Psychology of loss and gain
Economists who study behavior will tell you that we value something we lose, much more, than we value something we gain.
This is a pertinent emotion during a recession. Most of us will lose something. We may not get the increase in salary we worked so hard for, or we might make less profit. We might suffer a large loss, such as our job, or our business. Some of our possessions may get repossessed. We could even lose our houses that we saved and skimped and spent many weekends working on. What chumps we will feel!
Loss is devasting, and distracts us from possibility.
Tom Peters today passed on a fabulous anecdote about Kurt Vonnegut, Joseph Heller and a hedgefund manager.
“At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history. Heller responds, ‘Yes, but I have something he will never have … enough.'”
And thank you, John Bogle!
(And Judith Ellis.)
Coping with loss
It’s really difficult not to focus on loss when it happens. Indeed, we shouldn’t move on too soon. Grieving has its place.
I find the advice from the 5 stages of group formation useful: forming, storming, norming, performing, adjourning. The leader’s task during ‘adjourning’ is to help an individual break their tie with the group, and to proceed back into the world quite happily as an individual.
Applying that advice to the horrible events that happen in recessions, we have three broad steps. We need
- Signal that change is going to happen in sufficient time
- Plan a rite of passage (like a graduation ceremony)
- Get people visualizing life without the group (or house or whatever).
No, that’s not quite right. To talk about ‘life without’ brings our attention back to what we have lost.
We need to talk about our story, all the good times we have had, and gradually get to the point that we see jobs, companies, businesses, not as the end in themselves – just as ENOUGH. They are there to help us get what we want.
What do we want? And how are those projects going! Incredibly hard to focus on those things when confronted with loss – the economists tell us so!
UPDATE: For an HR Managers perspective on the Recession, I have written a summary on a new post.