting, unnerving. But our advice is to keep with it.
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Start by writing a few handwritten, specific thank-you notes at the end of the day today, and see how they are
received. Start by calling your employees together once a week and presenting an award to someone who has gone
above and beyond. Start by making a great formal presentation of the next service award in your group.

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 Predictors of Engagement

Predictors of Engagement

1. Opportunity and Well-Being

a. My organization’s management is interested in the well-being of
employees.
b. I believe I have the opportunity for personal development and growth in
my organization

2. Trust
a. Management trusts the judgment of people at my level in my organization.
b. I trust my immediate supervisor.

3. Organization Symbol
a. I feel a strong sense of pride when I see our organization symbol/logo

Page 156: Contributions to Recognition (Like Image Above)

Page 165-171: The Carrot Calculator: How to determine the following:

 Level: What level of award is appropriate for what behavior?

 Spending: How much you should budget for recognition?
 Awards: What creative rewards can you offer for excellent performance?
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Page 172–191: 125 Recognition Ideas

 Goal Setting
 Communication
 Recognition
 Communication (continued)
 Trust
 Accountability

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 Reference Page (Pages I Noted)

Pages:

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 62-63
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 68-70
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 80-81
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 87-88
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 100
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 106
 108
 110-113
 116-117
 119-121
 126-138 The Carrot Principle | 11/23/2010
 141-161
 166-171
 174-193
 195-196