Einstein famously declared compound interest as the most powerful force in the universe. Compound Interest- Interest that accrues on the initial principal and the accumulated interest of a principal deposit, loan or debt. Compounding of interest allows a principal amount to grow at a faster rate than simple interest. The more frequently interest is added to the principal, the faster the principal grows and the higher the compound interest will be. Compound interest is not just something that is done with money; the theory can be applied to many things. In this case, praise and how compounding praise can improve the bottom line. In the corporate world there are 2 prospective on praise:
Leaders on praise: It works better than punishment
Managers on praise: Employee recognition leads to profit
In today’s business world terms such as empowerment, engaged, passion etc are often thrown around on the executive level with the hopes that their message will make its way down the ladder. However more often than not corporate lingo finds itself lost in translation. Often times employees find themselves doing just enough not to get fired vs doing everything they can to help their employer achieve their goals. Studies have shown that 35% of employees want to quit their current job, 20% love their current job and the other 45% have mentally quit on the job they are currently working even though they haven’t physically quit yet. Today’s society finds most people doing jobs they do not love, they don’t see the value in, they don’t feel value doing, are simply doing them because they need the income to provide for themselves and their family. One-half of all first time heart attacks occur between 6 to 9 am. on Monday mornings because some people hate their jobs so much, they would rather die than go back to work!
Believe it or not the combination of praise and compound interest theory is the difference maker. Why Praise is so powerful? One of the basic human needs is the need to feel value or important. Praise fulfills that need for employees and the results of that praise fulfill the number 1 business need which is to generate a profit. Praise is one of those small investments that cost employers very little but has high returns. The results of a little praise given properly and on time can go a long way. A study done by Harvard Business school on Best Buy showed a 0.1% increase in employee engagement lead to $100,000 in operating income to the bottom line.
The benefits of praise:
People are engaged
People feel empowered
People bring their brains to work
People take on more responsibility
People become problem solvers not just problem spotters
People will take ownership
The how to:
The 1 minute praise:
1. Tell people up front that you are going to let them know how they are doing
2. Praise people immediately.
3. Tell people what they did right-be specific.
4. Tell people how good you feel about what they did right, and how it helps the organization and the other people who work there.
5. Stop for a moment of silence to let them “feel” how good you feel.
6. Encourage them to do more of the same.
7. Shake hands or pat on the back in a way that makes it clear that you support their success in the organization. Keep the bear hugs to a minimum
If you praise progress you will get to the destination quicker. Think of it like this, How do you teach a baby to walk? You praise them for every step they take along the way. When they fall or make mistakes you help them up correct the mistakes and encourage them to keep going. The same training and coaching technique can be used to help people perform. Top Leaders look for ways to catch their people doing things right. They are constantly looking for ways to praise their people. Praise is a 2 way street everyone needs to know how to give it and everyone needs to know how to receive it.
Keys to receiving praise:
Score praise the way you score gymnastics throw out the lowest and the highest scores.
Listen to the stuff between the lines
Say thank you, be sincere and move on.
The goal of praise is to raise the bar and get you to take the next step. Once the baby starts walking you stop cheering every time they take a step, it’s time to move on to bigger and better things like running and jumping.
How to use praise to increase performance:
Accentuate the positive- what you shine a light on and feed is what likely to grow so if you don’t want to encourage bad behavior don’t spend a lot of time on it.
When mistakes occur and they will acknowledge them for what they are then redirect the energy. Human beings are competitive by nature, they want to win, they want to succeed great leaders help people reach their full potential. Catch Them Doing Something Right! People who feel good about themselves produce good results. It’s not enough to tell people to be engaged you have to engage them.
Getting them engaged:
Provide opportunities and well being
Avoid under estimating the power of praise and the effect that compounding that praise can have on people. Catch people doing things right, happy people = happy results.
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