Yum! Brands CEO David Novak Extols the Power of Recognition

The key in business and in life is to give people earned recognition. Once you do something that drives performance or once you exhibit a behavior that’s going to drive performance in your company, recognition is then earned. We always try to recognize the good things that will drive performance of the company or in your family or wherever you might be trying to influence people in a positive way, but it’s just as important to recognize the bad behavior. So, if people are not performing, you have to give them proper coaching and hope that they turn it around. If they don’t, have them go somewhere else to work.

Even Yum! Brands experienced performance difficulties in its China business in recent years. Some may argue that superior recognition practices couldn’t overcome those sorts of problems.

Recognition creates a culture that allows you to overcome problems faster. Nothing works by itself. The work environment you create [generates] the kind of performance orientation that you want to have. I always felt it was more important to recognize people in the down times than when everything was going along swimmingly well. Because that says that you’re consistent in your behavior and that the good [actions] that you’re looking for in the company are going to get you out of the ditch.

There’s no company that runs on autopilot forever. You’re always going to have your ups and downs. Even when we grew our earnings per share 13 percent a year for well over a decade—13 years—we still had ups and downs. We had to deal with different adversities, but we never lost the philosophy that drove our culture. A work environment that is driven by recognition helps you recover a lot faster than you would otherwise.

Recognition creates a culture that allows you to overcome problems faster. Nothing works by itself. The work environment you create [generates] the kind of performance orientation that you want to have.

Are there some forms of recognition that are better than others?
The best forms of recognition are ones that are personal, from the heart. You recognize people in a way that is unique to you and what you’re trying to reinforce. I always tried to reinforce behaviors that drove what we called “customer mania,” listening and responding to the voices of the customers. I always personalized each award with a clear articulation of what that person did to deserve the recognition. And I tried to make it fun because I think, in business, you don’t want to take yourself too seriously. You want to take your business seriously, but don’t take yourself too seriously.

Has your successor, Greg Creed, taken up the recognition torch?
He wouldn’t have gotten the job if he weren’t a believer. In fact, nobody in our company gets promoted without being a big believer in the kind of work environment [existing] in the firm.

Which other CEOs are good at recognition?
Every great leader I’ve ever met is good at it. Jamie Dimon [CEO, JPMorgan Chase] is great at earned recognition. If somebody has really done something great, he goes out of his way to tell people that this is the kind of behavior that [they’re] looking for at JPMorgan Chase. Southwest Airlines’ Gary Kelly is different from Herb Kelleher, but he’s been able to keep that culture moving in the right direction. Brian Cornell at Target is a big proponent of recognition. He visits stores and sits down with team members and makes them feel special in his own unique way.

When people adhere to your culture, it has an amazing effect. People who don’t adhere to it almost get rejected like a bad juror. It’s a great way to protect the values you are building. A good example is Ken Langone, the co-founder of Home Depot. If you did something well, he sits down and writes a hand-written personal note that makes you feel like a million dollars. These guys all have very different styles; but in their own way, they have their own [method] of being personal when it’s appropriate and giving people earned recognition that they need. At the same time, if you don’t have the behaviors that they’re looking for, they’ll manage you out or have you go make somebody miserable at some other company.

Is there a particular message you want CEOs to take away from the O Great One book?
The book makes it clear that a leader casts a shadow. People will do what the leader does. So, there’s no way you will have a culture of recognition unless the leader recognizes earned performance. The biggest lesson for CEOs is that they have to cast the right shadow.

Obviously, not all leaders are doing this well. If you’ve got 82% of employees saying that their supervisor doesn’t recognize what they do, there’s a big problem. Some people may think they’re doing a good job, but they’re not. Even in our company, we do a culture survey every year. We score very high on recognition, but people still wanted more recognition. We are one of the best-in-class companies at recognition, but even our employees wanted more of it.