Dale Carnegie begins chapter two of his masterpiece, How to Win Friends and Influence People, with an anecdote about steel magnate Charles M. Schwab.

Schwab happened to be strolling through his steel mills one lunchtime when he noticed some of his employees sitting under a "No Smoking" sign, smoking.  Rather than punish them for breaking the rule, Schwab gave each man a cigar as a present. As he did so, he said, "I'll appreciate it, boys, if you will smoke these outside." 

In the workplace, an employee's utility supersedes their identity. This blurs the clear line separating a person's identity from their action. We feel stung by negative feedback because when an action is at fault, we extrapolate that to the "person" being at fault.

Schwab's technique did not threaten his employees' self-worth. The cigars made them feel important and valued. He followed the golden rule of being a good boss: to never hurt an employee's self-identity, no matter what.

A good boss never hurts someone's self-identity.

An employee's self-worth and self-identity are sacred within the social hierarchy of a competitive workplace.

They're also immutable -- you can change an action, but you can't change an identity. If you dent someone's self-identity, they will carry that dent without being able to repair it.

This is why a good boss never hurts an employee's self-identity.

The trick to delivering negative feedback is to stay within the territory of the action and leave the person behind the action well alone.

Charles M. Schwab managed to do this with elan. He first cocooned everyone's self-identity into a cushion of safety by presenting each employee with a gift. Then, he delivered his negative feedback within the context of an action, "smoke these outside."  As a bonus, he attached a word of gratitude to convey respect, "I'll appreciate it."

People are more likely to accept negative feedback if you don't injure their self-worth.

Several studies including a meta-analysis of studies have shown how people are less likely to respond to negative feedback that targets their personal characteristics because this injures their self-worth. Concentrating on the technical aspects of a task, its strategy and its delivery, is far more effective.

Introducing a hierarchy into a social group challenges the self-worth of the group's members. This might explain why grading student performance is less effective at inspiring motivation than receiving freely written comments. The grading creates a hierarchy, while commenting does not.

Go low-carb on the sandwich, but add some sauce.

The popular advice for giving negative feedback is to deliver it in a sandwich with a slice of positive feedback on either side, but no amount of positive feedback can cushion a blow to self-identity.

You can go low-carb on that sandwich and throw away the bread, as long as you direct your negative feedback precisely at an action and meticulously stay away from harming a person's self-worth and identity.

Go a step further and add in some sauce --  nurture your employees' self-worth by reminding them how much you value them; instead of hating you for your feedback, they will love you for it.