Nudge, nudge, wink, wink: why HR should consider nudge economics

November 22, 2017 Arnab Banerjee

 

In October, Richard Thaler won the Nobel prize for economics – usually, a piece of news I consume online as I bite into my lunchtime sandwich and then forget all about it until next year. But something nudged me – this was different. As the HR function transitions from gate-keepers to influencers to thought leaders, this piece of news was a timely reminder about a very potent tool in the arsenal of all HR professionals.

 

Thaler is the father of ‘nudge' economics. According to him, ‘a nudge is any aspect of the choice architecture that alters people's behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not’.

 

Perhaps the most well-known manifestation of ‘nudge' economics in action is the gents' at Schipol Airport, Amsterdam. Quite inexplicably, the picture of a fly etched in the urinals has proved beyond all reasonable doubt, a simple, inexpensive way to reduce cleaning costs. You can hear all about it here from the man himself on YouTube.

 

The University of Louisville in Kentucky has been even more inventive: placing the emblem of the rival University of Kentucky at the bottom of the urinal in some of their changing rooms. More sanitary manifestations are the stairs leading out of the Odenplan subway in Stockholm, Sweden, which have been transformed into a giant functioning piano keyboard. By applying pressure to each step you produce a musical note. Commuters have opted for the new stairway making musical movements as they ascend up and down, resulting in 66 percent more people choosing the musical stairs over the escalator.

 

Social use to organisational implication

 

In the UK, in order to ensure that employees save for their retirement, employers, rather than letting employees opt in, automatically enrol certain staff into a pension scheme and then contribute towards it. Employees can always choose to opt out but very few actually do – there's no nudge to do that. As I was writing this, the UK government launched a new government website, Ethnicity Facts and Figures, which audits disparities in educational attainment, health, employment and treatment by police and courts between ethnicities. This audit is a giant nudge by the government to itself, as an employer and provider of public services, to change its behaviour on issues of racial inequality.

 

HR systems are continually providing the organisation with a platform to experiment with nudges and thereby innovate a new, transparent performance and learning culture. Bosses can, if they want, actively seek out feedback about themselves from their team as often they want. By encouraging a free and frank exchange of views and sharing the constructive criticism received, the boss can embed an open and honest performance culture within the team and inspire other teams to follow suit.

 

Instead of Learning Managers prescribing a curriculum to employees, learning platforms use machine learning to subtly curate relevant learning plans for employees, depending on, among other things, where they are in their career, their aspiration, their specialisation, preference, interests, location, experience, seniority, job title, trends, peer uptake and reviews. Phew, and this is not even an exhaustive list. These learning plans appear as suggestions, much like ‘"pages you may like" on Facebook, but without annoying commercial undertones. Experience suggests employees engage with these suggestions more openly than they do with an enforced curriculum from the HR department.

 

So dear HR folks: do you nudge?

 

Perhaps I should sign off like Eric Idle from his Monty Python days – ‘Wink, wink, nudge, nudge, say no more, say no more'.

 

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