Outstanding leaders go out of their way to boost the self-esteem of their people. When people believe in themselves, it’s amazing what they can accomplish.

—SAM WALTON

Some executives feel that work is a necessary evil that only produces a paycheck. They expect people to resent work, so they subconsciously assume the role of oppressor and treat people like victims. Such executives use criticism as a tool to prevent people from repeating unwanted behaviors. Yet criticism actually impedes their ability to lead by blocking conversations that improve performance. In contrast, effective leaders see work as inherently enjoyable and gratifying and seek to place people in positions where they feel rewarded and happy. Your high potentials will benefit from hearing your honest appreciation—even when their results and behaviors are not exactly what you would like at that moment.

People especially enjoy being recognized when they conquer a major challenge. Roger, a recently promoted executive, faced a difficult problem involving the people at a branch in South America. His predecessors tried to encourage them to understand and live by the company’s culture of personal responsibility and hard work, but with little success. They used threats, intimidation, and incentives without result. Roger flew to South America and asked the branch manager, Alberto: “What changes can we make to enable you and your people to willingly adopt the company’s practices and culture?” Alberto responded, “It’s impossible—we’re just too different.”

Roger kept pushing: “Well, I am glad you are the branch manager because you’re the only one I know who can accomplish the impossible.” After issuing the challenge, Roger continued: “Call me when you achieve a small victory during the next few weeks, and we’ll hold a party to celebrate success. Also, how would you and your people like me to respond when I thank you for succeeding?” This set the time frame, and Alberto knew that he and his people would be rewarded when the cultural change occurred. Six weeks later, major progress had been made in integrating the company’s culture into South American operations, and everyone’s contribution to that success was recognized.

Effective leaders know that first prize, second prize, and every other prize should be recognizing people for their achievements and contributions. The recognition need not be elaborate or expensive—the appreciation should be commensurate with the level of effort. Creating a culture of appreciation is the first step. Challenge each person to operate at the top of her potential. Let her know that you believe in her and rely on her. Offer assistance when things go awry, and do not chastise the bearer of bad news. During the celebration at the end of a successful project, those moments will be remembered most and become part of the culture of the organization.

Multimedia Recognition

In our increasingly connected world, the contributions of your high poten­tials should be recognized through a combination of virtual, voice, and face-to-face communications. Today, positive and negative information is shared instantly online. The challenge for today’s leaders is to provide clear direction, usable feedback, and effective recognition with the whole world listening in on your digital conversations. To ensure that your organization thrives in a global economy, you must motivate, coach, and create loyalty even though your people work at remote locations and are from diverse backgrounds. You also will be challenged to facilitate collaboration and knowledge exchanges between older workers and their more “digitally active” younger colleagues.

Recognizing technical expertise is particularly vital in a global economy driven by rapid advances in electronics, energy, health care, manufacturing, and other sectors. If you lead an organization whose success depends on technology, you may worry about keeping abreast of every change. Give it up—there is not enough time in the day to be both an effective leader and a technical guru. Instead you must connect with and motivate the experts who assist you in creating the future of your organization, by

• Acknowledging visionary concepts developed inside and outside your organization
• Building collaborative internal, external, and cross-sector relationships
• Using your people’s recommendations in making strategic decisions about projected technological breakthroughs
• Encouraging interorganizational knowledge exchanges

Despite limits on your technical knowledge, you must recognize, motivate, and build trust with experts so that they feed you ideas and offer honest opinions. Even though you may not be the expert, you are still expected to select the right investments, focus the experts on useful outcomes, and arbitrate competing views. By recognizing and guiding the experts, you can harness the creativity and curiosity of your most technically savvy high potentials.

Recognition Is Inexpensive—Lack of Recognition Can Be Costly

Sophia worked for a nonprofit for three years hoping in vain that her situation would improve. She was a high potential who stayed late and worked weekends on critical projects and grant proposals. Despite being a go-to person, Sophia got little recognition from her boss, received mediocre bonuses, and was not considered for promotion. Instead, her boss continually pointed out trivial errors, ignored her suggestions, and blocked her from working on projects with the nonprofit’s top leaders.

One Monday morning after Sophia had worked all day Saturday and Sunday to complete a grant proposal (her boss never came into the office on the weekends), the boss handed her a list of tasks that she had not finished the previous Friday. Sophia quit on the spot, but before the end of the week found a new job at a higher salary. The difference between the old organization and the new one was like night and day. In her second week, Sophia’s new boss recognized her at the staff meeting for suggestions she made to streamline the fundraising program. After one year, she became a project manager, and three years later she founded her own nonprofit.

Narrow-minded bosses like Sophia’s create costly nightmares when they mismanage high potentials. At a minimum, they destroy productivity and morale. At worst, they cause high potentials to quit. This type of boss is the most common reason employees cite for quitting a job—far more often than salary complaints. And turnover is very expensive. Research by various HR associations shows that the average cost to replace an employee is roughly half his annual salary. And that does not count opportunity costs, which can easily double the cost of replacing high potentials in key technical and sales positions. When you allow knowledge and relationships to exit your organization, you then must fill production gaps, interview candidates, train new employees, and calm customers—all of which take more time and cause more anxiety than recognizing employees. You can reduce turnover by ensuring that your people feel appreciated and rewarded for their contributions.

Recognize Behaviors as Well as Results

Herman, the procurement director for a Fortune 100 manufacturing firm, coordinated eight procurement managers, who each managed a staff of eight to fifteen people in his or her plant. Earlier in his career, Herman received little recognition and was not seen as a high potential because his priorities were stability at work and time at home with his family. Still, he set high standards for himself and his people and communicated his expectations concisely. Herman was also clear that his top priority was developing others. The managers whom he supervised relied on him for timely feedback that was fair, specific, and useful.

Herman recognized his people as individuals and adapted his approach to their personal goals and needs. If you asked Herman about his people, you would feel the admiration and passion in his response. Among his most significant contributions was that his high potentials were regularly promoted, and they excelled in new positions. Furthermore, the people promoted into their old positions were fully prepared to become managers. Herman was recognized by top leaders in the company for growing high-performing leaders, even though he was unlikely to advance given his family situation. He was given an award as the most effective manager of managers in the company because of his ability to launch his people into successful leadership careers.

Every high potential wants to be recognized in a way that thanks her for her contributions and salutes her effort. Do not make recognition a complicated process—a spontaneous thank you is often as effective as elaborate recognition later. Recognize three things: (1) the result, (2) the person, and (3) the behaviors that produced the result. You may want to recognize a person and a behavior even if the result was not as good as you expected. Recognizing effective behaviors enables all of your people to see how they can be more successful. In addition, behaviors are lasting, whereas a result is a one-time event. Recognition is important not only to those receiving it—it also motivates and inspires the entire team to achieve more.

Celebrate Even Small Successes

Whenever you meet with your people individually or collectively, cele­brate success by asking what went right. Focusing only on problems stops people from having open conversations. When shortfalls are the only topic, people become reluctant to report bad news. By asking what went right before addressing issues, you give your people a chance to talk about their successes—even if they are small. That approach leads people to prepare for your meeting by thinking about accomplishments they will present as well as the ongoing challenges. Interestingly, when people talk publically about their successes, they give themselves recognition for good work and want to accomplish more so that they have positive results to present at the next meeting.

While briefing the management team, Mitchell, chief operating officer of a growing company, said, “I don’t want to be negative, but we should have done better.” He was referring to the fact that, although their annual growth goal was 34 percent, revenue had grown by just 12 percent. The management team was crushed. By focusing on the revenue growth shortfall rather than acknowledging the growth that did occur, Mitchell negated a year’s worth of hard work in an extraordinarily difficult economy.

Results that one person calls mediocre, others see as outstanding. It all depends on your frame of reference, your viewpoint and assumptions. In this case, Mitchell felt that 12 percent growth was inadequate because it was short of the target, whereas his people saw the same 12 percent growth as excellent performance during a recession. This divergence could have been discussed much earlier in the year and expectations reset or new strategies employed. Then Mitchell might have been able to say at this meeting, “It’s amazing to have grown 12 percent during the recession; how can we hit a higher target next year? What resources do you need? How can I be of assistance?”

Celebrate People

Use group and individual recognition to acknowledge contributions and reinforce effective behaviors. Here are six ways that you can recognize your people, show them how important they are to you, and build a culture of success:

Actions like these demonstrate that you value people as individuals, which will build loyalty and encourage them to go the extra mile for you. Recognition is an effective way to manage performance, change behaviors, and develop others. It is far more effective than criticizing shortfalls, correcting mistakes, and fixing problems—and more fun too.