Nudge Theory For HR: Driving Organizational Change

The concept of nudge theory is based on behavioural science. It suggests using subtle direction to help steer people towards making a decision or taking a specific action, rather than enforcing it.

It was developed by American economist Richard Thaler and Harvard Law School Professor Cass Sunstein, who popularized nudge theory with the release of their book, Nudge – Improving Decisions About Health, Wealth, and Happiness (2008).Governments commonly use nudge theory to influence the behaviour of citizens. For example, Britain’s "Nudge Unit" (AKA their Behavioural Insights Team) successfully used nudge theory to encourage people to:

• Give to charity

• Participate in elections

• Become organ donors

• And more…

But how can nudge theory be put into practice, and does it have a role to play in the workplace? Let’s dive into how it works and how it can work for your organization…

Nudge theory is also known as “choice architecture.” This makes you, as an HR professional or leader, a choice architect.

In that sense, you can use nudge theory to design employees’ decision-making processes and use positive reinforcement to encourage change, guiding them towards the most favourable outcome for your organization.

That in mind, nudge theory works best with a strategy driving it.

Before you start “nudging” employees, first determine what’s potentially stopping them from making the desired decision.

The ‘nudging techniques’ you apply should then make it as easy as possible for the employees to make the desired decision or take the desired action.

Did you know? Employers experience failure rates of up to 70% when trying to deliver change in the workplace.

So, how do you properly apply nudge theory? Would a company-wide email reminding employees to complete their self-assessments be enough? What kind of incentives can you offer that would be fair for all workers?Let’s take a look at the most common nudging techniques and how they can be applied in various workplaces scenarios:

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How you present information plays a huge role in how it’s perceived. In a corporate setting, you can use nudging techniques to improve how employees view a certain task, experience, or upcoming change.Example: It’s time for your sales employee’s annual performance review. When relaying customer feedback for the past year, you can frame the information in two ways:

• 65% of customers say they had a positive service experience, or…

• 35% of customers say they had a negative service experience.

Of course, one statistic informs the other, but it’s how you introduce the information that impacts their perception. If you lead with 65% of customers having a positive experience, it sets a positive tone.

Whereas leading with 35% of customers having a negative experience may demoralize the employee, even if the majority of his interactions were indeed positive.

Want to encourage employees to become more interested or involved in a workplace initiative? Use motivational nudges!

Comparison and competition tend to be natural motivators. If an employee sees one of their peers, or most of them, involved or succeeding in a workplace initiative, it can motivate them to join in.

Example: Your company has started a mentorship program that pairs senior staff with interns and entry-level employees. The only problem is, you have more mentees than mentors.

Though senior staff members initially voiced interest in the program, few have officially taken on a mentee. First, you have to get to the heart of the issue: Mentors may have lost interest, feel they’re too busy, or aren’t sure how the experience will play out. If the main issue is lost interest, implementing motivational nudges can help.

In this scenario, motivational nudges may include rewards and incentives for those who participate, such as increased paid leave for each year of mentorship, a monetary bonus, or another high-quality incentive.

If receiving those incentives isn’t motivation enough, seeing their peers take an extra paid holiday when they’re feeling tired or overworked may eventually do the trick.

When an employee doesn’t believe they have what it takes to achieve a goal, they likely won’t attempt it at all. In this scenario, you can use nudges to change their perception of their abilities and give them the tools they need to make the task easier.

Example: More likely than not, you have an active living program already in place in your organization—but is it being used? If not, you may just need to remove some simple barriers.

For example, in the office kitchen/break room, putting healthy snacks at eye level and making them more accessible than unhealthy snacks can naturally motivate employees to make better food decisions.

Or, if you’re looking for ways to make meetings more engaging and enjoyable, give employees the freedom to choose the location and activity. When sending a meeting invite, provide them with the option to book a walking meeting, a meeting over lunch, or a video/phone call.

Having trouble getting everyone on board with a workplace change? When leadership members or peers voice their approval of a change, nudge theory can help move employees in the same direction.Encouraging employees to share their goals and ideas on the topic can help others come to agreement. You could also use social proof from other companies or related industries to show employees how well an idea has worked, and how they could experience the same results.

Example: Leadership wants to implement a hybrid working approach, where employees can choose to either come into the office or work remotely, but employees are divided.

While some employees appreciate the flexibility, others feel a hybrid approach might hinder workplace culture, communication, and engagement.

Since many companies have already implemented hybrid working, you’ll easily be able to find reports and case studies on its success rate.

Use this established data to speak to your employees’ concerns and introduce them to tools that will help their experience run smoothly.

How often do you click the “Accept Cookies” button on a website without looking at your options? Quite often, most likely. That’s because people are more likely to accept the default direction than go against it (in low-stakes scenarios).

In the workplace, you can change the default option in a scenario to positively influence your employees’ decisions.

Example: Let’s say you want to increase enrollment in pension schemes. Instead of providing employees the choice to opt-in to a pension scheme, automatically enrolling employees in pension schemes and including an opt-out option offers a better likelihood of success.

You can find proof of this in the UK Government’s 2012 pension policy initiative.

Are your employees resistant to the change you’re trying to make? Or are they more resistant to the complex process leading up to it?

Oftentimes, it’s the latter. While the change itself may be simple enough, the process beforehand may seem overwhelming, confusing, or inconvenient to employees, which is why HR must develop a clear change management strategy.

Here’s how to incorporate nudge theory into your change management strategy:

Before implementing a change management strategy, you need to clearly define what changes are needed to overcome your obstacle or begin your new business path. Work backwards from your goal to determine the following:

• What changes are absolutely necessary in order to reach your goal?

• What changes will make the most impact with the fewest issues?

• What changes can you avoid?

Next, examine your change management strategy with your leadership team. Analyze how it will be perceived by employees, as well as how it will impact departments, teams, and individuals. Prepare your answers to employee feedback and concerns so you can provide clear guidance and assurance.

Create a step-by-step schedule that walks the organization through the change. This should start with any necessary announcements and notices, through to full implementation and adoption of the change, and any future reviews or reflections.

As outlined earlier, there are several different nudge theory techniques that can help employees buy-in and get comfortable with an organizational change. Review these recommendations to determine which nudge techniques should be used to achieve the best results for your company.

Roll out your chosen nudge theory techniques and begin gathering employee feedback or data as needed. Set a realistic timeframe to gather initial insights, after which you can adjust your strategy or techniques as needed.

No nudging technique will work in every scenario, for every team. Your team’s response to change will depend on their relationship with their work, their leadership, and their peers. Change is difficult, so be open and understanding to your team’s concerns.

While it’s true that some employers may use nudge theory in a manipulative way, you can easily avoid falling into that category by ensuring freedom of choice, transparent communication, and positivity.

Ask yourself:

Nudge theory relies on providing freedom of choice. Make sure you’re giving employees an opportunity to opt out of the decision or action.

Have you ever ordered something online, only to receive the product and it not be the real deal? Frustrating, isn’t it? You need to make it abundantly clear what your employees are agreeing to, signing up for, or taking part in.

Nudge theory should only be used to guide those involved towards an outcome that will improve their behaviour, environment, or livelihood.

Nobody wants to be forced to change their behaviour or actions. This top-down type of leadership can make employees feel like they aren’t respected, trusted, or valued in the workplace, leading to weak workplace culture and lack of motivation.

Trying to force change upon an employee can, more often than not, lead them to ignore what you’re trying to get them to do, or to rebel and do the exact opposite.

To avoid that outcome, HR should instead use the nudge theory to encourage change. This approach consciously or unconsciously encourages employees to improve and change their behaviours themselves, leading to better organizational alignment, increased motivation, and better day-to-day engagement.