six behavioral economics lessons for the workplace

Behavioral Economicsfor the workplace

lessons from

2 Deloitte University Press | 5 lessons from Behavioral Economics for the workplace | @DU_Press #DeloitteReview Copyright © 2016 Deloitte Development LLC. All rights reserved.

Humans are not perfect

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We overgeneralize from our personal experience, often neglect logical analyses, and are generally overconfident in our judgments




These biases can impact decisions…

…more than we may realize

regulatorymanagement

economic




Concepts of modern psychology andbehavioral economics offer us tools to better shape programs, policies and products in a human-centric spirit




Here are five lessons that illustrate how leveraging the principles of

can improve your workplace

Behavioral Economics



7 Deloitte University Press | 5 lessons from Behavioral Economics for the workplace | @DU_Press #DeloitteReview Copyright © 2016 Deloitte Development LLC. All rights reserved.7 Deloitte University Press | 5 lessons from Behavioral Economics for the workplace | @DU_Press #DeloitteReview Copyright © 2016 Deloitte Development LLC. All rights reserved.

Money can’t buy you innovation

1






As a result, monetary influences often aren’t enough to cultivate innovation and creative thinking.

Individuals are often motivated by professional pride, fairness, and the greater good of a community. Even when those motivators inhibit our pure economic earnings potential.




Leaders at any level can begin to instill an innovative mindset by consistently incorporating three behavioral concepts into their leadership style:

To learn more, read “Nothing for money: A behavioral perspective on innovation and motivation” from Deloitte Review Issue 18

Download the article

Recognize the accomplishments of your people

Give your employees permission to fail

Treat your employees well, and they will reciprocate



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Quick decisions aren’t always the

best decisions

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However, prematurely switching to an execution-focused mindset may lead to excessive risk-taking.

During pre-decision making, individuals adopt a deliberative mindset, where they evaluate information to reach their goal. In the post-decision stage, an implementation mindset takes over and individuals become committed to a course of action.

implementation mindset

deliberative mindset

decision




To learn more, read “Crossing the mental Rubicon: Don’t let decisiveness backfire” from Deloitte Review Issue 18


Executives should consider the following tactics before letting their mindset cross from deliberative to implemental:

Conduct a “premortem” of available choices

Focus on understanding rather than “go/no go” decisions

Consider techniques like “devil’s advocate” or “dialectical inquiry”

Hold off on implementing project management tools

Pay attention to discordant data

Consider bringing unbiased outsiders into the conversation



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Better HR through behavioral economics

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The time has come for a fresh look at evidence-based HR, founded on two key premises:

HR practices, policies, and programs should be designed to reflect our best understanding of human psychology.

HR practices, like all business programs, should be tested and validated.




To learn more, read “HR for humans: How behavioral economics can reinvent HR” from Deloitte Review Issue 18


The HR domain should embrace three premises that correspond to the major themes of behavioral economics:

Play Moneyball: When it comes to hiring and evaluating employees, even simple predictive models can run circles around unaided professional judgment

Leverage intrinsic motivation: Traditional economic incentives can actually crowd out intrinsic motivations of high performance, innovation, and ethical behavior

Nudge your colleagues: Smart choice architecture can reduce cognitive overload and help employees make better decisions



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Overcoming mental bias against

additive manufacturing

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Process change, fear, risk and skepticism are just some of the behavioral hurdles for some engineers.

Rather than shifting to new design approaches when the situation warrants it, engineers often revert to well-worn, comfortable design paradigms, missing opportunities where additive manufacturing can create value.




As companies continue to consider adoption of additive manufacturing (AM) beyond conventional manufacturing, managers may want to consider some of the following actions:

To learn more, read “3D opportunity for engineers: Using behavioral science to help build a new mindset” from Deloitte Review Issue 18


Assess your own biases

Establish a purpose for adoption

Let change champions explore AM’s possibilities

Create an action plan with manageable stages and precise solutions

Forge relationships throughout the AM ecosystem



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Using behavioral research to nudge

compliant behavior

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Instead, by implementing smart, subtle communication changes, the New Mexico Department of Workforce Solutions was able to help its customers more accurately report information vital to the agency’s operations.

Government agencies don’t always put themselves in the shoes of their customers. As a result, regular communication methods often fail to achieve the desired results.




To learn more, read “Nudging New Mexico: Kindling compliance among unemployment claimants” from Deloitte Review Issue 18


If you’re looking to induce more compliant behavior in a process, consider these four dimensions of behavioral communications:

Know your audience

Make sure the system is built for humans

Value through communication does not have to be a huge undertaking

Consider how to gently nudge people in the right direction



http://dupress.com/articles/behavior-change-among-unemployment-claimants-behavioral-economics/?id=us:2sm:3ss:dup2893:eng:dup:030316:behx



Slow thinking can lead to better

thinking

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Cognitive behavioral therapy (CBT) can help people recognize the circumstances around their negative thoughts and, consequently, slow them down to engage in more positive behaviors.

We couldn’t function without fast thinking—the autopilot decisions that guide us through many ordinary situations. But fast thinking can lead us to blurt out the wrong thing in a meeting, make a poor strategic decision, or turn self-destructive.

fast thinking slow thinkingautomatic thoughts we

continually processcomplex, deliberate thought processes




Borrowing from what we know from behavioral science research and CBT practices, we can focus on several practices:

To learn more, read “Think slower: How behavioral science can improve outcomes in life and the workplace” from Deloitte Review Issue 18


Identify the moments in which fast thinking betrayed you in the past

Access things that put you in a positive mood

Know your limits and give your mind a break

Practice analyzing stressful scenarios can help enhance thought processes for future occasions



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Applying these six lessons can help you put behavioral economics to work

People are motivated to be innovative by intrinsic values, not money Don’t cross over to an

implementation mindset too quickly

Human resources should be designed with “Humans” (not “Econs”) in mind

Don’t let fear of the unknown lead to missed opportunities

Slow down fast thinking to avoid poor strategic decisions

Behavioral research can be used to nudge compliant behavior




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Read more from our special section on Behavioral Economics and Management in Deloitte Review Issue 18



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Meet the authors

JOSH BERSINfounded Bersin & Associates, now Bersin by Deloitte, in 2001 to provide research and advisory services focused on corporate learning

SHANIL EBRAHIMdata science lead in the Deloitte Strategic Analytics & Modelling practice in Toronto, Canada

JAMES GUSZCZAUS chief data scientist for Deloitte Consulting LLP

ALEXANDER BORSCHdirector of research, Deloitte Germany, Deloitte & Touche GmbH

NICOLAI ANDERSENpartner with Deloitte Consulting GmbH and the Innovation leader for Deloitte in Germany



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Meet the authors

TIM MURPHYresearch manager with Deloitte’s Center for Integrated Research. His research focuses on issues related to behavioral sciences and their impact on business management.

KELLY MONAHANmanager with Deloitte’s Center for Integrated Research. Her research focuses on the impact of behavioral economics on talent and leadership within organizations.

MICHAEL GREENEsenior manager and data scientist with Deloitte Consulting LLP

JOY FOREHANDdeputy cabinet secretary of the New Mexico Department of Workforce Solutions. JOHN FORSYTHE

director with Deloitte Consulting LLP. He works with client leadership of large organizations to drive sustainable, culture-enabled, enterprise-wide changes



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Meet the authors

BRENNA SNIDERMANsenior manager with Deloitte’s Center for Integrated Research. Her research focuses on the application of advanced technologies in manufacturing.

JEFF SCHWARTZprincipal with Deloitte Consulting LLP, is the global Human Capital leader for talent strategies and marketing, eminence, and brand

MICHAEL ROBERTOTrustee Professor of Management at Bryant University in Smithfield, RI. His research, teaching, and consulting focus on leadership.

DEREK PANKRATZresearch manager with Deloitte’s Center for Integrated Research. His research focuses on the confluence of emerging technological and social trends across industries.



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