Tools for a Changing Workforce

Behavioral economics can help midsize companies become more agile
by Bob Rosone and Tim Murphy

Why is change so difficult? First, people tend to naturally gravitate to the status quo. It’s familiar, there’s a comfort level associated with it, and so it feels “right.” Second, change can challenge people’s beliefs about their core strengths. Consider that many knowledge workers have spent years honing a particular skill or set of skills. When new technologies create opportunities or a large-scale change initiative is implemented and employees are asked to change course and do their jobs differently, it can be a challenge.

Break through the Status Quo Bias

Decision making isn’t always made in absolute terms; often, it is viewed in terms of how it impacts our status quo. Committing to a path that may yield higher payoffs but with the cost of greater uncertainty can be intimidating for anyone. This fear of uncertainty is often fueled by the behavioral concept of loss aversion: We hate losses so much that we would prefer to stay put and forgo new opportunities rather than expose ourselves to greater risk.

For example, engineers who may be weighing the merits of transitioning from a traditional manufacturing process to additive manufacturing (also known as 3-D printing) have been known to have difficulty making this transition. Switching to this new technology could threaten their status as subject matter experts or deviate away from a career’s worth of knowledge and success garnered in traditional methods. In this case — and many others like it — we are expecting people to pivot their mental model of how their organization functions and, consequently, their role should be performed. Without lending an assisting hand, asking people to change how they see the world can be an ambitious endeavor.

To facilitate these changes, the behavioral sciences suggest we should provide individuals with tools to make new courses of action easier. We discuss a few of these tools, known as behavioral nudges, which can help people make changes now that would benefit them in the future. When used effectively, nudges can remove cognitive barriers and offer people more confidence in taking on the unknown.

Commit to Change with Confidence

When committing to a new endeavor, many of us can benefit from even a small amount of assistance. Commitment devices strive to help people achieve success by clearly outlining the steps they should take to accomplish their goals — and a road map to get there. Psychology suggests that when someone explicitly makes a commitment to acting differently, they tend to be both more willing and confident in their ability to act differently.

In Norway, the social security administration asked people who were out on medical leave for more than six months to create a formalized plan for how they would return to work. By holding a meeting between the employee, employer and physician to outline plans and discuss issues, employees returned to work sooner — 20 days sooner for part-time work and 10 days sooner for full-time.

Even simply having someone fill out a consequence-free “commitment card” has produced promising results. In 2012, President Obama’s reelection campaign asked would-be voters to fill out a commitment card that pledged they would go to their local polling station to vote. They also asked these voters to explicitly state how and when they would get to the polls.

Organizations can leverage these same commitment strategies in their own change management projects. Walking people through small, predetermined steps can help remove uncertainty and make change feel less overwhelming. Covering the last mile of change by requesting that people fill out their own commitment plans can engender a change environment that goes with the grain of human psychology rather than against it.

Provide Meaning through Social Change

Taking cues from our peers is a powerful means to invoke change. People often feel more empowered when they know how their peers behaved under similar circumstances.

In an effort to reduce improper payments in unemployment insurance, the New Mexico Department of Workforce Solutions embedded social messaging that explained how others filled out forms. For a subset of the claimants filling out their weekly earnings report, a message prompted them by stating, truthfully, that “9 out of 10 people in <your county> accurately report earnings each week.” This little social cue resulted in a 25-percent increase in earnings reported vs. the control group, who did not receive the message.

By using commitment devices, organizations can highlight peer performance for each step of the change process while explicitly communicating expectations and allowing employees to commit to stated goals.

Social cues can also go well beyond messaging alone. Research shows that work feels more meaningful when employees feel the activities they undertake can improve the well-being of others. The Deloitte Review article “Humanizing change: Developing more effective change management strategies” featured a story about how one manufacturer revamped its inventory process by making the initiative more human.

Smaller organizations may hold a relative advantage in deploying these insights. Given their size, they may find it easier to bring seemingly unrelated groups together to “humanize” the change.

Design a Secure Culture through Choice Architecture and Social Cues

Modifying culture in general, and specifically to be more cyber-vigilant, is no easy feat. As the Deloitte Insights article “Toeing the line” explains, in order to change culture, businesses often need to align policies, individual and group learnings, and the tools employees are expected to interact with.

Policies alone typically do not engender compliance. Like the change management case, however, peer interaction can be a powerful way to build a secure culture. Consider the following tactics:

Leverage peer mentors. Carefully assigned onboarding coaches can help new employees understand and embrace the values of an organization. Coaching has a long history of influencing behavior: Research has shown that strong coaching environments are tied to strong business performance and engagement.

Make the group image the self-image. A West Point Army study shows the power of group belonging. From the first day of training, cadets receive the same uniforms, haircuts and routine — all in the spirit of espousing the same values across the group. With repetition, cadets internalize these values and they become integral to their own self-image. This can be akin to corporate environments that provide new employees with laptop locks and employee badge lanyards that prominently display the company logo.

At the individual and group levels, security-minded behaviors also can be reinforced simply through example. From simple activities like locking up an unattended laptop to always wearing an employee badge in a highly visible location, how our peers behave signals how we should behave, and, over time, what our peers believe can become what we believe.

Deliver Better Choice Architecture for Office Tools

A hallmark of a good choice architecture is designing an environment that, despite the many distractions, makes it easy for people to make choices in the short term that align with their long-term interests.

For example, many organizations now offer an auto-escalation option to 401(k) plans whenever an employee receives a raise. By making the choice once, employees can easily increase their retirement contributions without having to make a “new” decision every time. Similarly, companies can provide default permissions for sharing information or helpful pop-up messages whenever sending data to external parties to increase compliant behavior. With relatively fewer stakeholders to consider and manage, determining these permissions and defaults may be easier for midsize firms to execute.

Bob Rosone is managing director with Deloitte Growth Enterprise Services, Deloitte LLP.

Tim Murphy is research manager with Deloitte’s Center for Integrated Research, Deloitte Services LP.

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