Beyond the First Nudge: The Case For Behavioral Science in Corporate Practice
Just when it seemed that there was no unexplored territory in behavioral science or new fields the discipline could still be applied to, the New York Post brings us the “behavioral science of dating.” In a Post review of her new book, "How not to die alone: The surprising science that will help you find love", author Logan Ury explains how fundamental attribution error is responsible for the failure of so many first dates. “If you actually think, ‘I’m definitely going to go out on a second date with this person,’ you’re more likely to be relaxed on the first one,” Ury said. “This is a great way of countering a bias called the fundamental attribution error, when you believe someone’s actions are a reflection of their personality, not their circumstances (like if someone arrives late to the date, you assume they’re lazy, not that the subway got delayed).”
The Case for Behavioral Science in Corporate Practice
While dating and behavioral science may seem to make strange bedfellows (sic), there is in fact an increasingly rich literature of behavioral science that goes far beyond the “nudges” to increase personal savings, grow organ donations and overcome vaccine hesitancy that have become the stuff of popular psychology. Given that most commercial business activities involve both behavior change (sell new products), some form of negotiation (more affordable raw materials) or decision-making (close that plant?), it is somewhat surprising that corporations have taken as long as they have to embrace behavioral science as an active tool to raise efficiency and improve results. In reality, there are few areas in corporate life that are immune to the insights that behavioral science has to offer and its adoption could offer significant opportunities for more effective, more creative decision-making.
Perhaps the first corporate function that adopted some form of behavioral science was ethical risk management in financial institutions where attempts to rein in misconduct have been falling woefully short. Banks and other financial institutions have paid more than $400bn in fines since the financial crisis of 2008 and are looking to behavioral science to help reduce this toll. Although much has been made of surveillance technology in identifying word patterns in emails, texts and phone calls that correlate with fraudulent intentions, the reality is much more analog.
At RBS, for example, a team trained in organizational psychology, anthropology, forensics and related disciplines
uses a combination of surveys, individual interviews and observing meetings in real time, to gain granular insights about office subcultures with a propensity to drive ethical lapses. The key, according to the experts, however, is to get all employees to understand how subconscious signals sent by company leadership and that are intrinsic to the organizational structure of the institution can lead to both unethical behavior and a reluctance on the part of employees to draw attention to such behavior when they observe it. Behavioral scientists call this self-awareness “metacognition,” an ability to consciously think about one’s own thinking.
One of the other uses of behavioral science in business that has become significantly more visible in the past two years is its use in the area of diversity and inclusion. In the USA, this has been driven by an increased awareness of subconscious racism connected with the Black Lives Matter movement, but it also crops up in discussions of Islamophobia in France and gender bias in Germany. By understanding the subconscious biases that cause human beings to favor (and, therefore hire and promote) people like themselves, organizations can fight successfully against the tendency for corporate monocultures to replicate themselves if left unchallenged. A number of simple techniques are increasingly being used to combat this tendency.
As Julia Sperling puts it in a McKinsey Quarterly podcast, describing the discussion of a prospective hire: “You make people fill out a statement on the candidate themselves before they enter the group discussions, because science has also shown that once a group starts adopting a certain opinion, it’s very hard for the individuals that haven’t spoken yet to bring in another thought or have another opinion [. . .] Make sure that everyone notes [their] opinion right after having seen the recruitment candidate and before sharing their opinion.”
Using Behavioral Science To Improve Employee Recognition
With the increased emphasis on the importance of culture in building organizational effectiveness, human resources departments are also turning to behavioral science to enhance employee recognition programs. On the surface, providing employees with rewards and recognition would appear to be a relatively straightforward task but the experience of HR professionals suggest that this is not in fact the case. One reason for this is that the novelty of recognition programs quickly wears off and the programs lose their motivational effect. Points-based programs, for example, start out with satisfactory redemption rates but these fall off over time.
First recognized by German psychologist, Hermann Ebbinghaus in the late 19th century, this effect can be traced to the principle known as the “forgetting curve.” Research has demonstrated, however, that there is an antidote called “spaced repetition” by which information and behavior can be sustained over time. One hospitality company applied these principles to their employee rewards program by sending employees emails with regular reminders of their points balance. The result was 10,000 visits to the rewards site and the redemption of more than $800,000 in rewards points.
How Behavioral Science Can Prevent Damaging Groupthink
Behavioral science principles are also being used to overcome poor decision-making that springs from groupthink across the corporate spectrum. Here again, building in techniques that stimulate awareness of process itself can be highly effective (Emmerling and Rooders, 2020). While most executives would argue that making an important corporate decision should involve a large number of people because of its widespread potential impact, behavioral science research has demonstrated that decisions made in large groups are more subject to confirmation bias – the propensity to seek evidence that supports an existing opinion – than decisions made in small groups.
Another technique for a decision-making group is to appoint an official “devil’s advocate,” an individual specifically tasked with questioning the group consensus. Individual accountability can also play a key role in ensuring that many different points of view are represented in a decision. One way to ensure this accountability is for each member of a decision-making team to sign a joint responsibility statement at the outset, a technique that has been shown to lead to a more balanced division of responsibility and free exchange of ideas.
Using Behavioral Science To Improve Health & Safety Outcomes
In construction, manufacturing and processing industries involving fast moving or heavy equipment, behavioral science is increasingly being used to promote workplace safety and reduce accidents. Noting that construction workers promoted to foreman or manager stop wearing helmets to signify their status, McKinsey’s Anna Güntner describes a simple “nudge” to prevent this safety risk: give foremen and women different colored helmets that signify their status without exposing them to danger.
One of the most common workplace accidents involves fingers and hands injured after workers reach into fast-moving machinery to fix a problem without stopping to turn off the device first, in order not to slow down the production line. Behavioral science thinking leads to an inexpensive application of metacognition through the adoption of work gloves with an image of the skeletal human hand painted on the back. This tiny reminder of the frailty of the human hand and the risk to broken bones has been shown to reduce workplace accidents to the fingers and hand significantly. In a similar vein, some hospitals in the COVID-19 era are using a form of colored soap that is stickier than conventional soap to ensure that staff are washing their hands for the prescribed length of time, the time it takes to wash off all the color.
Not surprisingly, the health-care industry has been particularly interested in studying the potential of behavioral science to influence human health behaviors in areas such as clinical trial participation and medication adherence. Its ability to do so has been hampered until recently by the absence of the behavioral data to indicate how cognitive biases are influencing both patient behavior and physician interventions. However, the rapid growth in structured and unstructured real world data has begun to make the use of behavioral science possible. In an acknowledgement that 50% of human health outcomes are determined by patient behavior, French pharmaceutical firm Sanofi has appointed a behavioral science board to help gather evidence about human health behaviors and then use that evidence to build programs and interventions. Other healthcare researchers are also looking into the “intention behavior gap” to identify ways to help patients stick with health maintenance regimes. The key is to help them build self-efficacy, the belief that, notwithstanding setbacks, they can have a positive long term impact on their own health.
At the same time, research is expanding on the physician side of the relationship, examining how a range of cognitive biases influence prescribing behavior. These include anchoring, the propensity to cling to initial diagnoses in the face of new evidence, and base rate neglect, ignoring the underlying base rate for a given condition as if it did not apply to a specific patient. A deeper understanding of these biases is helping pharmaceutical companies communicate more effectively with doctors about the benefits of novel medications by helping them eliminate barriers to changing their prescribing practices.
4 Ethical Rules for Insights Derived from Behavioral Science
Critics of behavioral science-based strategies, whether involving employees, patients or physicians, have argued that there is something insidious about behavior change strategies that function, as it were, below the surface. The answer according to Katherine Starr, managing director of behavioral science at Syneos Health, is to observe some fundamental ethical rules for insights derived from behavioral science:
- Ensure that there is adequate transparency about the intent of the intervention.
- Demonstrate that the intervention respects the independence and autonomy of all stakeholders.
- Be cognizant of any unintended consequences.
- Verify that the intervention does not put any other group at a disadvantage.
We believe that in the long run, in spite of some of these misgivings, the ethical application of behavioral science will bring benefits to human decision-making and human-to-human interactions across a wide range activities. Fundamentally, a deeper understanding of how human beings “think” and act will become an ever more critical element in an environment of increased automation and artificial intelligence. If we can design all of our systems, from corporate organizational structures to urban transportation on the basis of the emotional intelligence that behavioral science provides us, we will go a long way to overcoming the limitations imposed by human brains that were hardwired tens of thousands of years ago. With a bit of luck, we can move from successful first dates to building stronger communities for the long term.
This piece was originally published in the Journal of Business Strategy, Vol. 42 Issue 3.