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When people are aboard the sunk cost ship

I have a junior consultant that I have been working with for a couple of years now. Naturally, I have invested a lot of time into her development. She has a lot of strengths, but she also has her weaknesses. Like most promising young consultants, she is committed to working diligently on improving those weaknesses. The problem is that a few of her weaknesses are so ingrained into her personality that attempting to rectify them is a slow, uphill battle. After seeing her failure to progress, I have realised that her intense focus on improving her weaknesses has kept her from improving—and capitalising—on her strengths.

The sunk cost fallacy is defined as “a greater tendency to continue an endeavour once an investment in money, effort, or time has been made”. Once we set our minds to something, it is hard to convince us to change course. A common example of this fallacy in action is in the stock market. If you have already invested a lot of money into a stock, it becomes increasingly difficult for you to pull out and cut your losses. Instead, you may even opt to sink even more money into that stock. If all objective signs are pointing towards the need to exit, yet you are unwilling to cut and run, then you are most likely falling victim to the sunk cost fallacy.

Sunk Costs from different perspectives

Things are usually more cut and dry when it comes to finance, but people are an entirely different matter. Let’s take the consultant example and examine the fallacy from two perspectives. First, from her perspective. She is young, and she has been successful throughout her life, whether in school or work, because she has an exceptional work ethic. Thus, she has never faced a problem that she has not been able to work her way out of. The problem she is facing is that she struggles during presentations with prospective clients. She does excellent work before the presentation: the clients seem to like her, she communicates professionally, and she meets expectations as far as number and quality of leads. The problem arises when she has to give the presentation herself. The likability that propels her at all other stages of the process evaporates when she starts to present. She takes constructive criticism and attempts to apply it, but so far it has been to no avail. Despite her work ethic, she has encountered a barrier that she might not be able to break through. And naturally, given her personality, she is obsessed with doing so.

From my perspective, this consultant is frustrating. But I am not at all frustrated by her inability to present. She has put the time and effort into improving her presentation skills, but the results are simply not coming. I cannot be upset with someone who puts the work in. So, what am I to do as her leader? As someone with significantly more experience, I need to be the one to tell her when it is time to cut her losses. That is my obligation as someone who cares about her development. If I do not step in, she will continue to spin her wheels, and she will be wasting her considerable gifts. Instead of focusing on improving her strengths even more, she will spend all her time focussing on a lost cause. In an effort to be a more “complete” consultant, she may end up with a worse career because of it. But in the end, this is her decision to make.