realizing behavioral change how nudges …...how can you nudge your employees to experience more...

Femke de VriesJoanne ReinhardMeijke Gorter2018

REALIZING BEHAVIORAL CHANGE HOW NUDGES CAN HAVE A BIG IMPACT ON BEHAVIOR OF EMPLOYEES, CUSTOMERS AND SOCIETY

Realizing behavioral change

Whatever business you may be in, you are inevitably

trying to change behavior on a daily basis. Whether

you focus on the behavior of customers by trying

to increase their loyalty, or on employee behavior

by improving collaboration across departments;

understanding human decision making and how it

influences behavior is crucial for every organization.

In this paper we’ll explore the latest insights in

behavioral change and provide you with practical

steps to change behavior in your own organization.

Here’s an overview of some of the areas in which

behavioral insights could be used:

Employees

• Boosting employee happiness

• Increasing productivity

• Increasing collaboration

between divisions or teams

• Encouraging learning behavior

Customers

• Increasing loyalty

• Improving the customer

experience

• Boosting customer satisfaction

Society

• Improving health outcomes

• Reducing unethical behavior

• Reducing food waste

• Helping people to make

better financial decisions

3

INTRODUCTION

Realizing behavioral change 3

4

THE RISE OF BEHAVIORAL SCIENCE AND NUDGINGDid you know that roughly 85% to 95% of our

decisions are made outside of our conscious

awareness? When making a decision we often skip

the process of weighing all pros and cons, which

may result in seemingly irrational behavior. Instead

of analyzing everything, we simplify reality by using

various rules of thumbs: we choose whatever

everyone else has chosen or stick to what we chose

last time. When confronted with a wide variety of

choices we tend to choose the default, although

rationally it may not be the best option for us. This

is for example what happens when a travel website

automatically adds travel insurance to your booking,

even though you are already covered by your own

insurance provider. We tend to go with the flow of a

pre-set option.

Luckily, an entire field of research called behavioral

science, aims to understand human decision

making and identifies predictable patterns in human

behavior. Insights from behavioral science can be

used to change behavior for the better, without

limiting people’s freedom of choice: a development

that has become known as ‘nudging’. This term was

originally introduced by the American economist

Richard Thaler, co-author of the bestselling book

Nudge and winner of the 2017 Nobel prize. Thaler

showed how carefully changing the environment in

which we make choices can change our behavior.

For instance, he showed that having to make an

active choice to leave a donor register immensely

increases registration rates compared to having to

make an active choice to join it. A simple change that

could save millions of lives globally. Check out the

box on the right for 6 frequently tested nudges.

Although the field of behavioral science provides

us with endless opportunities to change behavior

in organizations and to change the behavior of

important stakeholders of organizations, we see

that actual applications within organizations remain

limited. Here, we will explore how organizations

can tap into this unused potential and realize value

for employees, customers and the wider society by

creating sustainable behavioral change. As a source

of inspiration, we will describe three case studies of

organizations that successfully applied behavioral

insights. Lastly, we will describe the steps and

associated key success factors that are needed to

successfully create sustainable behavioral change

in organizations.

Behavioral insights

can help to change

behavior in a simple,

cost effective way,

while having a huge

potential on returns.

“

”


5

Popular nudges

Social normsWe look at the behavior of others to assess which

behavior is accepted. As a result, telling people

how most others are behaving makes them more

likely to behave the same way.

Setting the right defaultWe like to go with the flow and often choose pre-

set options. Changing the default option can lead

to more people choosing that option while not

limiting their choice.

Pre-commitmentSimply saying that you’re going to do something,

especially if shared with others, makes you more

likely to actually do it. Writing a plan and setting

goals can help people follow through on their

intention to change their behavior.

Making it easySeemingly small barriers, like turning a page

or one additional website click, can stop us

from taking action. Make it easier for people to

behave the desired way by removing friction and

simplifying as much as possible.

GamificationWhen it's fun to behave in a certain way, we are

more likely to do so. Make it fun to perform the

desired behavior by adding gaming mechanisms

or creating an actual game.

Visualize progressFeeling that we are making progress can help

us stay motivated. Visualize the progress people

have already made, for example by presenting a

progress bar or ticking off checkboxes.


6

Dust off your microeconomics textbook and you

will read about fully rational individuals who make

decisions by using all available information and

weighing every potential option. However, in the

real world we do not have the time or capacity

to do so. Decades of psychological research

have already given us a lot of insight into the

workings of human behavior. In combining the

knowledge from psychology with economics,

the art of behavioral science was born, resulting

in an evidence-based approach to sustainable

behavioral change. Let’s take a look at some

examples.

Humans systematically feel more miserable about

losing something compared to how happy they

feel about gaining the same thing; a concept

behavioral scientists call loss aversion. If we flip

a coin and have a 50% chance of making 100

euros and a 50% change of losing 90 euros,

the expected value is positive. However, we

don’t see this as a positive trade off because we

value the potential loss more heavily than the

potential gain. This pattern in human behavior

has important consequences for professional

decision making. For example, research shows

that even experienced surgeons can be more

accepting of a particular medical procedure when

they are presented with the odds of the patient

surviving, compared to when they are presented

with probability that the patient dies1. It’s important

to take this framing effect into account when

designing workplace procedures, especially in

high stake decision environments. Imagine what

the impact of this flaw in decision making could be

for executive teams making investment decisions:

the way the information is presented to them can

dramatically change their choices.

Behavioral science also shows us that we tend to

overvalue a small chance of gaining something.

That’s why lotteries are very effective motivators:

we are attracted by the possibility of winning

without making a rational calculation of the actual

probabilities of a win. Lotteries can therefore be

used to incentivize all types of behaviors in the

workplace or of customers. An example of one

possible application comes from a consulting firm

that wanted to increase the number of employees

completing a health check (also see box 1):

being entered into a lottery with the chance of

winning a $100 resulted in 64% of employees

completing a health assessment while simply

offering employees the cash amount ($25) led to a

participation rate of 40%2.

WHAT BEHAVIORAL SCIENCE TELLS US ABOUT BEHAVIORAL CHANGE

Percentage of employees completing their health assessment

64%

40%


7

Completion of health checks, designed to prevent

sickness by evaluating risks, have been shown to

improve people’s health and reduce absenteeism

in companies. For example, the percentages of

employees from Johnson & Johnson who smoke

and are physically inactive dropped by more than

half. The company estimates that their wellness

programs have saved $250 million on health care

costs3. Even though the advantages are clear, reg-

istration rates to complete the check remain low.

Cases Johnson & Johnson and NIPED:

How to increase the number of people completing a health check to prevent sickness?

Box 1

Behavioral science research shows that people

have the natural tendency to focus on immediate

awards instead of long term goals. According to

this present bias, the additional effort to complete

a health check outweighs the future gain of a

healthier lifestyle. Even with the best intentions

to complete the health check, we do not always

succeed to change our behavior. To bridge this

intention-behavior gap, research has shown that

goal-oriented reminders, personalized messages4

and financial incentives can increase registration

rates. To illustrate, a recent study from &niped

investigated the differences in registration rates for

their personal health check after sending a clear

action-oriented email reminder: in this message the

call to action was made more salient and moved to

the top of the reminder. This simple change

resulted in a 39% increase in registration rates

compared to the standard reminder. Ultimately

these simple changes could lead to better health

outcomes for hundreds of people.


8

In the past decade, we’ve seen a tremendous

rise in successful applications of nudges in a

wide range of topics. For example, nudges can

improve healthy food choices in cafeterias.

People tend to eat less when given smaller plates

and they eat more healthily when the healthy

food is presented first. Another example is the

use of nudges in tax letters. Adding information

about the number of people who had already

paid, increased the number of people who pay

their taxes on time, resulting in large savings

in government spending5. After having tackled

relatively simple behavioral change challenges,

behavioral insights are now being applied to

increasingly more complex topics, such as fighting

crime or recruiting a more diverse workforce. The

results are promising: with small changes to the

choice environment we can change behavior in a

predictable way. More importantly, we can change

it in a way that is sustainable.

With small changes

to the choice

environment we can

change behavior in

a predictable way.

More importantly,

we can change

it in a way that is

sustainable.

“

”


9

Employee satisfaction and commitment strongly

influence the happiness and loyalty of your

customers. However, for many organizations it can

be a challenge to keep the first excitement that

employees feel with a new job and maintain their

motivation. From a behavioral science perspective,

social influences are a key driver of employee

motivation. One of the key factors to actively steer

on employee motivation is by providing employees

with a sense of purpose. At &samhoud we often

help organizations to connect the daily work of

employees to the mission, or ‘higher goal’, of the

organization. A powerful way to achieve this is

to nudge employees to interact with people who

directly gain from their work. For example, one

organization found that a brief conversation with a

customer who had benefited from an employee’s

work was more motivating than an inspirational

Case Harvard Business School:

How can you nudge your employees to experience more purpose?

Box 2

speech from the organization’s leader6. One field

study conducted in a cafeteria investigated this

idea further by creating transparency between

employees and customers. They used an iPad

and videoconference construction so that cooks

and the diners could see each other. The results

showed that customer ratings increased by

22.2% compared to the control group. In addition,

both customer and employee satisfaction was

significantly increased7. Reciprocity, our tendency

to want to return the favor when another person

helps us, played an important role in the results.

Seeing the employee increased the customer

perception of effort and improved their ratings.

Seeing the customer caused the employees

to feel more appreciated and their work more

impactful. One employee stated, “When the

customers can see the work, they appreciate it,

and it makes me want to improve.” This research

highlights the added value of social interaction in

the workplace. More specifically, social interaction

with someone who is directly affected by your

work. By showing the customer how a product

is made or by facilitating moments of feedback,

you can increase the employee’s experience of

purpose and thereby their motivation.

This immediately shows the appeal of behavioral

science for organizational change: behavioral

insights can help to change behavior in a simple,

cost effective way, while having a huge potential

on returns. Imagine the possibility that a simple

nudge can lower the rates of absenteeism in

your company, or you can nudge employees into

experiencing more purpose at work (also see

box 2). Moreover, we can test the actual effect

of the interventions to create a change that lasts

and by measuring the effect we create proof

points of what works. Next, we will explore in

depth how behavioral insights can be used to

change customer or employee behavior in your

organization.


10

When there is an urge for change within an

organization for whatever reason, it can often be

drawn back to changes needed in behavior. Think

about the need for a change towards a culture

in which people feel free to make mistakes, the

need to improve cooperation between people or

the need to increase employee engagement. The

urge for change often requires a breakthrough in

underlying behavioral patterns.

Remember the example of donor registrations?

Within your company you could manage company

fitness registrations, pension or health check

registrations in a similar way. Opt-in strategies

would register employees only if they actively

subscribed for it, whereas opt-out strategies treat

everyone as willing to participate. Both strategies

maintain freedom of choice, but will have a

different effect on the behavior of those who have

never expressed a preference for one or the other.

For this group of employees, the registration rates

are likely to increase significantly.

Alternatively, let’s consider possible ways to

reduce sickness absenteeism among employees.

When sickness absenteeism rates are high,

managers may be tempted to communicate this

issue to their employees. From a behavioral

science perspective, we know that people take

cues from the behavior of others, which they use

as social proof for the behavior that is acceptable.

Stressing high sickness rates may therefore

lower the bar for employees to report in sick and

could have a negative effect on absenteeism

rates. Managers may also decide to intensify

the activities around helping absent employees

to return to work. This often involves additional

contact moments to discuss the state of their

illness and elaborate on what employees have

done during their absence. Research shows that

focusing on recovery instead of illness and helping

BEHAVIORAL SCIENCE IS A UNIQUE TOOL FOR IMPACTFUL CHANGE MANAGEMENT

Percentage of students requesting the maximum amount of financial aid

23%

53%


11

A growing percentage of sickness absenteeism

nowadays is caused by psychological injuries

rather than physical ones. Mental stress, such as

burn-out, depression and anxiety, can be very

demanding for people and their families, and

challenging to overcome. Behavioral insights

have been shown to help overcome some of

the barriers that employees face in the process

of successfully returning to work. A recent study

on sickness absenteeism highlighted three

aspects that help employees to return to work

faster: focus on the future instead of the past,

share personalized success stories and help

employees to write goal-oriented plans. The

first major intervention consisted of consistently

using positively framed language in all forms of

communication, rather than focusing on sickness8.

This was added to by-pass the so-called negativity

bias in which people experience the impact of a

negative experience roughly twice as strong as

a positive experience. Together with the other

two improvements to the process, this change

resulted in a 27% faster reintegration rate. The

effectiveness of goal-setting was confirmed

in a study focusing on the design of return-to-

work therapies for individual with mental stress.

Evidence shows that once people make a

commitment to either themselves or someone

else, they are more likely to follow through with the

intended action. Formulating goals in a motivating

plan can therefore help people to stick to the

behaviors necessary to successfully return to work.

Patients who followed a work-focused therapy

in which this concept was applied, returned to

work on average 65 days earlier than the control

group, who followed a more traditional type of

therapy9. Although we do not want to undermine

the complexity of stress-related disorders, this

research shows that knowledge on human

behavior and subtle changes could enhance the

process of reintegration after sickness and reduce

overall sickness absenteeism rates.

Case Australian Department of Education:

How to improve successful return to work after long term absence due to mental stress?

Box 3

employees to plan future activities to support their

recovery results in a much quicker return to work8

(also see box 3).

The advantage of using behavioral insights also

extends outside of your organization. Besides

changing behavior within an organization, it can

be used to change the relationship with external

stakeholders. In the Netherlands for instance, the

percentage of college students who requested

the maximum amount for financial aid decreased

from 53% to 23%, because the government

deleted the checkbox option for the maximum

amount.


12

Percentage of customers engaging with their mortgage

65%52%

Do it!

Similarly, behavioral insights can be applied

to the behavior of customers. Dutch bank ING

recently experimented with ways to activate their

customers to engage with their mortgage: a text

message with a clear description of the desired

behavior led to a 13% increase in the level of

customer engagement10. Behavioral insights can

even be applied to your future employees: nudges

during the recruitment process have been shown

to improve the performance of candidates from

migration backgrounds11.

You may already be convinced that insights

from behavioral science can have an impact

in organizations. You may even be thinking

about applying behavioral insights in your own

organization. In that case, you are probably

thinking: “So, what’s next?” In the following

paragraph we have identified five steps to guide

you through the most important aspects that you

should consider when applying behavioral insights

in your organization.

When there is an urge for

change within an organization

for whatever reason, it can often

be drawn back to changes

needed in behavior.

“

”


13Realizing behavioral change

DESIGN SCALEEXPLOREDEFINE TEST



14

5 STEPS HOW TO APPLY BEHAVIORAL INSIGHTS IN YOUR ORGANIZATION

2. Explore the context

As behavioral science shows, small changes to the

choice environment can have a big impact. Gaining a

broad understanding of the environment in which the

desired behavior occurs is therefore crucial. Possible

activities can include interviewing your target group,

observing them, mapping out the user journey or even

experiencing the context for yourself. Ideally, you also

analyze relevant data that is available.

1. Clearly define the desired behavior

Changing organizations by changing behavior starts

with a clear definition of what exactly you want to

change. Being clear about the outcome of the project

is essential because it helps to design the most

effective intervention.

3. Design evidence-based interventions

The next step is to use insights from behavioral

science to design interventions aimed at changing

behavior. In addition to applying relevant theories from

behavioral science, this may include getting inspiration

from interventions tested in similar or other contexts.

It often happens that during the design of the

intervention you realize that your identified behavior

is not specific enough or the context is broader than

you initially thought. In this case, it can be necessary

to take a step back to gain a better understanding

of the context in order to arrive at a truly effective

intervention.




15

5 STEPS HOW TO APPLY BEHAVIORAL INSIGHTS IN YOUR ORGANIZATION

4. Test if it works

Although behavioral insights are derived from

predictable patterns in human behavior, the context of

your organization is unique. Therefore, it is essential

to test whether your intervention has the desired

effect. To ensure your results are valid, you compare

the impact of your intervention to a randomly selected

control group of individuals who did not receive the

intervention (also known as A/B-testing).

5. Scale up what works

Small tests can give a quick indication of whether your

intervention is useful and can be extremely helpful to

save time. Once you know which solution realizes the

optimal level of behavioral change, the last step is to

scale it up to a larger group of employees

or customers.


16

KEY SUCCESS FACTORS FOR APPLYING BEHAVIORAL INSIGHTS

How can you increase your company’s likelihood of successful application of behavioral insights? The

concept of behavioral insights may seem simple, however there are a few things to keep in mind when

you follow the steps to apply behavioral insights to induce behavioral change. We identified three key

success factors to get the best possible outcome:

Get the right team together

A key success factor to applying behavioral insights in your

organization is to get the right team together. A subject matter

expert is essential to design an intervention that is relevant for

your particular business. A behavioral science expert is needed to

pinpoint all the possible biases in behaviors that would otherwise

go unnoticed and to design interventions that result in optimal

behavioral change. Lastly, a data analyst is crucial to ensure a

rigorous evaluation method.

Consider ethical use of data and intervention

When engaging in techniques to promote a behavior, it’s important

to be aware of ethical considerations. Ethical concerns are often

about the concern that it ultimately undermines the freedom of an

individual. To ensure that you are not pushing people instead of

nudging them, make sure to always maintain people’s freedom of

choice and be transparent about your work.

Start small

The best way to implement a new intervention based on behavioral

insights is by starting small. The potential impact of a new

intervention can easily be tested with a smart simple trial before

you scale it up to your entire organization. It is better to find out

sooner rather than later that the intervention does not work.


17

Achieving breakthrough change is possible

In this article we shared some inspiring examples with you that show how you can change

behavior of both your employees and your customers. Breakthrough change in an organization

often requires a change in the underlying behavioral patterns. By changing the choice

environment in a simple, cost effective way we can create change in a way that it is sustainable. In

addition, we can increase the impact of interventions by measuring what does and does not work.

In five steps we explained how you can apply behavioral insights in your organizations. If you get

the right team together, start small and consider the ethical use of interventions on top of that,

success is guaranteed.

CONCLUSION

Femke de Vries

[email protected]

Femke is senior partner at

&samhoud. Prior to joining,

her professional experience

as member of the board

of the Dutch Authority for

Financial Markets, has

equipped her with a deep

understanding of behavior and

its role in organizational change

processes. In addition, she is

a Professor at the University

of Groningen. Her research is

aimed at understanding various

types of organizational and

customer behavior.

Joanne Reinhard

[email protected]

Joanne is a consultant at

&samhoud and specializes in

applying insights from behavioral

science to organizations. Before

joining, she worked at the

UK-based Behavioural Insights

Team, an organization that

became well-known for its

successful behavioral change

projects in the public sector.

Meijke Gorter

[email protected]

Meijke is a data analyst at

&samhoud with a focus on the

translation of HR analytics data

to relevant business insights.

She holds a BSc and a MSc

in Neuroscience from the VU

Amsterdam

Authors


18

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