Balancing the Power of ‘Carrot and Stick’

January 5, 20171:48 pm5341 views

Which one is more powerful to boost employee productivity? Alluring them with high incentives? Or threatening them with postponed promotion? Using the term ‘carrot and stick’ might sound slightly outdated now. Nevertheless, most companies still use the concept as part of their strategy for employee development.

Originated from manager’s complaints on how employees are, lack of motivation, initiatives, and commitment, carrot and stick is an idiom commonly used to refer to the practice of providing rewards (carrot) and giving punishments (stick) to stimulate employees.

Through time, it seems that leaders tend to emphasise more on the carrots than the sticks. This means that rather than using threat, scolding, and reprimanding, employers prefer offering incentives, bonuses, benefits, and recognition to motivate employees. By using this strategy, employers can expect that employees will try harder to meet business goals.

However, there are cases wherein employees are not motivated even with these lures. Despite high incentives and bonuses allocated for success in accomplishing certain target goals, it seems that money is no longer the main motivator for people to move forward. Instead, research conducted by John List suggested that employees will work harder to avoid loss than to seek gain.

It means that the fear of failing or losing something, works better to trigger their willingness to perform their best rather than the desire to achieve something. At some point, people are more affected by negative reinforcements than positive plea. For example, people avoid speeding up due to the fear of getting speeding fines, rather than motivation by safety.

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During the period of economic downturns, too many carrots and less sticks will only spoil the employee. On the other hand, less carrots and too many sticks will be bad for company reputation as well. Thus, balanced implementation of carrot and stick approach is needed for every business to sustain during times of uncertainty. Here are some points on how HR leaders can achieve the much-needed balance:

First, align them with your business goals. What do you have to gain from implementing a carrot and stick strategy? What problem do you intend to solve? What is the benchmark that justify the systems? Before making decisions on particular reward and punishment, make sure that the carrot and stick approach to be implemented is in line with business goals. Bear in mind that each reward and punishment should be something that will increase employees’ quality.

Second, communicate the system clearly. Have you communicated the approach with the whole team clearly? What are their reactions? When a system is established, it is important to socialise it with everyone in the organization. The strategy will only succeed, when everyone understands the true meaning behind the change. Give clear directions about what employees should and should not do as well as the consequences of their actions. Accept positive feedbacks and enlightening inputs for the greater good.

Third, evaluate the impact and note the progress. Does the new system work well? How does it improve employee productivity? Are there any resistance to change? Some people work well under pressure, while some others cannot handle it. Thus, it is critical for HR leaders to note progress, employee development, productive outcomes and evaluate the impact of the strategy.

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