Back when I wrote my training course on “Secrets To Getting Your Staff To Sell”, I spent a lot of time researching how people motivated their employees.
Well, last night I was reading the latest issue of Inc magazine and ran across a short article called “Don’t Reward Failure.” Basically a study was done on loss aversion that showed that people will work harder to avoid loss than strive for a reward. You’ve probably heard this before. I know I have, but I hadn’t really thought about it in terms of employee motivation.
In this study, they set up two groups of teachers. One group was offered a bonus at the end of the year when their students had certain test scores. The other group was given at $4k bonus at the BEGINNING of the year and agreed to return it if their scores failed to rise by June.
Guess what? The teachers who faced refunding their bonus produced test scores that were 7 percentage points HIGHER than the teachers on a normal bonus plan.
As a business owner, you should be saying WOW.
I mean, how many of you have created an amazing bonus opportunity for your agency staff and had no one even try to reach it? I personally have offered cash bonuses, trips, you name it and never seen anyone strive for it. It made me angry most of the time.
But then I read things like this and realize that maybe we, as business owners, need to be studying up on psychology and motivation a bit more.
Now, I don’t know that handing out cash is necessarily the right idea for an insurance agency. Since staff are not on a contract, you might have someone just leave with the money! But I still think this is something to think about. Maybe lowering hourly rates at the anniversary date for low performers? Offering a higher commission rate from the beginning and lowering it every quarter for performance?
How would you implement loss aversion in your agency?