How nudge theory guides employees in the right direction


Giving employees a nudge towards a better way of behaving may sound straightforward, but there is more to this technique than meets the eye.

When Rhett Morris, owner and director of professional training and coaching service Bulletproof Performance, was approached by a NSW council to increase employees’ performance, he suggested using Nudge Theory.

Facing increased competition from external vendors in the marketplace and an ingrained culture of chronic underperformance, the council needed to employ a system that could be accepted quickly, multiplied throughout different groups and taught to others. But would Nudge Theory provide all those answers? More on that in a moment.

First, what’s this theory all about? The term was popularised in 2008 by economists Richard Thaler and Cass Sunstein in their book Nudge: Improving Decisions About Health, Wealth and Happiness. Rooted in behavioural economics, political theory and behavioural sciences, nudges rely on our cognitive biases to purposefully design the information we are privy to in order to shape our choices.

Nudges come in the form of subtle signals, messages or influences that suggest certain ways to behave, says Ben Newell, professor of cognitive psychology and deputy head of the School of Psychology at the University of New South Wales. He also works with the Behavioural Economics Team of the Australian government.

“Consider when an architect designs a building,” he says. “They arrange the rooms, windows and doors to encourage people to move around the building in a particular way.

“When it comes to nudging, you’re the architect of a choice environment.”

The more obvious nudges are, the better, says Newell. A simple example of this is the placement of resources in the workplace, such as making recycling options more accessible than rubbish bins in communal spaces.

Nudging is also designed to remove friction caused by the cost and effort of thinking which prevents particular actions; a common technique being to set up a default option.

Newell cited the example of a flexible work hours experiment conducted by the NSW government’s Behavioral Insights Unit, designed to encourage people to arrive and leave the office at off-peak times in an effort to ease congestion on public transport.

One of the techniques they used was adjusting the default settings in participants’ Outlook calendars so they were only available for meetings between 9:30am–3:30pm.

Along with further nudges in the form of emails from managers and team-based competitions relating to commuting behaviour, work arrivals outside of peak hours increased by 8.6 percentage points and departures by three percentage points.

According to nudge advocates, when a technique works it can easily be put into practice and then, scaled up.

Nudge theorists also say it’s a low-cost way to achieve a big impact on health and wellbeing. It can even be as simple as the language or wording used.

“We ran a trial with childcare workers in relation to the mandatory reporting of child abuse in an attempt to ease the burden on the Child Protection Helpline.”

The wording of a letter the childcare workers received after they submitted a report was changed to emphasise the helpline’s designation for situations where a child is at risk of significant harm. Lower risk cases could either be monitored or reported in alternative channels.

As a result, workers’ reporting behaviour subsequently changed, leading to 164 additional casework hours each day allocated to children at serious risk.

Ethical concerns

While nudging sounds like an ideal way to modify behaviour, there have been some ethical suspicions raised.

Moral philosopher and fellow at The Ethics Centre Dr Matthew Beard says, “When we’re talking about nudging in the use of behavioral economics as a way to overcome conscious thinking, effectively what they’re doing is bypassing free will in order to get someone to behave in a way that we want them to,” says Beard.

While there are no hard and fast universal rules around the use of nudges, there are some tests that can be applied to identify if the nudge is likely to land you in hot water; Thaler calls it, “nudging for good”.

First, consider who the primary beneficiary of the nudge is. If a nudge is designed to elicit outcomes that will benefit an organisation rather than the users, this could be an example of what’s known in behavioral economics as a ‘dark pattern’, which is manipulation.

Say you worked in sales, and technology was implemented that measured employees’ sales performance in comparison to their peers. A nudge that pops up to remind employees how they are faring may lead them to push on rather than pack up at the end of the day.

“That’s the kind of nudge that serves the interests of the company,” says Beard.

Secondly, ethical nudges should direct people towards their best selves – not in terms of productivity, but by preventing them falling prey to distractions. For example, Twitter will now inform us if we haven’t actually clicked on a link that we’re attempting to retweet by looking into our cookies.

“This is a simple way of trying to combat misinformation and nudge us towards being a better version of ourselves; [someone] who isn’t simply reading headlines and forming opinions as a result. It leads us to consider the information we’re sharing.”

Thirdly, Beard says the best way to safeguard people’s autonomy when using nudges is to get their consent.

“Talk to people before introducing a nudge, when they are their rational selves.

“Organisations such as Slack, for example, have created clear nudges that encourage people not to communicate after hours, and that’s not something that was imposed from the top down. It arose out of a conversation [with employees] about the kind of culture the organisation wanted to have.

Encouraging decisions

Now, back to Morris’ NSW council example from earlier. One of the main behavioural traits the council wanted to shift was accountability, a key deficit in its culture.

“We were trying to empower employees at all levels to make decisions by themselves and have a crack at things before deferring to a leader,” says Morris.

The accountability nudges were in the form of verbal feedback or text messages, which emphasised the message, “You can make that decision by yourself.”

“We made it clear, however, that they wouldn’t face harsh discipline for a poor decision,” says Morris.

A monthly scoreboard was set up to track progress on actions such as safety incidents, with a red, green or amber light next to an action signalling if they were on track and what they needed to improve.

Positive reinforcement was another nudge technique used to generate behavioural change, says Morris. “Performance management in a council environment has always been very punitive. We tried to nudge employees towards a more positive experience by giving them regular feedback on the things they’d done well.”

To do this, Morris’s team developed a simple feedback form around quality, safety and productivity, which also nudged managers into delivering feedback.

“When it comes to nudging, you’re the architect of a choice environment.” – Ben Newell, professor of Cognitive Psychology and deputy head of the School of Psychology, UNSW

The impact of the nudging techniques has been multifaceted. Peer accountability lifted the standards of the organisation, and the buy-ins both exceeded expectations and those achieved by previously implemented programs.

“We knew we were never going to get 100 per cent of people nudging in the right direction, but we saw 80/20, which is what’s needed for positive behavioral improvements.”

The scoreboard helped employees hold their colleagues to account as well.

“There was a notion of, ‘It doesn’t matter how well I’m performing if you’re underperforming, as it’s going to impact our scoreboard,’” says Morris.

The council also saw a direct impact on employee behavior once COVID-19 hit. After being nudged through positive feedback and encouraged to make their own decisions, employees who usually required heavy supervision were well-equipped to perform autonomously, he says.

Persuading executives

The higher up the chain of command, the more impervious people may be to techniques such as Nudge Theory, says Morris.

“What we noticed is that the executive team needed more diagnostic accountability. They wanted a more system-based approach.”

When discussing bringing about cultural change through leadership techniques, Morris’ team recorded a council meeting, which was subsequently analysed to identify keywords that were or weren’t said during the meeting.

“We were trying to eradicate bad behaviours, and the best way to do that was to point them out. For example, asking: ‘Do you realise you said that six times’, or ‘You had quite an aggressive undertone.’”

“Senior Nudge Theory [training] was all about how their behaviour affects the masses. We tried to help them frame a response so that when they get triggered, they are nudged to use a positive approach to deal with an issue.”

According to Newell, using data can help nudge the executive team to implement other nudges within the organisation. Comparative data through trial is a great way to measure and demonstrate the effectiveness of certain nudge techniques.

“During the flexible working hours experiment, a ready template email was introduced in one version of the trial, which was more impactful than simply changing the Outlook settings and managers drafting an email of their own.

“By running these small versions of interventions, you can build an effective business case to put forward to the executive team with actual data.”

If you’re not seeing an immediate change via a nudge, that doesn’t mean it’s time to abandon ship.

“If you tried different approaches to your onboarding form along with sending a prompt email, and exactly the same number of people completed either version of the form in a given time, you can still look at whether sending the email led to a behavioural change.”

Ascertain if some part of the nudge worked and then tweak your approach.

If you’re looking to introduce ‘nudging for good’ into your organisation, keep this parting message from Thaler’s book, Nudge, in mind: “If you want to get people to do something, make it easy. Remove the obstacles.”


Train your management in the skill of emotional intelligence and take advantage of AHRI’s EOFY short course sale.


A version of this article first appeared in the May 2021 edition of HRM magazine.

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1 Comment
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Max Underhill
Max Underhill
5 months ago

This top down driven nudging takes me back to the 1980’s when productivity was a major issue and Australia was loosing our manufacturing sector to Asia. The recovery in early 1990’s had a number of drivers including empowerment of the employees. This was achieved by defining outcomes for each position and the performance measures. Performance measures defined what was expected from an employee at base salary. Performance above and beyond was performance pay. Back in 1990 the defining of position competence was critical as it valued the position accurately. The same system was used to value the applicant/employee and set… Read more »

More on HRM

How nudge theory guides employees in the right direction


Giving employees a nudge towards a better way of behaving may sound straightforward, but there is more to this technique than meets the eye.

When Rhett Morris, owner and director of professional training and coaching service Bulletproof Performance, was approached by a NSW council to increase employees’ performance, he suggested using Nudge Theory.

Facing increased competition from external vendors in the marketplace and an ingrained culture of chronic underperformance, the council needed to employ a system that could be accepted quickly, multiplied throughout different groups and taught to others. But would Nudge Theory provide all those answers? More on that in a moment.

First, what’s this theory all about? The term was popularised in 2008 by economists Richard Thaler and Cass Sunstein in their book Nudge: Improving Decisions About Health, Wealth and Happiness. Rooted in behavioural economics, political theory and behavioural sciences, nudges rely on our cognitive biases to purposefully design the information we are privy to in order to shape our choices.

Nudges come in the form of subtle signals, messages or influences that suggest certain ways to behave, says Ben Newell, professor of cognitive psychology and deputy head of the School of Psychology at the University of New South Wales. He also works with the Behavioural Economics Team of the Australian government.

“Consider when an architect designs a building,” he says. “They arrange the rooms, windows and doors to encourage people to move around the building in a particular way.

“When it comes to nudging, you’re the architect of a choice environment.”

The more obvious nudges are, the better, says Newell. A simple example of this is the placement of resources in the workplace, such as making recycling options more accessible than rubbish bins in communal spaces.

Nudging is also designed to remove friction caused by the cost and effort of thinking which prevents particular actions; a common technique being to set up a default option.

Newell cited the example of a flexible work hours experiment conducted by the NSW government’s Behavioral Insights Unit, designed to encourage people to arrive and leave the office at off-peak times in an effort to ease congestion on public transport.

One of the techniques they used was adjusting the default settings in participants’ Outlook calendars so they were only available for meetings between 9:30am–3:30pm.

Along with further nudges in the form of emails from managers and team-based competitions relating to commuting behaviour, work arrivals outside of peak hours increased by 8.6 percentage points and departures by three percentage points.

According to nudge advocates, when a technique works it can easily be put into practice and then, scaled up.

Nudge theorists also say it’s a low-cost way to achieve a big impact on health and wellbeing. It can even be as simple as the language or wording used.

“We ran a trial with childcare workers in relation to the mandatory reporting of child abuse in an attempt to ease the burden on the Child Protection Helpline.”

The wording of a letter the childcare workers received after they submitted a report was changed to emphasise the helpline’s designation for situations where a child is at risk of significant harm. Lower risk cases could either be monitored or reported in alternative channels.

As a result, workers’ reporting behaviour subsequently changed, leading to 164 additional casework hours each day allocated to children at serious risk.

Ethical concerns

While nudging sounds like an ideal way to modify behaviour, there have been some ethical suspicions raised.

Moral philosopher and fellow at The Ethics Centre Dr Matthew Beard says, “When we’re talking about nudging in the use of behavioral economics as a way to overcome conscious thinking, effectively what they’re doing is bypassing free will in order to get someone to behave in a way that we want them to,” says Beard.

While there are no hard and fast universal rules around the use of nudges, there are some tests that can be applied to identify if the nudge is likely to land you in hot water; Thaler calls it, “nudging for good”.

First, consider who the primary beneficiary of the nudge is. If a nudge is designed to elicit outcomes that will benefit an organisation rather than the users, this could be an example of what’s known in behavioral economics as a ‘dark pattern’, which is manipulation.

Say you worked in sales, and technology was implemented that measured employees’ sales performance in comparison to their peers. A nudge that pops up to remind employees how they are faring may lead them to push on rather than pack up at the end of the day.

“That’s the kind of nudge that serves the interests of the company,” says Beard.

Secondly, ethical nudges should direct people towards their best selves – not in terms of productivity, but by preventing them falling prey to distractions. For example, Twitter will now inform us if we haven’t actually clicked on a link that we’re attempting to retweet by looking into our cookies.

“This is a simple way of trying to combat misinformation and nudge us towards being a better version of ourselves; [someone] who isn’t simply reading headlines and forming opinions as a result. It leads us to consider the information we’re sharing.”

Thirdly, Beard says the best way to safeguard people’s autonomy when using nudges is to get their consent.

“Talk to people before introducing a nudge, when they are their rational selves.

“Organisations such as Slack, for example, have created clear nudges that encourage people not to communicate after hours, and that’s not something that was imposed from the top down. It arose out of a conversation [with employees] about the kind of culture the organisation wanted to have.

Encouraging decisions

Now, back to Morris’ NSW council example from earlier. One of the main behavioural traits the council wanted to shift was accountability, a key deficit in its culture.

“We were trying to empower employees at all levels to make decisions by themselves and have a crack at things before deferring to a leader,” says Morris.

The accountability nudges were in the form of verbal feedback or text messages, which emphasised the message, “You can make that decision by yourself.”

“We made it clear, however, that they wouldn’t face harsh discipline for a poor decision,” says Morris.

A monthly scoreboard was set up to track progress on actions such as safety incidents, with a red, green or amber light next to an action signalling if they were on track and what they needed to improve.

Positive reinforcement was another nudge technique used to generate behavioural change, says Morris. “Performance management in a council environment has always been very punitive. We tried to nudge employees towards a more positive experience by giving them regular feedback on the things they’d done well.”

To do this, Morris’s team developed a simple feedback form around quality, safety and productivity, which also nudged managers into delivering feedback.

“When it comes to nudging, you’re the architect of a choice environment.” – Ben Newell, professor of Cognitive Psychology and deputy head of the School of Psychology, UNSW

The impact of the nudging techniques has been multifaceted. Peer accountability lifted the standards of the organisation, and the buy-ins both exceeded expectations and those achieved by previously implemented programs.

“We knew we were never going to get 100 per cent of people nudging in the right direction, but we saw 80/20, which is what’s needed for positive behavioral improvements.”

The scoreboard helped employees hold their colleagues to account as well.

“There was a notion of, ‘It doesn’t matter how well I’m performing if you’re underperforming, as it’s going to impact our scoreboard,’” says Morris.

The council also saw a direct impact on employee behavior once COVID-19 hit. After being nudged through positive feedback and encouraged to make their own decisions, employees who usually required heavy supervision were well-equipped to perform autonomously, he says.

Persuading executives

The higher up the chain of command, the more impervious people may be to techniques such as Nudge Theory, says Morris.

“What we noticed is that the executive team needed more diagnostic accountability. They wanted a more system-based approach.”

When discussing bringing about cultural change through leadership techniques, Morris’ team recorded a council meeting, which was subsequently analysed to identify keywords that were or weren’t said during the meeting.

“We were trying to eradicate bad behaviours, and the best way to do that was to point them out. For example, asking: ‘Do you realise you said that six times’, or ‘You had quite an aggressive undertone.’”

“Senior Nudge Theory [training] was all about how their behaviour affects the masses. We tried to help them frame a response so that when they get triggered, they are nudged to use a positive approach to deal with an issue.”

According to Newell, using data can help nudge the executive team to implement other nudges within the organisation. Comparative data through trial is a great way to measure and demonstrate the effectiveness of certain nudge techniques.

“During the flexible working hours experiment, a ready template email was introduced in one version of the trial, which was more impactful than simply changing the Outlook settings and managers drafting an email of their own.

“By running these small versions of interventions, you can build an effective business case to put forward to the executive team with actual data.”

If you’re not seeing an immediate change via a nudge, that doesn’t mean it’s time to abandon ship.

“If you tried different approaches to your onboarding form along with sending a prompt email, and exactly the same number of people completed either version of the form in a given time, you can still look at whether sending the email led to a behavioural change.”

Ascertain if some part of the nudge worked and then tweak your approach.

If you’re looking to introduce ‘nudging for good’ into your organisation, keep this parting message from Thaler’s book, Nudge, in mind: “If you want to get people to do something, make it easy. Remove the obstacles.”


Train your management in the skill of emotional intelligence and take advantage of AHRI’s EOFY short course sale.


A version of this article first appeared in the May 2021 edition of HRM magazine.

guest
1 Comment
Inline Feedbacks
View all comments
Max Underhill
Max Underhill
5 months ago

This top down driven nudging takes me back to the 1980’s when productivity was a major issue and Australia was loosing our manufacturing sector to Asia. The recovery in early 1990’s had a number of drivers including empowerment of the employees. This was achieved by defining outcomes for each position and the performance measures. Performance measures defined what was expected from an employee at base salary. Performance above and beyond was performance pay. Back in 1990 the defining of position competence was critical as it valued the position accurately. The same system was used to value the applicant/employee and set… Read more »

More on HRM