About this time of the year,
popular magazines are filled with articles about helping you make sure that your
New Year’s resolutions stick this time. In their best-selling book Nudge, Professors Richard Thaler and
Cass Sunstein show that an effective way to change people’s behavior is to
“nudge” them, rather than say, demand big changes in attitudes or behavior. These
nudges can be passive (e.g., placing your work-out clothes and bag right by
your desk or bedside) or can be self-imposed (e.g., using a smaller-sized plate
when having a meal). The effectiveness of this approach has been demonstrated
time and again, even in the UK, where in 2010 then prime minister David Cameron
created a Nudge Unit. One of its successes was dramatically increasing on-time
tax payments by simply reminding taxpayers that many British citizens pay their
taxes on time (an example of a nudge using social norms).
This is their description of
what nudging is: “A nudge … is any aspect of the choice architecture that
alters people’s behavior 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
the fruit at eye level counts as a nudge. Banning junk food does not.” (p. 6)
As summarized by Ann Cuddy in
her book Presence, the underlying
reasons for why nudging is effective are the following. First, nudges are small
and require minimal psychological and physical commitment. Rather than
promising yourself that you will never again be late for meetings, for example,
you might make a resolution to not be late for the next meeting you will have
with your boss. Second, nudges operate via psychological shortcuts; for
example, using normative influence (showing what other people would do in a
situation) rather than informational influence (giving all kinds of reasons why
you should do something). Third, our attitudes follow from
our behavior rather than vice-versa.
One of the underlying concepts
behind nudging is that of choice architecture. Choice architecture refers to
the design of an environment that can influence the choices that people make
without necessarily intruding on their freedom of choice. A nudge is “any
aspect of the choice architecture that alters people’s behavior in a
predictable way without forbidding any options or significantly changing their
economic incentives.” A nudge is not an order, nor is it forced compliance;
it’s an attempt to make a better option more visible.
In their book, Thaler and Sunstein
describe different types of nudges; many of these apply more to public policies
than to organizational policies. However, as Thaler and Sunstein mention,
employers are themselves choice architects. In implementing their policies, organizations
do in fact nudge employees one way or the other towards certain choices, for
example, when they opt in or out of certain benefits. I have not read many
examples of how managers can apply nudging strategy in the work place, although
managers do in fact nudge, whether they are conscious of this or not. My focus
here is not so much on organizational or employer policies, but on what individual
managers can do to become more effective choice architects.
In doing this, I am using as a
framework Peter Drucker’s (1973) five critical responsibilities of a manager:
setting objectives, organizing (e.g., analyzing activities, structuring,
selecting people for jobs), motivating and communicating, measuring, and
developing people. Sunstein (2014) has outlined ten types of nudges, which I
list along with an example or two of what managers can do to utilize each of
these types of nudges.
1. Default
rules. The common example here is when employees are automatically enrolled in
retirement plans so that they don’t even have to choose actively. Per Sunstein,
“…in many contexts, default rules are indispensable, because it is too
burdensome and time-consuming to require people to choose.” In the work place,
managers who want to set up regular interactions with their team can create
schedules on their employees’ calendars so that weekly team meetings are
blocked off.
2. Simplification.
Consultant William Scheimann has reported that in his surveys, only 14% of
employees have a good understanding of their company’s strategy and direction.
A recent HBR article found percentages in the same ballpark as Scheimann’s.
There can of course be many reasons for this, but certainly one of them is that
many strategies are complicated, and have not been simplified enough for
employees. Managers can make these strategies understandable to employees by
simplifying and explaining how the elements of the strategy align with team
members’ own objectives. Jack Welch, former CEO of General Electric, once said:
“The more simply your idea is defined, the better it is. You communicate, you
communicate, and then you communicate some more. Consistency, simplicity, and
repetition is what it’s all about.”
3. Uses of
social norms. Informing people what most others do in similar situations has a
big influence on behavior, and is an effective nudge. For example, when working
for a large financial services company, my team and I collaborated with several
consultants and academics to identify the most effective management practices
in this firm. We interviewed 60 of the managers nominated by their superiors as
among the best managers in the company, and 60 so-called average managers (no
one admitted to having poor managers in their divisions). We selected those
practices that best differentiated the outstanding from the average managers,
and used this to build a leadership development program for the company, including
360-degree surveys so managers could compare their results with the best. Google
recently did something similar when they came up with eight critical management
behaviors of their best managers (Garvin, 2013).
4. Increases
in ease and convenience. A nudge that makes it easy for people to choose is
effective, other things being equal. To facilitate communication, for example, managers
can make sure that employees’ work spaces are contiguous (much as what Apple is
doing for its new corporate offices and Google did when it created “bullpens”
or open spaces so that workers could interact more frequently with top managers).
For virtual teams, managers can make sure that employees have access to social
technology tools that make it easy for team members to communicate with one
another.
5. Disclosure.
Explaining the hidden costs of some behaviors (e.g., the full cost of certain
credit cards) is also an effective nudge. Leaders can encourage managers who
are hiring potential employees on the importance of considering diverse candidates,
and point to the benefits of diversity as well as the disadvantages (and legal
implications) of not hiring diverse candidates.
6. Warnings,
graphic or otherwise. For Sunstein, such nudges should be used especially when
serious risks are involved. Managers can explain clearly to employees the
dangers of accepting bribes especially when doing business in countries that
score relatively high in the Corruption Index, and provide examples of
businesspersons from other companies who have been fired or worse, jailed, for
these crimes.
7. Precommitment
strategies. This is a type of nudge where, if people precommit to engaging in
certain actions, they are more likely to follow through. During project review
meetings, for example managers can review action items with their team and ask
specific team members to explain what they will do next about action items on
project tasks for which they are responsible.
8. Reminders.
These are simple nudges to remind people to perform certain actions (e.g., the
e-mail alerts we receive letting us know when to pay our credit card bills). Managers
can set alerts to schedule specific times when they can check in with specific
employees, either personally or through e-mail, and inquire about certain follow-up
items.
9. Eliciting
implementation intentions. In this nudge, one asks a question about a future
conduct to draw out their intention (e.g., do you plan to fill out the employee
survey?). With an employee who might be hesitant to collaborate with others, a
manager may have a conversation with an employee about finding out when and how
the employee might reach out to colleagues.
10. Informing
people of the nature and consequences of their past choices. Through data about
past behavior (e.g., people’s expenditures on car insurance), people can be
nudged into either continuing or increasing their commitment to that behavior. Harkin
et al. (2016) conducted a meta-analysis of the relationship between monitoring
goal progress and goal attainment and found overwhelming evidence for such a
relationship. In fact, they report that “… progress monitoring had larger
effects on goal attainment when the outcomes were reported or made public, and
when the information was physically recorded.” For example, during their weekly
updates with direct reports, managers could review progress on specific task
milestones and reinforce how making progress in these milestones can make a
difference not only to the team but also to the department.
While use of these different
types of nudges might not seem very unusual or unique, I have found this checklist
helpful in reminding managers of the different types of nudges at their
disposal, especially keeping in mind Drucker’s five managerial
responsibilities. As managers think through the appropriate nudges for their
direct reports, they also need to consider the following four questions. Ly et
al. (2013) refer to these as bottlenecks; I’ve adapted their four questions,
which I think are an excellent starting point for managers as they consider the
most effective nudges to use for their direct reports:
1. Are your
direct reports aware of what they need to do but are unable to perform the
behavior, or does the desired behavior need to be activated? This is the
classic “skill” versus “will” question that managers inevitably need to answer.
2. Are
they motivated enough to impose a nudge on themselves?
3. How
much cognitive or information overload is there? A nudge that relies on
providing more information may not work at certain times (e.g., when there are
a significant number of change initiatives or there are pressing deadlines that
need to be met urgently).
4. Are
there competing actions or is inertia involved? If the former, then the manager
might want to focus on discouraging those other actions first.
A key takeaway here is that
changing behavior and influencing others do not have to require herculean
efforts; through effectively using nudges, managers (as well as individuals)
can make strides in achieving their goals – and our New Year’s resolutions.
Furthermore, since managers are already choice architects, they should be aware
of and make use of these different types of nudges to motivate their employees
and build a high-performance team.
Cuddy,
A. (2015). Presence: Bringing Your
Boldest Self to Your Biggest Challenges. New York: Little, Brown and
Company.
Drucker,
P. (1974). Management: Tasks,
Responsibilities, Practices. New York: Harper & Row.
Garvin,
D. (2013). How Google Sold Its Engineers on Management. Harvard Business Review, December.
Harkin,
B. et al. (2016). Does Monitoring Goal Progress Promote Goal Attainment? A
Meta-Analysis of the Experimental Evidence. Psychological
Bulletin, 142 (2), 198-229.
Ly,
K. et al. (2013). A Practitioner’s Guide to Nudging. Rotman School of
Management: Research Report Series.
Sunstein,
C. (2014). Nudging: A Very Short Guide. Journal
of Consumer Policy, 37.
Thaler,
R. and Sunstein, C. (2008). Nudge:
Improving Decisions about Health, Wealth, and Happiness. New Haven, CT:
Yale University Press.
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