Adrian Gostick

Had an interesting interview yesterday with Braden Kelly of Blogging Innovation. I thought you might find it interesting.

1. Do you feel that companies should incentivize innovation?

Absolutely. We studied 200,000-people for The Carrot Principle, and a simple truth we found in that data is that people do more of that which is rewarded. If you want great customer service, you find, reward and publicize people who go above and beyond in serving your customers. If you want innovative products, service and solutions, you reward that behavior. It’s a no-brainer, but rare is the organization that actually puts this in place in a formal way.

2. How do you recommend that companies think about incentivizing innovation?

Xcel Energy is a great example. This energy company in the West has 10,000 employees. They tried the old suggestion boxes, which got stuffed with gum wrappers and suggestions such as “why don’t you pay me more.“ Instead, they used recognition to drive great ideas. The year we studied the program, they saw 7,500 ideas come into the recognition-based innovation program, and more than two thirds were implemented for a $17 million savings to the organization. They recognized every idea that came in with a very small token. If the idea was accepted, it received a slightly larger recognition award. But if the idea was implemented and saved the company money, the innovation received a third, much more substantial recognition award (from a selection of merchandise awards), that was commensurate with the achievement. So they used recognition three times on great ideas, and the results speak for themselves.

3. What do you recommend that companies keep in mind when recognizing innovation achievements?

Don’t make things too complicated. A lot of recognition has to be approved by a committee and takes months. Give idea generators instant thanks. Next, make sure the awards are equal in value to the accomplishment. We’ve seen organizations where every idea gets a gift certificate to Dairy Queen (seriously). So the guy who comes up with the innovation that makes the company a hundred grand in new revenue gets the same reward as the person who cleaned out the supply cabinet. This happens all the time. Finally, make sure you are publicly recognizing your innovators. Many managers keep recognition in the shadows because they are afraid of jealousies on the team. Nothing could be more dangerous. Employees know who the innovators are on the team, and if you fail to recognize them you fail to show what we consider “excellence” around here. And you will eventually stop getting good ideas from your stars.

4. Anything you would like to say on the topic of recognition and innovation?

Be frequent in your praise as people are developing ideas. Keep letting them know their efforts are appreciated in specific ways. But when they achieve, make sure they get a reward. We praise effort, but we reward results. Get that right, and you’ll keep innovating on your team.

 

Before working with corporate groups, we’ll send out pre-surveys that ask employees to note the last time they were recognized. How would you answer that question? While we’ve shown in our research the most productive workplaces provide specific praise to their people every seven days, the majority of workers we survey say it’s been at least six months since their last public recognition moment, and about a third say it’s been longer than a year. Yikes!

One simple way to begin building a Carrot Culture is to remember that effective recognition is frequent. To hit that “every seven days” goal, your methods will vary from providing specific words of encouragement, to hand writing a note of thanks, to thanking a team member in a staff meeting, and so on.

Almost all of us understand the need for this type of frequent recognition in our personal lives, but we don’t translate this to our business lives. Think of it this way: Have you ever been in love? How often do you tell your significant other that you love them? In our personal lives, we tell those closest to us that they are important to us just about every day. We say it with three simple words, “I love you.”

At work, it’s even easier. We tell employees that they are important to us by saying just two words, “thank you,” about once a week. Now don’t get those two mixed up! But ask yourself, how often do you tell those that work with and for you that you appreciate them?

To illustrate this point, the amazing animator Sean Womack has put together a fabulous little film. It takes about a minute to watch, and I promise you’ll never forget the message.

Check out the world premiere of Don’t Say I Love You right now, and send this link along.

I did an interview yesterday with Rick Corrado, host of “The Independent Business Owner” show on VoiceAmerica’s Business Channel. I mentioned how a recognition award should fit the achievement, and Rick gave an interesting anecdote. Before becoming a successful entrepreneur, Rick said a good friend of his worked for a large corporation. The man was a rising star, and developed a new product that brought a whopping $6 million into the corporation. This fellow and his teammates were summoned before the CEO, who praised their efforts. But the CEO ruined the sentiment by rewarding them for their hard work with a company t-shirt.

Do you think this fellow or anyone around him ever went above and beyond again? Of course not. In fact, Rick says the star employee quit the following month. Instead of making this company successful, he went on to use his genius for his own benefit.
Obviously, all carrots are not created equal. In some cases, a t-shirt is a fine reward for a simple job well done. It is certainly possible to take an object of little value and make it more valuable. Remember how badly you coveted that gold star in grade school? The star had no value apart from what you and your fellow students gave it. By the same token, wouldn’t you prize a handwritten note of appreciation from your boss? We’ve seen handwritten notes and cards from supervisors posted on hundreds of cubicles and office walls throughout the world. Why? Because the recognition is rare and valuable. But for Rick’s friend, who had obviously gone well above what was expected in his position, a t-shirt was a poor reward. He wanted something lasting to remind him of that remarkable achievement.
We’ve heard the tale of the t-shirt/mug/coffee-card more than once. In fact, we often get called in after a hideous, large-scale award fiasco. Many companies want to make sure they never repeat the mistake.
The moral of this story is: To have the intended effect, a reward’s value should be an appropriate symbol of the employee’s effort and its outcome. Remember, value isn’t the only qualification for an effective award. Just as importantly, the reward should be tangible and memorable.
There are a lot of onions out there masquerading as carrots. A thoughtless award can leave a bad taste in an employee’s mouth.

Flipping through the July Special Report of Money magazine, it’s hard to miss the glowing Carrot on page 21. Tyler Cowen, professor of economics at George Mason University, has written an article that says to get your people working harder in this economy you’ve got to “dole out cheap carrots.”

Professor Cowen states, “Offering bonuses for superior performance works, but that’s not an option when your budget has been cut to the bone.” He cited a study by Kaisen Consulting, showing employees actually ranked “financial reward” as only No. 6 in a list of work motivators. “Far more important,” Cowen notes, “recognition and a sense of accomplishment. So ladle on the praise for a job well done.”
Well said professor.
The doctor also doled out some other advice to get your people to give their all. First, he said you must roll up your sleeves yourself. Next, he reminds us to create a sense of urgency with measurable goals and specific deadlines. And finally he says we must treat our people fairly.
While I agree with the idea that unfair treatment breeds resentment, I do question Cowen when he recommends we “fake” the “love” for employees we don’t like. I have 14 people who work in my group, and I can honestly say I like them all. When we have someone we don’t get along with on our group, there’s usually an underlying problem in communication and trust that must be addressed. I think a “fake it” approach puts our heads firmly in the sand.

The second edition of The Carrot Principle hits the BusinessWeek Bestseller list.

The authors, long devoted to the dissemination of “carrot culture,” are back, listing techniques for recognizing and praising the performers in an organization, the thing so many managers are afraid to do.