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Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited
DHL embraces the carrot principle
Article Type: Rewards From: Strategic HR Review, Volume 7, Issue 4
Short case studies that demonstrate best practice in rewards
DHL, the world’s largest express carrier, has successfully improved satisfaction, loyalty and motivation among 136,000 of its staff, leading to greater brand recognition and best of class status in many key areas of employee satisfaction for the company. And all this has been achieved through the use of carrots.
In DHL’s case, the use of “carrots” refers to the implementation of a recognition solution developed by global strategic recognition specialist O.C. Tanner. The program is based on the carrot principle – a strategic method for creating a culture of engagement and retention, as presented in the book The Carrot Principle, which was written by O.C. Tanner consultants, Adrian Gostick and Chester Elton (Gostick and Elton, 2007).
The carrot principle philosophy provides a tool for organizations to effectively recognize the contributions of all employees, resulting in a stimulated and motivated workforce that can drive the business forward. It does this by creating an organizational culture centered on its people, their recognition and results relating to business strategy. The effectiveness of this approach can be seen in the results that DHL has achieved in the pilot and US launch of its recognition program.
Turning to recognition to boost morale
Following the much publicized merger with shipping company, Airborne Express, in 2003, DHL’s management realized that it needed more active employee engagement and more effective communication from management in order to inspire the workforce to move collectively in one direction. Initial employee surveys indicated significant levels of disengagement and a feeling that there was a lack of communication from management.
DHL started to tackle its post-merger issues by defining the key goals it wished to achieve. Improved customer service was identified as a core strategy and around this the company developed its “I’m On It” campaign, which promoted DHL’s high energy, fast-paced service and workplace ethos. With the right strategy and the right marketing campaign in place, the firm realized that it would only be truly effective if its employees and management completely embraced this ethos. So DHL began evaluating the best way of making its key values equally important to each and every employee.
The company turned to O.C. Tanner’s carrot principle in order to unify the workforce by reinforcing common values and beliefs among all employees. It knew that its people, irrespective of what they did for the organization, needed to know where they fit in, what their purpose was, and how what they did contributed to the success of the company. Most of all, DHL needed to make it clear to all its employees what the company was trying to achieve and what the DHL brand and the “I’m On It” slogan stood for. The carrot program was a means of linking its values to behaviors, with the seven corporate values acting as the criteria for the new recognition program. Associating recognition with behaviors that exemplify company values and goals helps employs to understand the value the company places on them. The program was supported by web-based technology, offering an online peer recognition tool and a manager’s award system that prompts users to link recognition to corporate values.
Rolling out the “carrot culture” world-wide
The carrot principle approach was first trialed stateside in DHL’s IT department of 1,100 people, based in Arizona, where employee retention had previously been a serious issue. The trial program resulted in a decrease in staff turnover of 27 percent in the first six months. This showed DHL the potential power of the carrot principle philosophy as a tool with which to positively impact employee morale, loyalty, engagement and satisfaction.
As a result of this success, the carrot principle program was then launched across all of DHL’s US workforce, and is in line to be implemented globally throughout DHL world-wide. While recognition is about improving the bottom line, it is also about bringing fun into the work place. Creating a “carrot culture” of fun has been embraced from the top of the organization with senior management known to don carrot suits in management meetings in order to inspire the energetic and fun-filled recognition that the program hopes to make available to all employees.
Training and communication are key
Key to the success of the carrot principle is its focus on training. With an organization as large as DHL, reaching every employee could potentially have been a problem. However, with the understanding that employees most closely associate their work experience with their immediate line manager, DHL set out to make sure managers understood the carrot principle philosophy, how to bring recognition results to their workgroup and how to successfully use recognition and praise to create a high-performance environment.
With so many employees in so many different locations, the organization turned to its managers to assure the success of individual employees. However, training was not solely provided to managers, but also to employees. Each member of staff was given a copy of a carrot recognition book, trained on recognition basics and tasked with acknowledging great behavior relating to their goals. Communication of recognition goals and objectives is transparent and open. Measurement charts, goals and progress reports are posted on DHL walls and communicated through the company’s intranet. In this way, the company is promoting the use of the program and calling on every employee worldwide to participate.
Realizing the business benefits
Proof of the effectiveness of utilizing recognition as a business principle to accelerate progress is shown by DHL, which uses regular employee surveys to monitor results. Employee satisfaction with the program and DHL and overall engagement levels have reached an all time high since the program was introduced. The company believes that usage is one of the best indicators of the success of the program and in 2006 there was a 330 percent increase in program participation. After falling short of aggressive participation and budget targets in 2005, DHL redoubled its training and communication efforts and in 2006 it reached the goal of $1 million in performance recognition.
Scott Northcutt, a member of DHL’s global leadership team, comments: “Recognition is separating us from the competition. We have shown that when you have engaged employees, you in turn have higher sales, higher customer satisfaction, higher productivity and lower turnover. Recognition acts as the accelerator that can bring the company together around key objectives, the right behaviors and values. More importantly, we are now using it as an accelerator as we become the first choice for our customers in the package delivery business. Recognition has become a core part of our culture and it is something we will continue to build on.”
In summary, there are three key factors behind the successful implementation of the Carrot Principle program at DHL:
DHL has adopted the carrot recognition philosophy and thoroughly trains all managers as an integral part of its employee engagement strategy.
The company increases recognition program participation and overall business impact through specialized training, constant communication of company values and clear program criteria.
DHL monitors program impact on business results and employee engagement through regular employee surveys.
Donna SizemoreDonna Sizemore is vice-president, European sales at O.C. Tanner.
About the author
Donna Sizemore is vice-president, European sales at the O.C. Tanner Company. She has been with the company for over 25 years and has served in the role of sales, manager/coach and VP of professional and organizational development. Donna Sizemore can be contacted at: firstname.lastname@example.org
Gostick, A. and Elton, C. (2007), The Carrot Principle: How the Best Managers Use Recognition to Engage Their Employees, Retain Talent, and Drive Performance, Free Press, New York, NY