Nudge Theory in the World of Work

Nudge Theory in the World of Work

Nudging obviously has a role to play in the wider world, but what about specifically in the world of work? Well, we think that an awareness of how nudge theory works is useful for everyone involved in work, and that the concepts behind nudge theory can be effectively (and ethically) used by organizations to improve both performance and engagement.

In this post we identify a few examples of where and how nudging can be used in the workplace to change and improve behaviors. For more information on different types of nudges, see our post covering Sunstein’s 10 important nudges.

1 – Project Delivery (visual reminders)

Placing visual reminders and progress trackers around an office can help change behaviors. Things like program tracking posters (think of the big thermometers for fundraising) can help remind people of what priorities are, keep them focused, ensure that everyone is moving in the same direction and improve performance.

2 – Learning (disclosure)

Many organizations want their employees to take the time to learn and develop new skills and capabilities. They also support this goal by setting aside reasonable budgets for employee development. However, in many instances these budgets go unspent and employees fail to pursue new learning and development opportunities.

To address this, it may be worth disclosing available budgets so that employees are reminded of what’s available. When individuals are informed of these budgets, they’ll be more likely to spend them. Of course, that’ll be a cost to the organization, but an investment one really.

3 – Compliance (email reminders and social norming)

Many industries and organizations have compliance requirements that staff need to adhere to. For example, financial services organizations need to comply with certain levels of mandatory training.

One way to increase the rate of completion of mandatory training is to email everyone reminding them that the action is due, but also notifying of the proportion of their peers who have completed the training.

As an aside, this process of letting people know what their peers are doing is known as social norming and plays on human’s desires to be part of the main group. This is a clear example of using nudge theory in the world of work.

A word of caution though. If the rate of completion among peers is high, this will further increase completion rates. However, if the rate of completion among peers is low, doing this may actually slow the rate of completion.

4 – Pensions Savings (defaults)

Encouraging people to save sufficiently for retirement is a real challenge in many countries, and one that organizations can significantly help with.

By changing on-boarding processes so that individuals who join the organization are by default set up to make moderately high levels of pension contributions (unless they opt out), organizations can increase the overall savings rates for their employees. Similarly, organizations could update their promotion or annual pay increase processes so that a set proportion of these increases also defaulted to becoming pensions contributions.

5 – Health and Wellbeing (increase ease and elicit intentions)

Employee health and wellbeing is an important issue in many organizations. Simple activities such as walking can material increase health and work related performance, but few people do things like go for a walk during lunch.

To help people do more of this, organizations can share walking / running maps and routes with employees, encourage walking meetings and ask employees if they intend to take a walk over their lunch break at some point in the week.

Nudging in the world of work, like persuasion, can be used with more or less ethical intentions. When it is less ethical it is known as Sludge. A lot of nudge theory involves changing a choice architecture that people are faced with.

Part of the reason that nudging is so effective is that we all have cognitive biases. We also have bounded rationality, limited ability to make really rational decisions. Similarly, the fact that humans have a dual process way of thinking plays into why nudging is effective.

Communication is another tool often used to change people’s behaviors. Ideas like the rhetorical triangle and the five canons of rhetoric shed some light on how this works. For a more detailed look at communicating for persuasion, explore Monroe’s Motivated Sequence.

Increasingly, products are also design to be persuasive, as it were. They are designed to create habits and drive increased use. Examples of this include Fogg’s model and the Hook model of behavioral design. You can listen to our podcast on this topic below.

We think there are some merits to using nudge theory in the world of work. We believe that nudging is an effective and helpful tool and that through nudging it’s possible to help individuals become more effective, engaged and happy in the workplace.

Like so many things though, to use nudge well in the world of work takes some time and effort and planning. Rushing into some of these things can result in interventions that yield limited results, or worse still, can result in negative results as individuals feel they are being manipulated.