Why is it that we all can recite that old saying, “An ounce of prevention is worth a pound of cure,” but so few of us listen to its wise advice?
Why is it that we all can recite that old saying, “An ounce of prevention is worth a pound of cure,” but so few of us listen to its wise advice? We throw money at new hires with recruitment bonuses instead of rewarding our current star employees. We go all out with marketing efforts when our census falls, but don’t address why it fell. We pay for a consultant to help clean things up after we’ve had a terrible survey rather than bringing them in proactively to educate staff. Most of us are reluctant to do anything about an issue before it becomes a problem.
Loss aversion vs. prevention
It turns out there’s a reason for all this illogical behavior. It’s a pretty well documented psychological phenomenon called loss aversion. We will pay (with our time or money) to solve a problem—but not to prevent one. It’s irrational, it’s kind of bizarre, but it’s true. Why? Simply because the negative feelings we get after a loss are much stronger than the positive ones we have after a gain. In one study, researchers asked people to imagine an outbreak that involved 600 people dying. They were asked to choose a program to address the outbreak:
A: 200 people will be saved
B: 1/3 chance that 600 people will be saved and 2/3 chance that no people will be saved.
The vast majority, 72% of people, chose option A. But then these choices were reframed:
A: 400 people will die
B: 1/3 chance that nobody will die. 2/3 chance that 600 people will die.
Guess what happened? 78%, chose option B this time! The same exact options, just reframed a different way, changed the choice people made. Totally illogical, right? But it’s human nature. Unfortunately it’s also a really powerful force in preventing change, so we need to figure out how to deal with it.
What are we so afraid of?
Loss aversion is one of the reasons why people prefer their current state to changing to something better. When I read about this phenomenon, I thought about some people’s opinion of person-centered care. There is research that shows that after implementing person-centered care organizations have:
- better surveys
- higher census
- less turnover
- higher revenue
- and improved clinical outcomes.
Yet some people resist changing their organization’s culture. For some it’s the fear of losing the comfort that they have with the way they’ve been doing things for years. For others it’s giving up the control they have as boss. Good ole’ loss aversion at work again!
How does it translate to leadership?
Loss aversion will hold you back. It will slow down change efforts. It will work against you. Unless… you turn the tables and put it to work for you! Try one of these tips to do just that:
- Reframe a change to avoid a loss for the skeptics in your organization. Can you make it a win rather than a loss for them? (Refer to the reframed outbreak choices above for some inspiration.)
- Reduce the risk of loss that many prospective patients/residents feel. How about offering a money back guarantee or a free trial?
- Use loss aversion as a motivator. Why not set very small goals and keep diligent track of your progress? That way your disappointment in not making progress will be greater than any temporary displeasure.
Have you dealt with any “loss aversion” thinking in your organization? How have you handled it? I’d love to hear your stories in the comments below.