Companies all over the country are facing worker shortages in what has been dubbed "the great resignation."

"People just don't want to work" or so the narrative goes.

Today, we're going to answer the question of why people are leaving, and what we can definitively do to fix it.

Read the post for full context or just jump to the solution here.

Motivation

In 1979, Daniel Kahneman and Amos Tversky, published their behavioral economics theory known as Prospect Theory which showed that people's perception of gains and losses are processed illogically. The research showed that, on average, we process the pain from the perception of loss between 2-3x greater than the perception of joy from an equivalent gain. Losing $50 is perceived to feel 2-3x worse than gaining $50 feels good. This is why Prospect Theory is often referred to as "loss aversion theory" and has had a significant influence on modern marketing, sales, and communication.

The second chapter in Jonah Berger's book Catalyst is called Endowment. This chapter explores the idea that people tend to resist change, and tries to identify solutions. The book cites research that shows it takes an average of 2.6x the upside versus downside for someone to make a decision. This is right in line with the research from Daniel Kahneman who, by the way, won a Nobel Prize for his work on Prospect Theory.

This means that, on average...

• someone would need to have a potential upside of $260 to risk losing $100 (example straight from the book)
• someone would need roughly 2.6x more features and benefits, with no perceived losses, to change internet service providers, cell phone model, or other products and services
• someone would need a job offer that, on the whole, seems 2.6x better than the perceived downsides of leaving their current job

Did you catch the key word?

"Perception"

In all of these cases, the gains and losses are subjectively perceived, rather than objectively defined.

For example, a $260 upside versus $100 downside will feel very differently to someone living in abject poverty than it would to a billionaire. The subject changes the equation.

People make decisions based upon their perception of the situation and that perception is shaped by their situation in life.

All of the above information shows what it would take for someone to change from their current state. If a benefit fails to be perceived as being substantially better than the staying the same, or the potential loss, people will be reluctant to take action.

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Understanding all of what I just wrote is critical if you want to reduce employee attrition in the midst of "the great resignation."

Let's dig into it.

"No one wants to work"

You've probably seen one of these signs, either in real life or on social media. It is beyond frustrating how thoroughly this passive aggressive BS misses the point. WOOSH!

It's not that "no one wants to work" because of "government handouts" (funny how it's only called a "handout" when it's for the working class and poor). No, the truth is that "no one wants to work" if it barely provides for the means of survival and yields little more than barely getting by. "No one wants to work" once they realize that they are burned out, or tired of being placed in harm's way just to make someone else a profit. No one wants to work when they feel their work is meaningless or they are treated as replaceable.

Remember, it's about perception, and that perception is shaped by people's realities. Many of the people who ar