Leveraging Behavioral Nudges in Your HR Function

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Leveraging Behavioral Nudges in Your HR Function

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Speaker: Sarah Newcomb Behavioral Economist Morningstar Inc.

Moderator: Kellye Whitney

Associate Editorial Director Workforce magazine

Leveraging Behavioral Nudges in Your HR Function

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Kellye  Whitney  Associate  Editorial  Director  Workforce  magazine  

Leveraging Behavioral Nudges in Your HR Function

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Sarah  Newcomb      Behavioral  Economist  Morningstar  Inc.  

Leveraging Behavioral Nudges in Your HR Function

Leveraging Behavioral Nudges In Your HR Function August 20, 2015 Sarah Newcomb, Ph.D. Behavioral Researcher HelloWallet, Morningstar

“The most practical strategy for

accumulating several hundred thousand dollars” for retirement.

- Opinion Research Corporation for the Consumer

Federation of America and the Financial Planning Association

More  than  one  in  five  Americans  think  that  playing  the  lo?ery  is    

Encouraging Behavior Change

WHERE  WE’RE  HEADED  1.   Choice  Architecture  

2.   Nudging  for  Op6mal  Outcomes    3.  When  in  Doubt…Test!    

Choice Architecture & Nudges

“A  choice  architecture  represents  the  interface  –  menu,  ordering  and  structure  –  

of  opEons  that  are  available  for  individuals.”    

-­‐  Tepo  Felin,  Nudge:  Manager  as  Choice  Architect,  2014  

How do you get people to eat fewer calories1?

1.  Wansink,  B.,  and  van  I?ersum,  K.  2013.  “PorEon  Size  Me:  Plate-­‐Size  Induced  ConsumpEon  Norms  and  Win-­‐Win  SoluEons  for  Reducing  Food  Intake  and  Waste.”  Journal  of  Experimental  Psychology:  Applied  19  (4):  320–32.    

Boost Organ Donation Rates2?

2.  Eric  J.  Johnson  and  Daniel  Goldstein  “Do  Defaults  Save  Lives?”,  Science  21  November  2003:  302  (5649),  1338-­‐1339.  

Get a Flu Shot3?

3.  Milkman,  K.,  Beshears,  J.,  Choi,  J.,  Laibson,  D.,  and  Madrian,  B.,    “Using  implementaHon  intenHons  prompts  to  enhance  influenza  vaccinaHon  rates.”  PNAS,  vol.  108  no.  26,  pp.10415-­‐10420  

Choice Architecture & Nudges When  are  they  needed  and/or  

appropriate?  

When  natural  biases  threaten  desired  outcomes    

•  Hiring  •  Benefits  SelecEon  •  Engaging  with  Online  Tools  

Nudging Ethics

1) Transparency  2) Autonomy  3) Privacy  4) Fairness  

Nudges in Hiring Know  the  natural  biases  that  interfere  with  

opEmal  talent  acquisiEon  

•  Men,  or  masculine  leadership  styles  •  A?racEve  people  Marlowe,  C.M.,  Schneider,  S.L.,  &  Nelson,  C.E.  

(1996).  Gender  and  a?racEveness  biases  in  hiring  decisions:  Are  more  experience  managers  less  biased?  Journal  of  Applied  Psychology,  81.  

•  Those  who  are  like  ourselves    •  Preference  for  potenEal  over  actual  

experience.  Tormala,  Z.L.,  Jia,  J.S.,  &  Norton,  M.I.  (2012).  The  preference  for  potenEal.  Journal  of  Personality  and  Social  Psychology,  103,  567-­‐583.  

Nudges in Hiring

Diversity in Hiring is Threatened by…

Implicit  Biases  •  Managers  of  BOTH  sexes  are  twice  as  likely  to  hire  a  man  than  a  woman4.  •  And  then  there’s  this  graph  showing  implicit  racial  bias  among  whites  in  the  U.S.  

4.  Reuben,  E.,  Sapienza,  P.,  &  Zingales,  L.  (2014).  How  stereotypes  impair  women’s  careers  in  science.  Proceedings  of  the  NaHonal  Academy  of  Sciences  ,  111  (12  ),  4403–4408.    

Homophily Noun:    

The  tendency  of  individuals  to  associate  and  bond  with  similar  others.  The  presence  of  homophily  has  been  

discovered  in  a  vast  array  of  network  studies.  

5.  Miller  McPherson,  Lynn  Smith-­‐Lovin,  and  James  M  Cook,  “Birds  of  a  Feather:  Homophily  in  Social  Networks”  Annual  Review  of  Sociology,  Vol.  27:  415  -­‐444,  2001  

Because  informal  networks  are  prone  to  homophily,  exis6ng  paVerns  of  gender  and  race  bias  can  be  reinforced  

by  company  referral  programs.    (Cohen  et  al.,  1998;  Fernandez  et  al.,  2000)  

Diversity in Hiring What to Do?

 •  48%  of  employees  are  not  aware  of  iniEaEves  to  increase  diversity  within  the  company  they  work  for.    

(Glassdoor  survey,  July  2014)    

Let  employees  know  that  diverse  applicants  are  encouraged,  and  be  open  about  the  traps  of  groupthink  that  arise  from  homogenous  work  

environments.  

Make  it  a  known  issue  in  your  workplace  

Nudging Greater Diversity

•  “Feel  the  Need”  messages.  Help  people  to  get  past  an  intellectual  understanding  of  the  need  for  diversity.  Make  it  emoEonal.    Show  them  how  the  difference  in  added  producEvity  that  diverse  workplaces  have  will  affect  the  company’s  survival,  or  their  annual  bonus.  

What  are  your  company’s  HR  Icebergs?  

Diversity in Hiring Knowledge is Power

Inform  hiring  managers  of  specific  gender  and  racial  biases  and  how  they  can  affect  the  hiring  process.  Have  them  assess  their  own  implicit  biases  using  Harvard’s  Implicit  

Antudes  Test    

 h?ps://implicit.harvard.edu/implicit/takeatest.html    

   

Diversity in Hiring Become Bias Literate h?p://uvasearchportal.virginia.edu/?q=bias_literacy  

 

Nudges in Hiring

•  When  relying  on  informal  networks  like  employee  friends  &  family  members  for  referrals,  homophily  is  a  threat  to  diversity.  Make  sure  your  company’s  referral  incen%ves  are  weighted  by  the  company’s  objecEve  to  increase  diversity.  

Benefits Selection

60% Of households are accumulating debt faster than retirement savings

…most employees simply want someone to tell them what to do…based on a deep understanding of an individual's needs, preferences, and behaviors, which results in more personal guidance. – Amy Cribbs, Head of Vanguard Participant Experience

“  We’re  facing  a  crisis  of  under-­‐contribuEon  

and  reErement  plan  leakage  

Benefits Selection

Freedom  of  Choice   Expansion  of  Informa6on  

PotenEally  lead  to  increased  saEsfacEon…BUT…  Come  at  the  cost  of  cogniEve  load.  

Mo’ Choices, Mo’ Problems •  SelecEon  difficulty  is  one  of  the  key  drivers  of  DECISION  AVOIDANCE  6  

6.    Anderson,  C.  J.  (2003).  The  psychology  of  doing  nothing:  Forms  of  decision  avoidance  result  from  reason  and  emoHon.  Psychological  BulleHn,  129,  139–167.  7.    Schwartz,  B.,  Ward,  A.,  Monterosso,  J.,  Lyubomirsky,  S.,  White,  K.,  &  Lehman,  D.  R.  (2002).  Maximizing  versus  saHsficing:  Happiness  is  a  maTer  of  choice.  Journal  of  Personality  and  Social  Psychology,  83,  1178–1197.    

•  MaximizaEon  moEves  7  •  Greater  regret  •  More  social  comparison  •  Greater  incidence  of  depression  

Encouraging Action: Make it Simple

A  simple  heart  icon  was  be?er  at  improving  diet  choices  than  calorie/fat  content  info8.  

8.  Boonme,  K.,  Hanus,  B.,  R.  Prybutok,  V.,  A.  Peak,  D.,  &  Ryan,  C.  (2014).  Visual  informaEon  influences  consumer  fast-­‐food  choices.  NutriEon  &  Food  Science,  44(4),  279–293.      9.  Maureen  Morrin,  Susan  M.  Broniarczyk,  J.  Jeffrey  Inman  (2012)  Plan  Format  and  ParEcipaEon  in  401(k)  Plans:  The  ModeraEng  Role  of  Investor  Knowledge.  Journal  of  Public  Policy  &  MarkeEng:  Fall  2012,  Vol.  31,  No.  2,  pp.  254-­‐268.    

Star  raEngs  reduce  perceived  choice  difficulty.  Offering  star  raEngs  for  funds  increased  

adopEon  and  saHsfacHon  rates  among  employees  with  low  

financial  knowledge9.      

Encouraging Action: But not Too Simple!

Perceived  task  complexity  drops  when  the  focus  is  placed  on  key  a?ributes10.  

BUT...Too  few  opEons  can  promote  the  search  for  more  opEons,  triggering  the  Maximizing  MoEve  and  the  user  will  ulEmately  be  less  saEsfied11.  

Incomplete  informaEon  about  key  a?ributes  increases  decision  difficulty.  4.  Broniarczyk,  S.  M.,  &  Griffin,  J.  G.  (2014).  Decision  Difficulty  in  the  Age  of  Consumer    Empowerment.  Journal  of  Consumer  Psychology,  24(4),  608–625  

Encouraging Action: Decision Aids Pros & Cons

Adapted  from:  Broniarczyk,  S.  M.,  &  Griffin,  J.  G.  (2014).  Decision  Difficulty  in  the  Age  of  Consumer  Empowerment.  Journal  of  Consumer  Psychology,  24(4),  608–625.    

Online Portals & Tools

Online Portals & Tools

Online Portals & Tools

Online Portals & Tools

Encouraging Action: The Tightrope

Brevity   Completeness  

TESTING  

Test to Learn What Works

We’re testing everyday: big theories SOCIAL PROOF GAIN LOSS AVERSION CONTROL

Clear Winner!!

We’re  TesEng  All  the  Time:  Big  Theories  

Social Comparison

We’re testing everyday: small details

Time of day, day of week •  Tuesday at 10:30AM •  Wednesday at 10:30AM, 12:00PM, and 5:30PM •  Thursday at 10:30AM •  Sunday at 5:30PM

Clear Winner!!

We’re  TesEng  All  the  Time:  Small  Details  

We learned a lot, and increased conversion by 80%!

Key Findings: What’s Worked

Call to Action Original: “Start Today”

New: “Get My Account” Result: 42% Conversion Increase

Time of Day & Subject Line Original: “[Employer] Associates, Introducing a new

tool from your 401(k) plan!” at 11:00AM EST New: “[Employer] Associates, Your HelloWallet

Account is Ready!” at 10:30AM EST Result: 13.7%* Conversion Increase

Ease of Sign Up

Original: Email to Landing Page New: Email to Sign Up Page

Result: 36% Conversion Increase

Key Findings: We’re Wrong!

Aspirational Template Base: Original Template Design

Tested: Aspirational template design Result: 37% Conversion drop for test group

Unique Subject Line & Sender Base: [Employer] Benefits sender and “Reminder, Your

HelloWallet Account is Ready!” subject Tested: “Your Financial Future” sender and “Come Find

me On HelloWallet” subject Result: 66%* Conversion drop for test group

Omit “Free” and Shift to Social Proof Base: Reminder with “Free” in Header and no social

proof Tested: Remove “free” and include social proof statement

Result: 36% Conversion drop for test group

TesEng  Helped  Us  increase  Conversions    By  80%  

Resources

45  posts  on  A/B,  Mul6variate,    and  Usability  Tes6ng:    

 h?p://Enyurl.com/pa259rx  

 

h?p://www.amazon.com/Designing-­‐Behavior-­‐Change-­‐Psychology-­‐Behavioral/dp/1449367623  

h?ps://whichtestwon.com/  

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