Loss Aversion: The Hidden Killer of Progress

Last week I wrote about the idea that in order to maximize commitment and performance on the part of volunteers, it is necessary to give up some control over their activities. I ended with, “Terrifying, isn’t it?” Social science tells us with great certainty that the more a person thinks they are being controlled, the worse they perform. This is known as “the hidden cost of control.” But, as a manager of any sort, we want the reins. The idea of giving up control creates a lot of discomfort for nonprofit executives who are accountable to their boards of directors for results.

Ceding control is a new strategy for most, and even though we have solid evidence that doing so will increase performance of volunteers, most managers don’t cede control to volunteers. Why is that? There are a few reasons:

• No one’s job was ever saved by, “The volunteers didn’t do what they said they would.”
• It is counter intuitive that ceding control will improve volunteer performance.
• Another freaky human bias? Yes!

Ceding control is a change and requires a decision. Why should this—or any—change be such a gut-roiling exercise when all the research, both quantitative and empirical, says, "do it"? Most often, people stay the course in the face of diminishing results. Each of us has sat back in our chair, exasperated and confused about a leader or subordinate’s unwillingness to change in the face of overwhelming evidence. In fact, my friend Amy Braiterman of Blackbaud, recently confided in me her frustration because sometimes clients go against all reason and make clearly self-destructive decisions. “Katrina, what is happening in their heads as they point a gun at their own foot? I just don’t get it,” she said.