Motivating Employees: Carrots Beyond Salary and Benefits
Praise, recognition, incentives aid in achieving results
Almost all managers have heard (and likely used) of both carrots (rewards and recognition) and sticks (punishments or censures) as methods to work with your employees. In this column we draw on a recent book entitled, The Carrot Principle, by Adrian Gostick and Chester Elton who base their recommendations on a 10 year study of 200,000 managers and employees — where they state that top managers (as measured by performance of their firms on Return on Equity, Return on Assets and Operating Margin) rely more heavily on the use of recognition to engage their people, retain talent and accelerate performance. Their data and suggestions are convincing, and below we highlight some of their findings and add some of our thoughts on possible applications in your grain elevator or feed mill. Their book is well worth reading and we find the lessons are applicable to both large and small businesses.
Almost, closer, nearer
Gostick and Elton start out by stating that a manager who sets clear goals, communicates openly, respects people and creates trusting relationships — almost has it right. They further posit that a firm where people are coming to work on time, doing their job and feel satisfied — is close to achieving its full potential. Finally, they talk about management theories which promise to transform your business from ordinary to extraordinary, which will push you nearer to your goals than ever before. But — they argue that “almost there” is a frustrating place to be — and that you need what they term an “accelerator,” and that this accelerator is purpose-based recognition.
The authors quote a statistic that 79% of employees who quit their jobs cite a lack of appreciation as a key reason for leaving. Their solution to this issue and a better strategy to motivate and retain employees is to use "carrots," which they define as something used to inspire and motivate your workforce. Their comprehensive research shows that when employees know that their strengths and potential will be praised and recognized — they are significantly more likely to produce results.
Gostick and Elton cite a study first conducted by Lawrence Lindahl in 1949 — who researched human behavior at work — and which has been replicated several times since. In these surveys, managers were asked to name what they thought employees wanted and then this was contrasted with a similar list prepared by employees. Every time, managers guessed that good wages and job security would top employee lists, but their people always cited “feeling appreciated” and “informed.”
They go on to write about a Watson Wyatt Reward Plan survey of 614 employers who employed 3.5 million employees. This study found that the average turnover rate of employers with a clear reward strategy was 13% lower than that of organizations without one!
Leadership is key
Gostick and Elton discuss leadership quite a bit. They offer some interesting insights, and outline what they call the “Basic Four” areas of leadership. They cite their 200,000 person study, and report that it confirms that managers who achieve enhanced business results are significantly more likely to be seen by their employees as strong in: goal setting, communication, trust and accountability. We will not discuss all of these areas, but there are some nuggets of wisdom we will pass on.
Communication within your feed and grain company is going to happen with or without your active participation as an owner or manager. Employees are talking about customers, processes, rules, office romances — everything — and all the time. So if you fail to constantly and openly communicate about what your firm is and what is important — the conversation does not stop, you just aren’t a participant, much less leading it. Thus, you need to communicate regularly and openly to keep things on track. Do this in-person, via e-mails, with company newsletters and via mid-level managers.
The authors state that a good place for managers to start the process of building trust is by becoming more visible to employees. Getting out of the office and mingling with employees is a simple solution to a very common trust problem. One of our favorite quotes from the book is this: “The things that keep us in our offices are nowhere as important as open communications with employees.” We’re sure many owners and managers in the grain and feed business practice this strategy — but it can certainly be improved. Making a commitment to spending an hour or two each week talking to your truck drivers, feed grinders and grain receiving personnel can pay big dividends. Talking to them on their turf — in their area of operations — allows you to not only show interest, but see things from their perspective.
Perhaps a workable approach here would be to make a list of 20 to 30 questions, and go through them (a couple at a time) each time you visit their work area. Questions can focus on their physical job, or can be more probing regarding their relationship with you and your business. Example questions might be:
1.) Are there any problems or bottlenecks that are causing issues for you?
2.) Who is your favorite customer to deal with and why?
3.) If you were the boss, what changes would you make in your area?
4.) Is there a product or service which you think our business would benefit from carrying or offering?
5.) Why do you like working here? And, don’t forget that these employees can be a key source of insight on customers and competition, and may well have these insights long before they hit your radar.
The building blocks of recognition
In their book, the authors outline four of the most common forms of recognition, which they say “make up the backbone of a healthy recognition culture:”
Ideas here include handwritten notes, small gift certificates, flowers when appropriate, or fruit baskets. Elon and Gostick call these “low-cost, but high touch” recognition. A useful tool they put forward is a recognition frequency log, reproduced in Table 1 below.
Table 1. Recognition Frequency Log
Recognition Frequency Log
Example: Jim Porath
Dealt with tough customer issue
Had great cost-savings idea
Source: Gostick, Adrian and Chester Elton. The Carrot Principle
Another useful chart tool they provide for managers is one which allows you to get to know your employees — their strengths and individual motivators, as outlined in Table 2 below.
Table 2. Employee Strengths and Motivators
What is most important to this person
Strengths to develop
What forms of recognition and awards does this person value?
These tools may seem overly simplistic. But, given the hectic pace of today’s feed and grain business and the demands on your time, it is virtually impossible to know when you last acknowledged an employee, what every employee’s preferred form of recognition is, etc. And, these tools keep you from just missing entirely the employee who is never on your radar, but just does a solid job (quietly) day after day.
Above and Beyond Recognition
Employees who go above and beyond should be rewarded with a more formal response from your company. Examples might be implementation of a novel or cost-saving idea, achieving a sales goal or providing exemplary customer service. Recognitions or rewards here might be a plaque with your company logo combined with a cash award (see the How Much to Spend.. and on What? section below for more detail).
Give some thought to implementing a recognition program for your employees on the anniversary of their hiring date. The authors state that this is the most underutilized vehicle for recognizing and engaging your employees. The simple act of recalling an employee’s hiring date provides an opportunity to put a spotlight on every employee. Just make sure it stays personal — turning this into a ‘form’ celebration devoid of any personal attention will soon undermine any motivational value.
Find reasons to celebrate — it is fun and will motivate your workforce! Events might be company anniversaries, achieving record results or completion of an important project, and new product launches. We have seen companies rally around service projects such as raising funds for a children’s charity, participating in a 5k race that is a fund raiser, or working at a food pantry. While not strictly a celebration, the chance to work together on a worthy cause can be a source of pride and real accomplishment, and is great PR for your feed and grain firm.
Gostick and Elton have a great section of their book entitled “Carrotphobia,” where they elaborate on why some managers do not put forth the time and effort to recognize employees. We thought a couple of these managers’ reasons and the authors’ responses were worth highlighting:
“Why would I recognize them? Aren’t they just doing their jobs?” The authors counter that recognition gives employees that extra push they need to do their jobs even better. “They already get too much recognition.” Elton and Gostick characterize high performers as “recognition sponges.” They warn that you should not stop praising these employees... or they just might stop doing what it is you value! “I don’t want to play favorites,” countered by the observation that when you start recognizing performance frequently, the authors point out that you will find it easy and that nobody feels left out – and that it motivates others to seek similar recognition. And finally, “They’ll expect more recognition.” Yes they will say the authors — and when recognition is provided regularly, employees stick around for seconds and thirds — turning out even better results. And, they ask — this is a problem (not)? They sum this chapter up with a quote from a senior business manager: “To be effective, individual recognition should be frequent, specific, timely and public.”
Frequent, specific and timely
Gostick and Elton found in both their North American and global data that effective recognition is frequent, specific and timely. Their survey showed that these factors were most key: recognition must be aligned: it is given frequently to those who are acting in accordance with the clearly articulated goals of their business. Secondly, they found that recognition is best when it is performance based — meaning it is based on specific goals that everyone understands (not favoritism). Finally, they found that recognition needs to be meaningful — awards and/or kudos are presented in a timely manner. This means they are given close to the date of accomplishment and are given in a sincere public ceremony.
How much to spend... and on what?
We hope that you buy into the concept of recognizing and rewarding your employees. The Carrot Principle provides some tools you might utilize to implement a recognition program in your feed or grain business:
1. Level of Recognition broken down into rewarding employee behavior measured as:
a) a small step toward living their (and your feed and grain company’s) values (called “Day-to-Day awards below);
b) a one-time above and beyond action which makes your firm more successful;
c) an ongoing above-and-beyond demonstration of your firm’s values or
d) an action, project or behavior that has a significant impact on your bottom line.
They also suggest some possible annual dollar amounts per employee, to coincide with the several of the levels listed above:
Day-to-Day small step awards = $0: EX: handwritten notes, verbal praise;
One Time Above and Beyond awards = $100 to $200 annually. EX: movie tickets, coffee certificates;
Ongoing Above-and Beyond Awards = $250-500 annually EX: Weekend getaway package, fruit-of-the month award from a catalog company, or perhaps large personal item that can be used with the employee’s family — gas grill, ping-pong table, etc.
2. How much to spend? Gostick and Elton suggest that a place to start for recognition is to spend about 2% of payroll.
3. Regarding awards, rewards and recognition, The Carrot Principle has a super list of 125 ideas that managers can use for praise and recognition. A couple that we liked were:
a) For their recognition, write down the person’s accomplishment and make copies — and tuck them under the windshield wipers of every car in the parking lot.
b) Bring something back from your next business trip for each employee as a thank you.
It doesn’t have to be expensive, just thoughtful.
Carrots — not just for better eyesight!
Rewards, recognition, awards, praise and gratitude can certainly go a long ways to improving the bottom line for your grain and feed business. And, many of these carrots are low cost, but offer much upside in terms of employee attitude and performance. Recognizing employees should become a habit — just something you do automatically when employees have done something worthy of praise — big and small. In addition, this is a habit that will be contagious. When you recognize employees, you are modeling that habit for others. And, we bet it won’t be long before your direct reports pick up this very good habit. We hope we have generated some ideas on your part that will help you motivate your employees to do their best and will also improve their performance and retention in your business. Carrots are great motivators — and can help you see your way to increased success!