Leveraging Behavioral Nudges in Your HR Function

Leveraging Behavioral Nudges
in Your HR Function
HRExecutive Webinar
July 15, 2015
Sarah Newcomb, Ph.D.
Behavioral Researcher
HelloWallet, Morningstar
More than one in five Americans think
that playing the lottery is
“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
WHERE WE’RE HEADED
1.  Choice Architecture
2.  Nudging for Optimal Outcomes
3.  When in Doubt…Test!
Encouraging
Behavior Change
Choice Architecture & Nudges
“A choice architecture represents the
interface – menu, ordering and structure
– of options 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 Ittersum, K. 2013.
“Portion Size Me: Plate-Size Induced Consumption Norms and Win-Win Solutions 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 implementation intentions prompts to enhance influenza vaccination 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 Selection
•  Engaging with Online Tools
Nudging Ethics
1)  Transparency
2)  Autonomy
3)  Privacy
4)  Fairness
Nudges in Hiring
Know the natural biases that interfere with
optimal talent acquisition
•  Men, or masculine leadership styles
•  Attractive people Marlowe, C.M., Schneider, S.L., & Nelson,
C.E. (1996). Gender and attractiveness biases in hiring decisions: Are more
experience managers less biased? Journal of Applied Psychology, 81.
•  Those who are like ourselves
•  Preference for potential over actual
experience. Tormala, Z.L., Jia, J.S., & Norton, M.I. (2012). The
preference for potential. 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 Na1onal 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. Because informal networks are prone to homophily, exis7ng pa9erns of gender and race bias can be reinforced by company referral programs. (Cohen et al., 1998; Fernandez et al., 2000) 5. Miller McPherson, Lynn Smith-­‐Lovin, and James M Cook, “Birds of a Feather: Homophily in Social Diversity in Hiring
What to Do?
Make it a known issue in your workplace
•  48% of employees are not aware of initiatives 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.
Nudging Greater Diversity
•  “Feel the Need” messages. Help people to get past an intellectual understanding of the need for diversity. Make it emobonal. Show them how the difference in added producbvity that diverse workplaces hWhat
ave will affect the are
your
company’s survival, or their annual bonus. 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
Attitudes Test
https://implicit.harvard.edu/implicit/takeatest.html
Diversity in Hiring
Become Bias Literate
hdp://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 incentives
are weighted by the company’s objective 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-contribution
and retirement plan leakage
Benefits Selection
Freedom of Choice
Expansion of Information
Potentially lead to increased satisfaction…BUT…
Come at the cost of cognitive load.
Mo’ Choices, Mo’ Problems
•  Selecbon difficulty is one of the key drivers of DECISION AVOIDANCE 6 •  Maximizabon mobves 7 •  Greater regret •  More social comparison •  Greater incidence of depression 6. Anderson, C. J. (2003). The psychology of doing nothing: Forms of decision avoidance result from reason and emo1on. Psychological Bulle1n, 129, 139–167. 7. Schwartz, B., Ward, A., Monterosso, J., Lyubomirsky, S., White, K., & Lehman, D. R. (2002). Maximizing versus sa1sficing: Happiness is a maJer of choice. Journal of Personality and Social Psychology, 83, 1178–
1197. Encouraging Action:
Make it Simple
A simple heart icon was better at
improving diet choices than calorie/
fat content info8.
Star ratings reduce perceived choice
difficulty. Offering star ratings for
funds increased adoption and
satisfaction rates among employees
with low financial knowledge9.
8. Boonme, K., Hanus, B., R. Prybutok, V., A. Peak, D., & Ryan, C. (2014). Visual information influences
consumer fast-food choices. Nutrition & Food Science, 44(4), 279–293.
9. Maureen Morrin, Susan M. Broniarczyk, J. Jeffrey Inman (2012) Plan Format and Participation in 401(k) Plans:
The Moderating Role of Investor Knowledge. Journal of Public Policy & Marketing: Fall 2012, Vol. 31,
No. 2, pp. 254-268.
Encouraging Action:
But not Too Simple!
Perceived task complexity
drops when the focus is
placed on key attributes10.
BUT...Too few options can promote
the search for more options, triggering
the Maximizing Motive and the user
will ultimately be less satisfied11.
Incomplete information about key
attributes 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 All the Time: Big Theories
CONTROL
SOCIAL PROOF
GAIN
We’re testing everyday: big theories
Clear Winner!!
LOSS AVERSION
We’re Testing All the Time: Small Details
Time of day, day of week
•  Tuesday at 10:30AM
•  Wednesday at 10:30AM, 12:00PM, and 5:30PM
We’re testing everyday: small details
•  Thursday at 10:30AM
•  Sunday at 5:30PM
Clear Winner!!
Tesbng Helped Us increase Conversions By 80% Key Findings: What’s Worked
Key Findings: We’re Wrong!
We learned a lot, and increased
conversion by 80%!
Call to Action
Original: “Start Today”
New: “Get My Account”
Result: 42% Conversion Increase
Aspirational Template
Base: Original Template Design
Tested: Aspirational template design
Result: 37% Conversion drop for test group
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
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
Ease of Sign Up
Original: Email to Landing Page
New: Email to Sign Up Page
Result: 36% Conversion Increase
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
Resources
45 posts on A/B, Mul7variate, and Usability Tes7ng: hdp://bnyurl.com/pa259rx hdp://www.amazon.com/Designing-­‐
Behavior-­‐Change-­‐Psychology-­‐
Behavioral/dp/1449367623 hdps://whichtestwon.com/