So You Want to Jump on the "Nudging" Bandwagon? Start with your Employees.

By Linnea Gandhi (TGG Group)

You’ve read Misbehaving: The Making of Behavioral Economics, and all the classics preceding it – from Nudge to Scarcity to Thinking Fast and Slow. You’ve witnessed the rise of public sector “nudge units”, who have deployed behavioral science to conserve water, speed up tax collection, and help military personnel save for retirement, among other accomplishments. You’ve even seen companies in the private sector increasingly testing and launching initiatives to nudge their stakeholders for good, from Pepsi promoting smaller serving sizes (as discussed in an earlier blog post), to ComEd and other utilities companies promoting energy saving through Opower tools.  And now, you want in.

For many leaders in this situation, the natural temptation is to focus on nudging your customers. It’s where your daily focus tends to be. And no wonder: as marketers well know, applying behavioral science to the customer experience – from displaying price discounts, to designing defaults and bundles, to providing opt-out e-mail subscriptions – can certainly drive quick returns to the bottom line. However, the organizations that get the most bang for their behavioral science bucks may arguably be those who also follow in the footsteps of government nudge units and use science to improve the lives of their citizens—a.k.a. their employees.

Why? First of all, nudging your employees is often relatively cheap, easy, and quick. There’s a lot of low-hanging fruit to pick off, already proven in lab and field environments and ready for relatively painless implementation in your organization. Second, it’s far easier to follow the rules of thumb Professor Richard Thaler puts forth to qualify a nudge as ethical: at the very least, you’re far more likely to be transparent about employee nudges than customer nudges, and it is often much easier to see how the nudges are in your employees’ best interest.  Finally, nudging your employees can also improve their well-being, a metric recently proven to increase long-run corporate profits.

Ready to start? Below are ten curated (but not comprehensive) nudges to promote the well-being of your employees. Consider this list a quasi-playbook for applying behavioral science within your organization. Enjoy!

Use nudges to promote your employees’ financial well-being:

1.     Default your employees into saving for retirement. Perhaps one of the most impactful nudges is to auto-enroll your employees into a retirement plan. Studies from as early as 2000 demonstrate a massive jump in enrollment merely by making it automatic. While you’re at it, make sure to select an appropriate default savings rate into which your employees are enrolled; further studies show this rate persists.  

2.     Better yet, give them the opportunity to “save more tomorrow.”  As detailed by Professor Richard Thaler and his colleague Shlomo Benartzi in a 2004 study, employee savings can be further improved by asking employees if they wish to opt-in to a program whereby their savings rate increases with each future salary increase.

3.     Irrespective of program, “Keep it simple, stupid.” Financial decision-making – from saving for retirement to selecting the right insurance products during open enrollment – is hard. Keep options as simple as possible, pre-filling information you already have on file or at least having a Human Resources representative on hand to facilitate completion of complex forms. Additionally, adopt metrics that are meaningful to your employees, such as retirement funds labeled by target retirement date or insurance products described in everyday rather than technical language.

Use nudges to promote your employees’ physical well-being:

4.     Tweak your cafeteria design. Follow in the footsteps of schools across the country, who, with the help of the Cornell Center for Behavioral Economics in Nutrition Programs, are nudging students to eat healthier by making more nutritious options (e.g., plain milk) more attractive and easier to access than less nutritious options (e.g., chocolate milk). Further, you can provide smart mappings to help your employees quickly understand which options are healthiest, such as color-coding salad bar tongs based on the nutrition of the food the tongs are meant to pick up. 

                           Color-coded salad tongs nudge eaters to choose their toppings wisely. 

                           Color-coded salad tongs nudge eaters to choose their toppings wisely. 

5.     Keep junk food out of sight, out of mind, and out of stomach. Beyond the cafeteria, you can continue to nudge healthier snacking options by taking a note or two from merchandisers. If you have vending machines, place the healthiest snacks at eye-level. If your employees like to set out shared candies, especially around the holidays, provide them with opaque rather than transparent bowls, per research by Brian Wansink at Cornell. If all else fails, just buy a few Kitchen Safes for the office. 

                 The Kitchen Safe keeps tempting items off-limits for pre-specified amounts of time. 

                 The Kitchen Safe keeps tempting items off-limits for pre-specified amounts of time. 

6.     A spoonful of sugar gets people to the gym… Wharton professor Katherine Milkman has demonstrated the power of “temptation bundling” – pairing instant gratification with a behavior we should do, but don’t want to do – to nudge increased levels of exercise. If you have an office gym, provide premium entertainment channels on the machines that are less easily – or at least less cheaply – accessible to employees elsewhere.

7.     …and so does a reminder of the cost of membership. When we remember we paid for a recurring service, we are more likely to engage with it to effectively “get our money’s worth.” Professors John Gourville and Dilip Soman show this in the realm of gym memberships: when we see our monthly membership bill, we are more likely to go to the gym. You can directly apply this if your employees purchase their gym memberships through payroll; simply make sure the regular payment is detailed out as a deduction on their regular paystubs.

8.     Employees too busy to work out? At least make the stairs fun.  From stairs painted and programmed to play as piano keys to stairs made into a racetrack in anticipation of the 2024 Olympics in Hamburg, there are countless public examples of making a more active lifestyle fun. You can do this within your office too; for instance, one fan of Professor Thaler’s work has upgraded his office stairs with chalkboard, colored chalk, and music to nudge employees to take the stairs rather than the elevator.

                      Chalkboard paint in the stairwell subtly nudges employees to skip the elevator. 

                      Chalkboard paint in the stairwell subtly nudges employees to skip the elevator. 

Use nudges to promote your employees’ mental well-being:

9.     Hire Mother Nature. Finding an office space with windows overlooking a park or lake, decorating your office with plants, or even providing a default nature-themed screen-saver can help replenish your employees’ depleted cognitive resources. For instance, one study found that taking breaks and gazing at representations of nature – even for less than a minute – improved subsequent concentration.

10.     If you build it, they will come. Shared communal activities – such as lunchtime – have been shown to increase employee cooperation. Identify natural shared spaces in your office and ensure their décor provides a welcoming environment for employees to socialize together during breaks or mealtimes.

 

One last word to the wise: across any and all initiatives, wherever possible, you will be best off testing before a full roll-out. Irrespective of how many lab or field studies have been run to prove the validity of a nudge, there is no guarantee that it will work as well – or at all – within a new context. If you can’t run a randomized controlled trial (the gold standard), try piloting on a small, representative population and comparing the results to a pre-pilot baseline or a comparable non-pilot population. If even this is not possible, you can try running a simulated evaluation of the initiative, using realistic hypothetical cases and reported intentions by employees. Creative ways of testing can often be found and are well worth the effort to prove the science works in your particular context.

With that said, go forth, nudge away, and – if nothing else – nudge for good!