He had recently been promoted to chief operating officer at Pepsi and was visiting a bottling facility. He was sitting around a table with employees and everyone kept raving about their colleague Bob and how instrumental he was. Novak glanced down the table and saw that Bob was crying. He was set to retire in two weeks and had no idea his coworkers felt this way.
The recognition doesn’t have to be an elaborate gesture. It can be as simple as a rubber chicken. Or goofy wind-up teeth.
Just ask David Novak. The former CEO of Yum! Brands credits much of his career success to his focus on employee appreciation.
“Recognition is the secret weapon to a business,” he says.
Novak, who worked his way through the ranks at PepsiCo and later led KFC and Pizza Hut to eventually become co-founder and CEO of Yum, recalls one moment in his career that made him realize how important a simple “thank you” can be.
“That hit me in the gut,” Novak remembered. “I said as a leader that the number one behavior I am going to show is appreciation, and use it to inspire people. I am going to make recognition my thing as a leader.”
When Novak was promoted to CEO of KFC in 1994, he got more condolence calls than those offering congratulations.
“It was a graveyard for executives,” he said. “Morale was down, business was down. It needed energy injected into the business.”
That energy came from a rubber chicken.
Novak started handing out the toys — plus a small cash bonus — to employees doing a good job. And it worked.
“This took off like you wouldn’t believe — it helped turned around the mindset of the organization and we started working together with the franchisees and turned around the quality in three years. And the franchisees were now giving us ideas,” he recalled.
Two years later, he also became CEO of Pizza Hut. He continued the tradition, but this time he gave out foam cheese heads.
“When you recognize people, they will work harder. People are starved for attention.” Even if the attention is a plastic toy you can pick for a few bucks.
Sometimes, he would give out the awards spontaneously, like when he saw an employee exemplifying the company’s culture during one of his visits to a restaurant. Other times, it would be planned so the recognition would occur during a meeting where he knew he’d be able to honor an employee that had gone above-and-beyond expectations.
On each trinket he would write a personalized note about why the employee was receiving the accolade. Sometimes it was for quality food preparation. Other times it was for outstanding company service or leadership on project. The award also came with a cash bonus, which started at $100.
“You have to be very specific with what the person has tangibly done and how it is contributing to the success of the organization. It has to be purposeful.”
As CEO of Yum! Brands, which operates Taco Bell, KFC and Pizza HutTen, Novak was using the chattering teeth to reward employees and increased the cash bonuses to $300. And the recognition culture was spreading. His team leaders had started giving out their own recognition awards — with their own personal touches.
“The most effective recognition is something you like and have fun doing and tailoring it to the individual and tying it to the principle you want to see more of,” says Novak.
Yes, his rewards were on the silly side, but they were coveted. Novak recalled one employee who kept the award in a safe.
As the recognition culture spread, employee turnover decreased at the company, and it became easier to retain and recruit new hires.
“The culture became a big part of why people wanted to come to our company,” Novak said.
He always took a picture with award recipients, which he later had framed. He would then send one copy to the employee and kept the other.
Novak covered his office walls with the pictures — more than 1,400 of them — and when he ran out of room, he hung them on the ceiling and in the hallways.
During Novak’s tenure, Yum’s market capitalization increased from $4.6 billion to around $31 billion. He retired in 2016, but the recognition culture he started is still a big part of the company.
“David Novak laid the foundation for Yum!’s people-first culture and strong focus on recognition, which remains a key driver of our growth and values today,” said Greg Creed, current CEO of Yum! in a statement to CNN. “His tremendous leadership continues to guide how we engage and develop our employees around the world to positively impact our customers, shareholders and franchisees.”
He still visits Yum’s headquarters in Kentucky from time to time. The awards still hang in the office and seeing them still makes him swell with pride.
“I have a great office. It symbolizes what our company is about and puts me in a great mood. I feel privileged to be a leader.”
One of the biggest reasons people leave their job is lack of appreciation. But some leaders can be hesitant to dole out the accolades for fear of upsetting or alienating other employees.
Novak says that’s why you need to recognize employees often. “It only becomes a problem if you only recognize people once a year.”