What We're Reading: Improving Performance Through "Loss Aversion"?
Most organizations attempt to motivate employees through positive reinforcement – rewarding good behavior and performance through praise, compensation, or other benefits. Negative reinforcement – such as harsh criticism, threats of termination, or loss of compensation or benefits – often is believed to reduce motivation and therefore lower performance.
NPR reports on a new study that challenges these beliefs, at least for public school teachers. Three groups of teachers in Chicago Heights, Illinois were asked to raise student achievement test scores. One group received no special incentives. The second group was promised a bonus if student math scores improved. Teachers in the third group received an immediate bonus of $4000, with a contract requiring return of the money if student scores did not get better.
The results? The first two groups performed about the same. Teachers who were promised a bonus achieved no better results than teachers who were asked to improve scores without any financial benefit. However, the teachers who received bonuses in advance did far better than the other two groups. The researchers believe that the third group was highly motivated by “loss aversion” – the idea that once a person has a benefit, it would be very painful to give it up.
The Chicago Heights research is preliminary and may not translate well to other workplaces. And many workers and employers would be uncomfortable with the idea of contingent compensation. But perhaps there is a place for “loss aversion” in your organization.