Decoding employee decisions

Understanding a necessary step in knowing how to influence action
By Melissa Campeau
|Canadian HR Reporter|Last Updated: 11/14/2016

What goes into the decisions we make? Whether the choice is what to have for breakfast or whether to accept a job offer, understanding what goes into those decisions is a necessary step in understanding how to influence action.

Exploring what factors play a role in our decisions — and how that can impact HR policies and programs — was the theme of a recent Strategic Capability Network event held in Toronto recently.

Guest speaker Julian House, research scientist at the Ontario government’s Behavioural Insights Unit and research fellow at the University of Toronto’s Behavioural Economics in Action Research Hub, shared insights into why people choose to do the things they do, and how human resources professionals can harness some of that understanding to benefit both employees and organizations.

Two thought systems   

For centuries, generally accepted theory held that people make decisions based on rational self-interest. Recent science, though, tells us making choices is a more nuanced and complex process.

House’s colleague, Daniel Kahnerman — author of the book Thinking, Fast and Slow — proposed that we have two thought systems. The first, said House, is an automatic system.

“It’s the default,” he said. “It’s deciding what to have for breakfast or what route to take to work. It’s habit and mental shortcuts.”

This system, said House, parses complex information into simple questions, involves stereotypes, and is emotional, impulsive, focused on the present and hard-wired.

“‘System 2’ thinking is capable of complex, rational things like putting a man on the moon or curing disease,” said House.

The two systems are often at odds with each other.

“You can have all kinds of good intentions and make plans to act on them tomorrow,” said House.

“And tomorrow is always a day away… Off in the distance, we’re all training for a marathon and eating kale and saving for retirement.”

While those intentions can be genuine and sincere, the pull of the immediate is in direct conflict.

“We think about those goals in the future, but decide that ‘today I’ll sit on the couch and eat a cheeseburger and watch this Seinfeld rerun,’” he said.

The Last Mile

Even when an employee makes an effort to employ system two thinking, hurdles can easily get in the way.

House spoke about the negative impact of obstacles during the final phase of a program — something his colleague Dilip Soman has coined “The Last Mile.”

“The last mile suggests it’s the last phase — the interface between the programs and the end user —  that can really shape the outcome of a program and make or break its success,” said House.

Logical, rational thought doesn’t always win, though. When it comes to post-secondary education, for example, “the cost-benefit analysis is really stacked in support of going to college. You wouldn’t think something as small as paperwork would prevent people from acting in their own best interest,” he said.

House then outlined a 2009 U.S.-based experiment involving families in the process of filling out end-of-year tax paperwork. Some were given no information about financial aid for children approaching college age and some were given pamphlets and instructions about how to apply for aid. In a third condition, the company involved took all the information people had given for their taxes and pre-populated the financial aid form. This meant a 100-question, eight-page questionnaire was reduced to a 10-minute in-person interview.

“That small change made it 40 per cent more likely that the children of those families would submit an aid application and 29 per cent more likely that they would attend college,” said House. “A little bit of paperwork at the last mile is enough to totally change someone’s life.”

HR professionals can help remove some of those obstacles, he said.

“With a pension plan, for example, employees generally have to fill out paperwork to sign up, and lots of people, despite wanting to be part of the plan, don’t sign up because the paperwork is a pain.”

Instead, they should cater to their default, present-day, system one thinking and have them sign papers to opt out of a plan.

Research shows it makes a difference, said House.

“For things like flu clinics at work, remove the barriers,” he said. “In some experiments, what researchers have done is just assigned people an appointment. It increases the likelihood that they’ll attend by more than 40 per cent.”

Fear of loss, anticipation of gain

Offering incentives to help achieve goals isn’t a new idea, but a non-traditional approach might be more effective, said House.

One study looked at whether incentives based on performance could actually improve employee performance, he said. Employees were asked to reach a goal of 7,000 steps each day. They were offered either $1.40 for each day they reached the goal, or a total of $42 for participating in the program, less $1.40 for each day they didn’t reach their target number of steps.

“Only the loss scenario of losing $1.40 each day helped employees meet their daily step counts,” said House. “So anticipation of regret is a strong motivator… This is an important point for designing programs.”

Social context

Another important factor in making decision is social context, said House, who described a situation in the United Kingdom where the government hoped to reduce the rate at which doctors were prescribing antibiotics. A behavioural insights team sent letters to 20 per cent of those with the highest rates of antibiotic prescription to inform them where they stood, compared to their peers.

“There were no punishments, no incentives, they were just letting them know,” said House. Those letters, however, had an immediate impact and resulted in significantly fewer antibiotics prescribed. 

Social context only works if there’s something people can do, relatively easily, to align themselves with their peers, said House. He mentioned a study in which a company sent letters to employees encouraging them to sign up for the pension plan, and noting that the majority of their co-workers had already enrolled.

“The letters didn’t work,” said House. “It was an unfavourable comparison to their peers and demotivating. They felt like they’d never catch up.”

While social context can be leveraged, as in the antibiotic study, and can backfire, as in the pension study, it’s sometimes helpful to remove it altogether: Think recruiting and interviewing, with all the implicit bias removed.

House described a new company using software to strip resumés of any individual or personal information.

“Then you conduct an interview over the Internet via VOIP with a voice scrambler that makes everyone sounds the same; everyone sounds either like a woman or a man and most accents are also neutralized,” said House. “Instead of being influenced by all sorts of irrelevant contextual information — Does this person look and sound like I do? — now you’re just focusing on the candidate’s answers and the resumé that’s in front of you.”

Understanding all the additional, non-rational factors that go into making a decision can be an important tool for HR.

“That’s the more complete picture that behavioural science paints,” said House. “We have not only this slow and deliberate way of coming to decisions, but also these automatic systems that tend to be the majority of how we interact with the world.”

Melissa Campeau is a Toronto-based freelance writer.

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