Spare the rod and spoil the child

How true is the statement? For myself and hubby, we believe in taking a fair stand. We use both the soft approach and sometimes when there's the need, we play it hard. Both of us were brought up where the rod was always hanging somewhere in the house. But those were our days. Even Prophet Muhammad S.A.W advised us to discipline our kids as per their generation and not ours. Thus, I was not using my childhood as a reference when I decide to hit my child his feet or beat his hand. It definitely is not an indication that I love him any less.
As parents, it is not desirable to have your baby-sitter or your other family members complaining about your child's lack of discipline / attitude/ aggresiveness.... etc. As much as possible, we try to take their remarks positively and at the same time do what we can to ensure it does not happen again.
But the whole process of disciplining can be a tricky one. For a simple reason. Elders cannot stand lack of discipline in a child. Neither can they stand to see a child being beaten for a mistake that they have done. So how?