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Nudge theory: what does HR need to know?

Published 21st February 2018 by Investors in People
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With a proven record at the governmental level, nudge theory is increasingly seen by organisations as a way to positively influence employee behaviour in the knowledge economy. But what is nudge theory, how can organisations use it and what does it mean for HR professionals?

Nudge theory: what is it?

Nudge theory’s goal is to change behaviour by influencing the emotionally-driven, automatic part of the brain. This contrasts with methods of behavioural change that try to influence the logic-driven part of the brain.

This principle has been used for many years. When we see a notice near a sink warning of scalding water, it’s always ringed in red because we instinctively recognise the colour red as a sign of danger. The process of recognising this sign and becoming more cautious is automatic.

This is effectively a nudge. It’s not trying to rationally convince us why it’s a bad idea to scald ourselves. It pushes us towards an automatic decision to be careful when using the tap. Nudges aren’t designed to eliminate choice, but to push us towards a specific choice.

While the principles behind nudge theory aren’t new, it’s the first time they’ve all been brought together in a unified, multidisciplinary theory and it’s this that has raised awareness of how effective the underlying principles can be.

Dashboards that display the number of customers helped can mould an employee’s end-of-the-day fatigue into a positive feeling, like satisfaction, rather than frustration.

The first introduction many people have to nudge theory is stories about the Behavioural Insights Team, a part-government owned organisation that was the first in the world to apply behavioural science to policy-making. Colloquially known as the ‘Nudge Unit,’ this team uses nudge theory to optimise everything from encouraging people to pay taxes more quickly to reducing the number of parents who bring their children to A&E with non-urgent problems.

It’s important to note that nudge theory is not without its detractors, who levy a range of criticisms including that it is inherently exploitative and that it lacks scientific credibility.

Nudge theory in organisations: how is it used?

As in society, nudge theory has been used in organisations for many years without being labelled as such.

The clearest example is in health and safety and compliance. These include ‘how to lift properly’ labels on heavy loads, brightly-coloured hand washing stickers near sinks for employees who work with food or different coloured chopping boards for different types of food.

A more recent example of nudge theory is positive reinforcement, for example to help employees connect with beneficial outcomes from their work. Dashboards that display the number of customers helped can mould an employee’s end-of-the-day fatigue into a positive feeling, like satisfaction, rather than frustration.

The latest application of nudge theory is in linking it with performance and management, with organisations increasingly considering it as a way to improve productivity in the knowledge economy. This is partly due to recognition that directive, ‘you shall’ methods of leadership and management simply do not raise levels of performance and that more subtle methods are needed to mould productivity in the 21st century.

Ebert and Freibichler (2017) talk of nudge management, which uses the underlying behavioural science of nudge theory to better align the unconscious behaviours of staff with organisational objectives.

The authors give an example of an organisation suffering from meeting overload. Changing the default duration of a meeting from 60 minutes to 30 minutes shifts the overall perception of meeting time in people’s minds so that 45-minute meetings then seem on the long side, whereas before 45-minute meetings would have been below the average. This perception largely happens automatically but over time should reduce the incidence of longer meetings at the company.

Nudge theory in HR: what are the use cases?

Nudge theory can have impact in any HR area if the choice architecture, or the way that individuals make choices, is considered. HR need to be aware of what employees experience on the frontline, and how they make decisions, in order to know how and where to influence choice.

Directive, ‘you shall’ methods of leadership and management simply do not raise levels of performance.

That said, there are some clear examples of where nudge theory can add significant value to the HR proposition. Many of these areas are where organisations start experimenting with the principles of nudge theory:

  • Performance reviews: employees struggle to remember all that’s happened in the past year, which can make performance reviews time-consuming and ineffective. Regular nudges throughout the year to record successes or challenges will prevent employees forgetting key details and help them build a performance review without really realising they’re doing it. A peer-to-peer recognition scheme could serve a dual purpose here: encouraging team unity while serving as a record of achievement to be used in performance reviews
  • Financial wellbeing: Auto-enrolment is an example of nudge theory in practice: rather than logically trying to convince workers on the value of pensions, the government has adopted an ‘opt-out’ policy with auto-enrolment. Staff can still take themselves out of the pension scheme, so the choice is there, but it’s much easier not to. Employers can use nudge theory in other ways to push the financial wellbeing agenda, such as sending ‘savings reminders’ with electronic payslips that encourage people to save a little as soon as they’re paid each month
  • Survey architecture: HR are increasing the number of surveys sent to employees as they quite rightly ramp up employee voice, but it can be hard to get employees to fill them in. HR could utilise nudge theory in several ways, for example incentivising survey completion, using the principles of peer pressure by publicly comparing the response rates from different teams and breaking surveys down into manageable chunks that appear on employees’ screens throughout the week
  • Wellbeing: healthy eating is an area ripe for shaking up with nudge theory. Organisations that provide free fruit often provide it passively, whereby employees have to physically get the fruit from a central location. Organising a ‘fruit trolley’ to come round will encourage consumption. Organisations can also display healthier choices more prominently, for example subsidising the cost of healthy snacks in the tuck shop and raising the price of unhealthier options. Pop-ups that appear on screens to remind employees to get up and move around are another good idea