3 Tips to Counterbalance ‘Sunken Cost Fallacy’

The Oxford Dictionary defines sunken-cost fallacy as ‘the phenomenon whereby a person is reluctant to abandon a strategy or course of action because they have invested heavily in it, even when it becomes clear that abandonment would be more beneficial

At the Mandt System we encounter this phenomenon with surprising regularity.  Most often from organizations but also, on occasion from individuals.  The rationale we hear for not making an immediate change in De-escalation training or crisis prevention training program is usually along the lines of ‘….well we have already invested in the program we want to change from, so we might as well continue until our current certification expires and then come across to the Mandt System…’ or ‘ …once we have used up the workbooks we have been forced to purchase, then we will schedule our switch to Mandt training.  

Arguably both examples are versions of the same thing, and that is that once the upfront investment having been made,  we the organization or I the individual might as well stay the course in order to get my monies worth, or a version to that effect.  Interestingly many fairs and theme parks work of the same principle.  Once you have paid an initial parking or entry fee you are reluctant to abandon that investment once you realize that any rides or activities worthwhile come at an extra fee.  So, you wander around and finally hunger and or thirst drive you to a $5.00 bottle of water or $10 slice of pizza.  Sound familiar?

For what it’s worth a study published in Scientific Reports in 2020 showed that Capuchin & Rhesus monkeys showed ‘sunken-cost’ behavior effects, so this is not an entirely human issue… https://rdcu.be/cod2t

So, what are our tips to the organization or individuals finding themselves in this position?  Specifically, that of having purchased or invested in a training program or approach that is not cost effective, does not meet their learning outcome needs or does not meet their safety needs.

Tip 1 – Do safety considerations outweigh the risks associated with continuing until the program certification ends?  If they do and staff or service users are injured before a program switch has occurred, then it is going to be hard to defend this action in the face of litigation.  Imagine if a car maker knows of a safety issue and determined not to address or recall for current customers on the basis that they were going fix the issue in the next model year…. Has all the makings of a class action lawsuit.

Tip 2 – Do staff know that current program is not meeting their own or their service users learning or safety needs?  Often it will be through staff evaluation and feedback that organizational leadership or managers learn of the program disconnect.  From the perspective of creating a positive workplace culture shaped by healthy workplace relationships, postponing the change in program switch may not be communicating the message that is well received by staff or service users and advocates.  The message here might be construed as ‘We have told you what is wrong with this program and approach, and you have agreed and found an alternate.  However due to the money already spent on workbooks or such, we have to wait 1 or 2 years until we can access the solution….’  This approach has a rather strong potential for its unspoken message. 

Tip 3 – Administrators may drive the change due to a better cost benefit assessment rather than any specific learning or safety concerns and existing trainers are happy with the current program.  Rather than upset the trainer cohort the decision is made to allow the current training cycle or resources to run out rather than ‘changing horses, mid-stream’?  The challenge with this approach is the trainers will likely sabotage the new program on basis on their lack of involvement in the change process or decision-making considerations.  Most employees understand that investment decisions must be balanced between cost, effectiveness and efficiency.  Engaging with those directly affected through a consultative process may well avoid and in fact create further advocates for the change process.   

To paraphrase Dietrich Bonhoeffer, ‘….. if you find yourself on the wrong train, running down the carriages in the opposite direction of travel only brings temporary relief.  You are still on the wrong train….’

If you want to talk about changing trains, we would love to hear from you, listen to your situation and offer thoughts and options for you to consider.  Connect with Mary@mandtsystem.com , no pressure sales tactics, just an open ear from a partner in creating a safer workplace.

Simon Kemp – CEO 

Are you ready to start training?

Our programs will help you build a safer, healthier workplace culture.

e-Learning In-person Training