In the world of management and motivation, how do you see the concept of "Carrot and stick" as dealing with subordinates?

There are two different interpretations  of the "carrot and stick" policy.

1. One of them says that the carrot would be hanging from the end of the stick as some form of attraction/motviation to make the employee move forward, do better in the job ... hoping to reach the carrot at the end of this stick.
2. The other one says that the boss (manager) has a carrot in one hand, and a heavy stick in the other hand as a form of reward and punishement depending on how the employee behaves and peforms his/her job duties.

Trying to generalze our judgement on such concepts/practices may be the  wrong thing to do.

What may be applicable and gives good results in some situations, may be a lousy thing to do in other sitation.  What works for some employees will not necessarily wotk for other employees, and what works at one time and for a specific situation, may not work for other times and other situations