Throw Away That Shirt: Why We Fear Loss

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I have a shirt in my closet from 2011. I haven't worn it in about 10 years and don't even like it.

But each time I go to get rid of it, something stops me. Maybe it's the "what if I need it" thoughts or good memories. Whatever it is, the fear of losing this shirt is much stronger than any joy I felt from wearing it.

It's a silly everyday example of loss aversion, aka the psychological concept that we experience loss much more strongly than we appreciate corresponding gains.

It's estimated that we feel the loss of something 2x more than the pleasure we derive from gaining it. In other words - we avoid loss because it hurts!

It's a protection mechanism that can have a consequential impact in the workplace. Keep reading for more info about what it is and how it can influence your organization.

??♂? Change management: Loss aversion can lead to significant resistance to change, stunting organizational growth and interrupting team functioning.

???? Employee Retention: Companies often keep underperforming employees due to the perceived loss of invested time and resources, resulting in continued poor performance and inefficiencies.

?? Cost Savings: Terminating underperforming employees can save a company $12,500 while retaining a top performer saves $5,300.

?? Incentive Programs: Framing incentives in terms of potential losses (e.g. missed promotions) is more effective than highlighting potential gains.

The takeaway? Appropriately managing loss aversion can boost participation, save money, and encourage innovation and success.

KINDLE THE FLAME????Managing Workplace Loss

As with most things we discuss, there is no black-and-white with loss aversion. As alluded to above, the psychology behind it can actually be leveraged to incentivize workers and drive motivation.

The key thing we think about avoiding is staying stuck or missing opportunities for growth based on the fear of loss. Another big one is being ok with the status quo because it's "working good enough" (aka not really working.)

Implement the following to ensure your team's fear of loss isn't leading to stagnation:

?? Implement Loss-Framed Incentives: Design incentive programs that frame rewards in terms of avoiding losses rather than gaining benefits. For example, instead of offering a bonus for meeting a target, frame it as a potential loss if the target is not met.

??Focus on Long-Term Gains: Encourage a long-term perspective by helping employees see the bigger picture and the long-term benefits of their actions. Regularly communicate how their contributions lead to sustained success and growth, mitigating the focus on short-term losses.

?? Celebrate Innovation Regardless of the Outcome: Recognize employees for leaving their comfort zone and minimize punitive measures for well-intentioned failure. Your team needs to know you have their back and feel psychologically safe to focus on potential gains.

The underlying thread here is awareness. Loss aversion is a psychological process that often goes unrecognized. Bring it to the forefront of employees' minds to allow them to challenge their fear and reframe what could go wrong to what could go right.

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Stoke the Fire???? The WISE Up Leader Intensive is (still) Open!!

A few weeks ago we announced that we're opening our WISE Up Leader Intensive program to non-clients for the very first time. We're including the information again because we have a few spots left and want to hear from YOU!

The Intensive is a 4-month hands-on program in which you will learn the practical steps needed for optimal performance and growth. This knowledge is combined with the support and accountability needed to make it stick.

The program also includes:

• Pre and Post WISE Assessments to track progress
• Weekly content and WISE Up challenges
• Confidential coaching sessions with a degreed and experienced coach

….. And more!

Don't let the fear of loss of time/money stop you from taking advantage of this unique opportunity - we promise the long-term gains will 100% be worth it!

Or.... Use the fear of losing out on this opportunity as motivation to apply. We still promise it will be worth it.

Please reach out if you'd like to learn more, or scan the QR code below to view/begin the application. We look forward to working with you!

PANTS ON FIRE? ?? Myth Busting

Myth: Loss aversion only affects humans.

Reality: Loss aversion has been observed in animals as well.

Studies have shown that loss aversion may also exist in animals, challenging the notion that it's purely a human cognitive bias. For example, research with primates like capuchin monkeys has demonstrated behaviors consistent with loss aversion.

These animals show reluctance to give up a food item they possess, even when offered a more preferred food as an alternative. This is similar to how humans exhibit attachment to possessions or resources, illustrating that loss aversion may have deeper evolutionary roots than previously thought.

It's an interesting reality to consider as it highlights the survival mechanism behind loss aversion instead of it as purely modern reaction to our world.

That completes our time for today!?If you like what you read, please send to a friend to subscribe below: https://www.workzbe.com/hot-minute