The Carrot vs. the Stick

Companies finally seem to be catching on that honey is more effective than vinegar in engaging employees and stimulating strong job performance and staff retention.

When I was in a sorority at the University of Alabama in the mid-1990s, much was made of continuing to “rush” the young women admitted to our organization even after they had joined. It wasn’t enough to get them to join our sorority. There was an emphasis on continuing to sell our organization to them to retain membership. Hazing of sorority and fraternity members on our campus was a common occurrence, and stories abounded of young women and men who lived in fear of upsetting the decision-makers in their organizations. Despite the prominence of these stories of intimidation, it seemed that what kept members was satisfaction rather than anxiety.

The same is true in corporations. It’s common to hear stories of companies that demand a super-human commitment. Employees are expected to work all days and hours, and are under constant threat of job loss. But the stories that are most impressive, and the greatest predictors of success, are those of companies that show employees they are well cared for and secure.

High-profile companies are picking up on the value of marketing themselves as good, ethical employers. I saw an ad in The New York Times recently in which Amazon promoted its support for a higher minimum wage. The ad linked to this page, in which the company shares that more than two years ago it raised the starting wage of all of its employees to at least $15 an hour: “We’ve seen the positive impact this has had on our employees, their families, and their communities. Since then, we’ve been lobbying Congress to increase the federal minimum wage—which has been stuck at $7.25 since 2009.”

Shortly after seeing that ad in The Times, I noticed the news that Costco will raise its minimum wage to $16 an hour: “‘At Costco, we know that paying employees good wages and providing affordable benefits makes sense for our business and constitutes a significant competitive advantage for us,’” the article, by Michael Corkery, reports a Costco executive as saying during a Congressional hearing.

These two major companies are focusing on providing for their employees in positive ways rather than ruling like tyrants. I have been hearing for a while about the growth of this carrot-versus-the-stick approach. But it’s a relatively new development. When I started writing for Training in the fall of 2005, one of the first topics I wrote about was forced ranking in which managers are forced to rank employees, who in some cases do entirely different work, against each other to determine which should go first if layoffs are necessary. The approach seemed brutal—and foolish—to me. If you have just the number of people you need for each job function (and haven’t over-hired to begin with), then it would seem that only a poor performer would be useless weight on the payroll. If you have well-thought-out job roles, then if you eliminate someone, you would have to replace that person or risk overburdening another employee with the outgoing employee’s responsibilities. If a company had so many employees in each job role that it was likely it could do away with some of them if necessary, the question arises as to why all those extraneous people were added in the first place.

More importantly, the forced ranking approach likely creates a culture in which employees know they are pitted against one another, and act accordingly, looking for ways to outdo—and undercut—colleagues.

Forced ranking is just one example of how companies would commonly create a hyper-competitive, brutal culture with hopes of scaring employees into strong job performances. My guess is that while this approach may have stimulated short-term strong performance, over time, it did not work. Employees likely became burnt out from the pressure after as little as a few years, and would look for new opportunities.

Companies finally seem to be catching on that honey is more effective than vinegar in engaging employees and stimulating strong job performance and staff retention.

Smaller organizations also are catching on. Last week, I discovered that a healthcare organization, which I report on for another publication, for the first time offered daycare services at one of its (pre-COVID) events. The doctor, who participated in that event, said it impressed her that the organization cared enough about its employees and members to do that. Her commitment to the organization was strengthened.

How can your company offer more tender loving care to employees? Are you afraid of doing so for fear of turning your employees soft? If you already are offering ample TLC, are you doing enough to make employees aware of the many benefits and extras you offer to make their work lives—and even personal lives—better?

When employees see you care, they want to do a good job for a company they are excited to work for, that has values they support. Employees who are treated well are likely to reflect the kindness with which they are treated back to your customers. Abused employees are likely to abuse your customers. Fear may keep them in line, but not in a way your customers will appreciate.

How do you show employees your organization cares, and is interested in treating them well, rather than keeping them in line via fear?