{"id":470,"date":"2019-03-06T09:27:06","date_gmt":"2019-03-06T15:27:06","guid":{"rendered":"https:\/\/agri-search.com\/?p=470"},"modified":"2019-07-17T10:40:34","modified_gmt":"2019-07-17T15:40:34","slug":"loss-aversion","status":"publish","type":"post","link":"https:\/\/agri-search.com\/loss-aversion\/","title":{"rendered":"Loss Aversion"},"content":{"rendered":"\n

Imagine this scenario: a colleague offers to flip a coin and\ngive you $20 if it lands on heads. If it lands on tails, you give him $20. Stop\nand ponder; would you accept that bet? For most of us, the answer is no.\nBehavioral science experts Amos Tversky and Daniel Kahneman performed an\nexperiment which resulted in a clear example of human bias towards losses. The\nexperiment involved asking people if they would accept a bet based on the flip\nof a coin. If the coin came up tails the person would lose $100, and if it came\nup heads they would win $200. The results of the experiment showed that on\naverage people needed to gain about twice as much as they were willing to lose\nin order to proceed forward with the bet. This tendency reflects loss aversion,\nor the idea that losses<\/em> generally have a much larger psychological\nimpact than gains<\/em> of the same size.<\/p>\n\n\n\n

You likely experience this phenomenon daily. Ever purchased\nsomething knowing you\u2019d likely return it, but the longer you keep it the more\nattached you get? Sending the item back now feels like a loss. The longer we\u2019ve\nwaited to be seated at a restaurant, the harder it becomes to leave, as it\nfeels as if the time we\u2019ve invested would then be lost. The more we try to fit\na new couch through a too-narrow entryway, the less inclined we are to give up\nand accept that we need a smaller couch, and the more steadfast we become in\nmaking it fit. It seems that sometimes we will persist with a belief or\ncourse-of-action long after it is rational to do so: we feel trapped by what we\nhave already committed.<\/p>\n\n\n\n

Although a fascinating piece of knowledge about human\nbehavior, what does the concept of loss aversion have to do with the workplace?<\/p>\n\n\n\n

As leaders, knowing that losses have a tremendous\npsychological impact can cloud judgement when it comes to truly evaluating\nemployee performance. We have a tendency to double down with those we\u2019ve\ninvested time with yet who continue to underperform.<\/p>\n\n\n\n

\u201cB\u201d and \u201cC\u201d Players<\/strong>
\nA less enjoyable component of management is the act of working with and\ncoaching the perpetual underperformers. Every department has them, every leader\nhas struggled with them, and some may even have a few who come to mind\nimmediately. They are the few who we try to encourage, who we try to train, and\nfor whom we hold out hope that change will come, but it can seem like an\nendless cycle of performance management and frustration.<\/p>\n\n\n\n

We all recognize \u201cA\u201d Players. Within most organizations,\nthere is even room for the competent, steady \u201cB\u201d performers who balance their\nwork and personal lives while still performing a significant amount of tasks\nthat need to be done. They stay in their lane, don\u2019t require a great deal of\nattention, and they get the job done.<\/p>\n\n\n\n

On the other end of the spectrum, \u201cC\u201d Players sometimes make\nup the smallest segment of the team yet require the most time and attention.\nThey are the employees with a constant litany of excuses \u2013 a vehicle is broken,\nsomeone is sick, excessive days are missed, and the workload either gets passed\nto someone else or delayed altogether. They walk the fine line between \u201cgood\nenough to get by\u201d and \u201cfireable offense worthy of termination.\u201d They are\ngranted continual employment primarily because the act of hiring, training and\nmanaging someone you don\u2019t know is sometimes more intimidating than continuing\nto deal with the perpetual issues of the presently employed \u201cC\u201d performer.<\/p>\n\n\n\n

Stop Doubling Down<\/strong>
\nIt\u2019s time to step away from the fear of losing $100 and focus instead on the\nopportunity cost of not<\/em> winning $200. The obvious unintended consequence\nof having a seat filled with an underperformer is having it not<\/em> filled\nby a significant contributor. What rarely is considered is the impact on those\nwho are current significant contributors; there is little more frustrating than\nhaving your own success consistently hampered by another person\u2019s incompetence.\nIf the majority of your team is working hard, producing great results with\ntremendous collaboration, what message are you sending by supporting the 10\npercent who are doing the opposite? How long do \u201cvarsity players\u201d want to be\nsurrounded by sub-par athletes?<\/p>\n\n\n\n

Beyond performance issues, it is likely time to topgrade\nwhen:<\/p>\n\n\n\n