Click here to download this article.
When we think about the purpose of Human Resources in a company, administrative tasks generally come to mind first. But in today’s largely disengaged workplace, HR professionals take on a much broader role as they are tasked with boosting employee engagement, wellness and performance; helping individuals learn, develop and perform at their best; and providing useful feedback while also serving the company’s organizational mission. In order to reach these goals, companies increasingly incorporate behavioral economics principles when designing programs, corporate policies, communications, change management and training.
Today, the nudge theory takes center stage.
The nudge theory, coined by authors Richard Thaler and Cass Sunstein in Nudge: Improving Decisions About Health, Wealth and Happiness is about creating an environment that makes the right decisions easy to make. “Only 10 percent of human decision making is based on rational evaluation,” says Sille Krukow, founder of Krukow, a company that provides consultancy and development within behavioral design, nudge and behavioral optimization. “Translating what we know is the right thing to do into true behavioral change requires an extraordinary amount of energy, which is why 90 percent of decision making is driven by a subconscious or automatic system.”
Take for example the seatbelt in your car. We have all been taught, through road safety campaigns or lectures from our parents, that buckling up keeps us safe — yet we still forget to do so from time to time. The blinking light on the car’s dashboard however is a perfect example of a subtle reminder that pushes us towards safer behavior.
While these types of nudges have existed for quite some time, the nudge theory is now being operationalized and purposefully implemented in the modern workplace to push employees to reduce absenteeism, boost productivity, prioritize wellness, communicate more effectively, encourage a better quality of life — in short, creating an environment that is conducive to success, for individuals as well as the organization.
“Often companies hold annual meetings to boost motivation, communicate the company vision and how employees should behave accordingly. They then expect that people will translate that into behavioral changes,” says Krukow. “While it may happen for the first week, in the long term we need to approach behavioral change in a different way.” Researchers Philip Ebert and Wolfgang Freibichler suggest well designed nudges that align employees’ unconscious behavior with a company’s objectives.
Incorporating these nudges successfully into the workplace requires a few key elements. First, companies must identify specific behavioral and business targets. Secondly, in order to set up purposeful “choice architecture,” or an environment that influences employees’ decision making, HR professionals need to be intune with the daily experiences of their staff and how they make decisions. And lastly, companies need to identify and eliminate the barriers — which can be physical, social or psychological — standing in the way of behavioral change.
“Changing behavior is not about using knowledge, but rather super simple interventions that engage our basic human instincts,” she says. After placing bottles of water on every desk each morning, Krukow quickly saw the returns of the subtle nudge: employees drank more water and walked to the bathroom more frequently — keeping them hydrated and helping them reach basic exercise targets.
Today organizations are increasingly connecting the dots between healthy, happy employees and higher productivity, higher engagement and lower absenteeism. And while informing employees of the benefits of healthy behavior is crucial, studies show that simple nudges can be more effective when it comes to creating real and lasting change. Google reported reducing employees’ collective calorie count by three million simply by placing healthy foods in more visible and accessible locations in the employee dining room. Other companies saw a rise in fruit consumption after they changed from a central help-yourself fruit bowl to a traveling fruit cart that served as a constant reminder to snack healthy. Influencing financial wellbeing is no different. Employers can offer auto-enrollment benefit options or send emails or messages to remind employees to set aside savings with each paycheck.
“Changing behavior is not about using knowledge, but rather super simple interventions that engage our basic human instincts” says Sille Krukow.
Creating an “employee of the month” program is also another example of a little nudge that goes a long way. Celebrating individual successes can boost morale and engagement and also encourage other coworkers to consider how they can boost their own performance.
Likewise, when global retailer Inditex set its sights on boosting sales targets in its stores, the company put up posters and publicly tracked the sales performance of individual employees. Used as a social driver, the initiative made everyone’s performance visible, nudging the entire team to perform better.
As a result, employee engagement rose by as much as 100 percent. This strategy can be used to encourage employees to get on board with other company initiatives as well, such as surveys and various other programs.
Nudges can also be used to get employees onboard with initiatives that benefit the company as well. For example, when Virgin Atlantic wanted to cut its fuel consumption, the company told pilots that they would be part of a fuel use study — a nudge tactic that reduced carbon emissions by roughly 20,000 tons. Similarly, with the organizational goal of reducing tardiness and absenteeism, Nimble Software Systems sent employees simple reminders prior to their shifts. Over a two-year period, the shift-scheduling platform cut tardiness by 21 percent and absenteeism by 16 percent. Nudges can also replace, or reinforce annual performance reviews. Case studies show that regular nudges year-round motivate employees and keep key performance targets top of mind.
App developers are integrating the use of nudges into their platforms to incite a little friendly competition among employees. With a points system using badges and a running scoreboard, companies can create challenges between individual employees or even across regions and countries. Rewarding individuals for achieving short term goals or for participating in surveys or simply reading content drives performance towards achieving the company’s objectives.
Similarly, when Express Scripts, an American benefit manager, set the objective of creating a more united workforce, the company turned to nudges to strengthen the sense of community in the workplace. With a social network-style online platform, company leaders can nudge employees to share articles, books, photos and activities within digital communities — developed around similar areas of interest — encouraging a feeling of camaraderie. This can be particularly important in sprawling companies where employees from different departments don’t often have the occasion to engage with each other.
So whether the goal is healthier employees, reducing absenteeism, boosting engagement or increasing productivity, HR professionals can foster real change within their organizations by focusing attention and resources on these types of subtle nudges that push employees in the right direction.