Manager's Tools: Newsletter

Get measurable results with The Carrot Principle

October, 2009

Oh, we remember the cooing. The cute little burps and hiccups. It seems like just yesterday we started with a baby carrot. But today our little baby is now in the real world, creating real results.

It was five years ago when we held our first Carrot Culture Summit in New York. Quite honestly, we weren’t sure if anyone would show up for that first event. Of course, we were thrilled to have more than 100 executives attend, even though it was little more than positive affirmation that the ideas in The Carrot Principle could work.

Did they work? Fast forward five full years to a few weeks ago—business leaders from around the world met in Boston for the fifth annual Summit. And this year, it was all about results—dramatic business results that organizations are seeing from living The Carrot Principle.

Ned Lidvall, CEO of Friendly Ice Cream Corp., and Cheryl Hutchinson, Friendly’s senior director of human resources, kicked off the event with details on how the 500-restaurant, 13,000-employee chain differentiates in their very crowded market.

Said Ned, “Every restaurant has a chicken Caesar salad. The way to win in a sea of sameness is to capture the hearts and heads of your people. You can’t pay people to be creative and passionate. You must create a culture that inspires behaviors through recognition.”

Cheryl added to that comment, saying that her organization turned to Carrots after an eye-opening employee survey in 2004, which showed a majority of workers did not understand the big picture, did not feel thanked for their efforts, and did not feel their manager cared about them.

It’s stories like this that have cultivated growth—both of The Carrot Principle and the organizations who have become our close friends.

Back then, the executive team at Friendly Ice Cream Corp. agreed that a change was in order, but most thought cash rewards would work best. Cheryl put her foot down. “They thought cash was king. They said, ‘Just give them cash or a $10 gift certificate.’ I asked them if they still had a box of trophies in the attic from high school? Yep, everyone did. The items in those boxes tell a story. That’s what recognition is. We want to have something that helps us remember our achievements.”

Cheryl then developed a recognition solution that connected to real business results—such as guest recovery and teamwork. And the results have been outstanding, including a 40-point upswing in trust levels on their employee surveys, not to mention stronger sales, higher guest counts, less guest complaints and lower employee turnover.

“The cost savings from reduced turnover alone funds recognition at Friendly’s,” said Cheryl. “How can you afford not to have a recognition program? It accelerates business results.”

Is that the full scoop? No way. The stories at the Summit continued to pile up.

Charlie Wall, senior vice president for United Water, reported that he is using The Carrot Principle in his 2,600-employee organization (1,800 of which are unionized). The principles are helping drive annual revenue growth of 17.5 percent a year (while revenue for its peer group has been dropping at a double digit rate). Gladys Williams-Tillman, vice president of training with insurance giant Aflac, reported how Carrots recognition training has positively changed their culture and is helping develop the next generation of leaders.

And then, there was the really big story, from Tom Stuewe, senior vice president of North American operations for call center giant Sutherland Global Services. At his 24,000-employee firm, Tom said nothing is as important as attrition. “If attrition kills in most industries, in ours it’s a homicidal maniac.” Why? Because if a call-center employee doesn’t show up, no revenue is earned and no customers are served.

Tom admitted that a 2007 employee survey showed too many Sutherland workers were actively disengaged on the job and dissatisfied with Sutherland as a place to work—certainly leading to high attrition rates.

Call it what you will—luck, smart marketing, smart observation, or destiny—Tom found us during a stopover in an airport one day. He was browsing in Hudson Book and stumbled onto a copy of The Carrot Principle. Tom quickly surmised that this is what had been missing from his organization. “We made it mandatory to read The Carrot Principle,” he said. And the corporation quickly introduced a recognition program tied to their corporate values. “To say we embraced recognition would be an understatement.”

Okay, that’s a cool story-a mere circumstance. But, we all know a good romance doesn’t last unless the moment of intrigue turns into something even better. And, in Tom’s case (and Sutherland Global’s case), it did.

Tom says their six-figure investment in recognition has been paid back 20 times—with more than a $5 million return. “I am amazed at the difference in our company in the last 18 months. People are happier. They don’t put their heads down when you walk by now. There’s a palpable change to enthusiasm levels. And employee survey results show a dramatic increase in just the first year measured: an 11 percent increase in employee ratings of Sutherland as a Great Place to Work, a 13 percent increase in employee loyalty, and a five percent drop in actively disengaged workers.” Survey firm Gallup was “floored” said Tom. “They called our change almost unprecedented.”

Not only that, Sutherland’s monthly attrition has dropped from eight to six percent, paying for the recognition program many times over. “No one can argue with our cost reduction gains,” said Tom. “The numbers come from finance. And they are more than 20 times what we invested.”

Tom summarizes: “Treat your people well, put a recognition program in place, and hold your managers accountable for using it.”

“Ahhh.” (That’s our sigh of pride—watching our baby carrot go out into the real world and help companies and people impact change.)  Yes, Carrots is playing with the big kids now.

Nevertheless, there’s still plenty of room for growth. We’re hoping that with results like these, many more managers (like you) will find that wavy green hairstyle, those bright shiny eyes, and that perfect orange skin hue, extremely attractive.