Behavioural Economics: Clearing the Cupboard.

| April 8, 2016 | Reply

water faceBy Erik Vermeulen

I heard my wife complain last week that she’d run out of cupboard space and that we need to buy a bigger house with a bigger walk-in cupboard. 1st World problems – I know.
I suggested that we take some time over the Easter Weekend to do an autumn cupboard clean-out, so that’s we did. She went through her closet and took out what she thought she didn’t need anymore – all of 5 garments. And by doing this, she fell prey to a very basic Behavioural Economics bias. The Status Quo Bias.
You see, while everything is like she thinks it should be – in the cupboard, it becomes more difficult to accept the change that come about when clothing is removed to be thrown out or given away. But if she had taken all her clothes out of the cupboard and dumped them on the bed, the status quo is altered by putting clothes BACK in the cupboard. The result is that she’ll be more hesitant to put things back, than she was to take things out in scenario 1. Therefore she’ll be more inclined to throw things out than to keep them. Result: A more effective clean out!
How can your awareness of the Status Quo Bias influence the way do business, the way you influence your clients, and the way your employees work?
Corporate Culture and Engagement: The Link between Culture and Motivation.
An interesting article in the Harvard Business Review explores the link between culture and motivation.
The article centres on three questions: 1. How does culture drive performance? 2. What is culture worth? 3. What processes in an organisation affect culture?
How does culture drive performance? A study by Deci and Ryan in the 1980s provided a breakthrough in terms of why people work. They identified six reasons why people work. Three of these tend to increase performance, while the latter three will hurt it. The three positive motivators are:
• Play – when people work because they enjoy it
• Purpose – where people work because they value the impact of the work
• Potential – when work enhances a person’s potential.
The indirect motives that hurt performance are:
• Emotional pressure – where external forces such as peer pressure, shame and emotional pressure drive performance
• Economic pressure – where the drive is to gain reward or avoid punishment
• Inertia – where people lose sight of why they are doing the work, they merely ‘do it’.
More recent research has discovered that high performance cultures tend to focus on the enablers of play, purpose and potential and minimise the others.
On the matter of what culture is worth, the authors cite some fascinating research. Using a measure called ‘Total Motivation’ (ToMo) of employees of four major airlines, analysis was undertaken to explore the relationship between ToMo and customer satisfaction. The results showed a high correlation – that is, the higher the ToMo, the higher the results of customer satisfaction.
This correlation also played out in retail, banking, telecommunications and the fast food industry. Indeed in one hedge fund, the highest performing portfolio had the highest ToMo.
In terms of what processes affect corporate culture, the article shines a light on the impact of a poor versus excellent processes on ToMo. Role design can swing ToMo by 87 points – with a badly designed role resulting in a ToMo as low as -40, while a well designed role can result in a ToMo as high as almost 50. Other roles that impact on ToMo include organisational identity, career ladders, community and workforce and resource planning.

Winter Team Building: Air Crash Rescue.
Get outside for some team building this winter!
We’re teaming up with Lakenvlei Forest Lodge to revive the very popular Air Crash Rescue teambuilding programme. We’ve run over 300 of these dynamic programmes all over South Africa (and even in Botswana, Namibia and Zimbabwe).
You can read more here if you want to:
· Renew and cultivate team spirit
· Encourage team members to gain a “big picture” perspective
· Build inter-departmental communication and trust
· Foster a culture of planning and efficient use of information
· Have fun
Until next time, may I wish you everything you deserve!

For more information contact:


Erik Vermeulen
International Consultant and Keynote Speaker.
Erik Vermeulen has been a Business consultant and international Keynote speaker since 1994. He specialises in Corporate Behaviour strategies, allowing companies to create more profitable behaviours by examining how their teams work and how they interact with their employees as well as their customers. Erik explores trends and behaviours that have shaped the business world, and ones that will be required to motivate and improve performance in a post-recession business world where corporate spin become less powerful than customer and employee experience.
He has the ability to create an immediate total emotional and mental connection with any audience, from Executive level to Sales groups and Service delivery teams. He has a stage presence, an energy which captivates, and most importantly, he delivers thought-provoking and take-home style content. This makes him an automatic choice to speak on human capital, motivation and people-related business issues.








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