Prithvi Shergill, CEO of entomo.
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Behavioral economics combines psychology and economics to understand human behavior. People often make decisions based on their emotions and act on impulse. However, the right nudges—monetary and non-monetary—could influence people to perform better and grow professionally and personally.
Shaped by the field-defining work of Nobel laureate Richard Thaler, behavioral science examines the journey from what one "should" do, what they "actually" do and the "consequences" of their actions. The principles of behavioral economics have been extensively explored and explained by experts like Adam Smith, Amos Tversky, Daniel Kahneman and many others. These theories can be applied to enrich personal and professional experiences.
I have always advocated that if intentions and promises are aligned with the beliefs a community or organization is committed to, then the actions required "take values from the wall into the hall." A right nudge, delivered at the right time via the right channel could guide people’s choices and encourage them to make specific "desired" decisions. To quote Thaler, "If you want people to do something, make it easy."
The Application Of Behavioral Economics In An Evolving Workspace
Augmenting human capital can power organizations to navigate smoothly through rapidly shifting economic landscapes. Leveraging the concepts of behavioral science and amalgamating them with the notions of "rules and rewards" that HR policies are anchored in could accelerate improvement in performance, proficiency and productivity in the personal and professional arenas.
With ever-changing work dynamics, hybrid workplaces and distributed workforces, leaders at the enterprises of tomorrow can develop strategies, leverage data as insight and shape their human capital to be future-ready. A workforce of the future will need a richer tapestry of skills as the future of work is being redefined. By simplifying the emerging complexities, enterprises of tomorrow can influence the evolution of individuals as they reinvent and reshape work, the workforce and the workplace.
To survive and grow in the competitive environment, HR can reevaluate, replace and refresh legacy processes based on needs. Translating available data into usable information can help HR generate actionable insights and influence decisions to inspire behavioral changes. This concept, when applied in personal and professional spaces, could influence positive performance and support growth by providing social proof.
Inspire Action That Leads To Behavioral Changes
Talent leaders today need to formulate and implement strategic plans that can enhance value by translating data into information and inspiring insights to drive actions that influence behavior changes—sometimes using economic incentives and sometimes not.
The process can reinforce social proof and motivate behavioral changes. Individual changes then influence collective behavior for desired outcomes. Enhancing "rules and rewards" with personalized "nudges" can translate the data into intent and promise of action.
HR and people leaders can steward and leverage such concepts and learnings from behavioral economics to drive performance. As HR anchors the agenda in enterprises to reset and reinvent ways of working, especially in a digital, hybrid and distributed world of work, rules and rewards used in the past may be inadequate to ensure action to impact change at the speed required.
HR leaders can reimagine policies, processes and practices with design-led intent. To ensure these deliver the growth expected, HR can reinforce using evidence-based nudges that lead to employee awareness, assimilation and adoption.
The Role Of HR In Shaping Enterprises Of Tomorrow
While we often say the role of HR professionals needs to evolve from being business partners, employee advocates and process experts, we underestimate the need for them to apply their skills as change agents.
To do so, the HR professional of tomorrow needs to understand the role of increasing their personal capacity so they can grow their ability to engage and empower leaders at all levels in the organization to influence behavioral change toward the direction desired. While technology cannot replace humanity, it can help with personalization at scale across the employment lifecycle as people recruit, staff, learn, perform, engage and grow.
HR can own this agenda by aligning enterprise governance norms. This leads to collaboration and delivery of outcomes as business strategy, operational outcomes and people performance intersect to ensure clarity of intention and promise as a line of sight to results.
HR and people leaders have the opportunity to own the agenda of creating a culture that ensures the right decisions are made related to the skills that organizations need to buy, build, borrow, boost or sometimes "bounce" today. They can work to ensure a distinctive capability and experience for the workforce so they multiply the value of its contributions by providing the opportunity to seed, nurture and harvest innovation.
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