For example, most change leaders know all too well that employees tend to resist change when it is forced on them. A technique can be engaged to overcome this resistance. The change leader provides several options AND includes a recommended selection. For example, a few years ago one of us [KW] was working with a procurement team developing new global processes. Instead of deploying new required process, we held workshops that allowed employees to bring their own thinking and experience into the process. We provided a few examples of what other regions had successfully implemented and made a recommendation on what we thought was best. Almost universally, the recommended default was accepted without resistance.
Fear of loss versus incentive of gain
The behavioral economics proposed that we as human beings tend to hate losses much more than we are excited about gaining the same thing. For example, if people are asked to play a game where a coin is flipped. If it ends up heads the players win $X dollars and if it ends up tails, then they lose $100. Kahneman describes research that shows that $X will generally have to be about $200 for people to be willing to play this game. In other words, the fear of losing is about twice as great as the possibility of winning.
One of us [KW]was working on a project some years ago where incentives were provided to keep consultants on the project until the end (consultants tend to begin looking for their next project many months in advance of the end of an existing project and will tend to leave the existing project for a new one. This project offered bonuses for consultants to remain to the end. These bonuses had little effect, and many consultants left early. A more effective method would have included retaining a portion of the consultants agreed pay until the end to leverage their fear of loss.
It is interesting to note that the fear of loss might not be our primary motivator. Kahneman and other behavioral economists have found that regret might be even stronger that loss. We regret not taking certain actions—even if these actions might have produced loss. The opportunity that is missed will “haunt” us for many years. Like our protagonist, Charlie Brown, we will try one more time to kick the football being held by Lucy. She will pull it away once again, but Charlie keeps trying—for he would regret not trying again to see if Lucy will finally not pull the ball. The consulting project not taken because of the payment plan offered could be a source of painful regret and could influence our decisions regarding future project requests. We are likely to distort reality if it will shield us from regret. While we might be suspicious of advice offered by a possibly untrustworthy expert might be countered at times by the fear that someday we will regret not taking this advice.
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