Credit Congress General Session Highlight
Biting Into
The Carrot Principle
E
ffective management essentially boils down to
effective motivation. A well-motivated employee
will be happier, work harder and accomplish more in
less time than an unmotivated employee, subsequently
leading to an overall acceleration in company performance. The process of motivation, however, can stifle
even the most experienced managers.
Motivating someone typically involves rewarding them
for jobs well done. Many companies, and many individuals, operate on the concept that cash is king, but as a
reward, money can often have only a limited effect. “The
fact is that money is not as powerful a reward as many
people think,” said Adrian Gostick and Chester Elton in
their bestselling management tome The Carrot Principle.
“While pay and bonuses must be competitive to attract
and retain talented employees, smaller amounts of
cash—anything short of $1,000—will never make the
best rewards because they are so easily forgotten.”
According to Gostick and Elton, the best managers
know that an effective reward has to have a long-term
effect rather than just a short-term boost. It needs to
accelerate the speed of performance on an ongoing
basis, much like the many accelerants used in various
chemical processes. “Scientists have known the secret of
accelerants for decades, adding them to speed up chemical reactions, achieving results more quickly,” said Gostick and Elton. “Accelerators work the same way in business, making the things you’re doing work better, faster
and more smoothly without throwing you (or your
organization) off balance.”
In The Carrot Principle, Gostick and Elton propose that
it isn’t money that accelerates and motivates workers;
it’s recognition. “It may sound like magic but it isn’t,”
they said. “The relationship between a management
accelerant and improved business results is highly predictable. In fact, an accelerant is the missing ingredient
General Session is on Monday, May 17
from 8:30–10:45am.
Copies of Chester Elton’s book are available through the
NACM Bookstore (order early to avoid lines on-site!). Be sure
to purchase and bring your copy to the NACM booth in the
Expo Hall immediately following the opening General Session.
Meet Chester, and have your copy autographed...a wonderful
keepsake from the conference.
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B u s i n e s s C r e d i t feb r ua r y 2 0 1 0
that will bridge the gap between where your team is
now and where it can be. And in the workplace, there is
no accelerator with more impact than purpose-based
recognition.”
Gostick and Elton show throughout their book that recognition can have tangible, positive effects on a company’s bottom line, citing eye-opening results of a
10-year study of 200,000 managers and employees that
illustrates the direct correlation between recognition
and return-on-equity (ROE). “In response to ‘my organization recognizes excellence,’ the organizations that
scored in the lowest fourth overall had an average ROE
of 2.4%, whereas those that scored in the top fourth had
an average ROE of 8.7%,” they said. “In other words,
companies that most effectively recognize excellence
enjoy a return that is more than triple the return of
those that do so the worst.”
Companies and managers looking to take advantage of
this research can find concrete tips and strategies in The
Carrot Principle, which essentially amounts to an easyto-read master class on effective management, taught by
two of the field’s most dynamic and intelligent professors. “The simple but transformative act of a leader
expressing appreciation to a person in a meaningful and
memorable way is the missing accelerator that can do so
much and yet is used so sparingly,” they said. “If you’re
tired of almost achieving your potential, if coming close
isn’t nearly good enough anymore, let’s shift things into
high gear.”
“Get ready to accelerate.”
To find out more about how you can use recognition
to become the best manager you can be, don’t miss
Chester Elton, co-author of The Carrot Principle, at this
year’s Credit Congress General Session! ●