Steve The Squirrel

Loss Aversion Poster Child

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Squirrel sitting on an empty bird feeder outside a window

Since WFH became a thing, my co-located colleagues have morphed a bit. This is Steve, and he’s sort of a hassle to work with, although he’s really great at his job. Steve was complaining pretty loudly to anyone who would listen about the fact that there was no free breakfast in the break area this morning.

Steve is a perfect example of something called “loss aversion”. Loss aversion can be summed up as: “the pain of losing is psychologically about twice as powerful as the pleasure of gaining.”

Loss aversion is a BIG piece of employee engagement. If you’ve ‘always’ had access to a resource, even if it’s not a critical part of doing your job, if/when that resource is no longer available, no matter what the reason, you’re going to feel it keenly, and that can have serious results. Even if only a tiny fraction of your employees use the free gym memberships, if you stop providing them, people are going to be mad. Even if the team votes to stop having donuts brought in on Tuesdays, they’re still going to grumble about it when they show up and there are no donuts.

When considering how to address engagement, either proactively OR reactively, it’s crucial NOT to just throw a bunch of stuff at the wall and see what sticks. It may seem like an easy way to gauge interest, but in reality, once you give people perks, taking them away feels like a punishment. Our brains are wired to actively avoid LOSING resources.

You should definitely be looking at ways to fix the engagement gap. But unless you want to actively DISengage and disgruntle the Steves of the world, be strategic and intentional as you design and implement programs. Your bottom line (and your company reputation) will thank you for it!

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