How behavioral sciences can improve company performance

@IE University

When the right behaviors become ingrained in employees, companies can create a more sustainable work culture and achieve superior performance.

As fantastic as modern technology is, human behavior is still a huge part of any organization’s success. Think about it—people are at the heart of all companies, so understanding the hardwiring of our complex (and confusing) brains is the key to unlock growth.

And this hasn’t gone unnoticed by companies. Understanding human behavior is becoming increasingly important as motivated employees are more creative, efficient and productive. Even the smallest of psychological pushes—known as “nudging”—can hugely affect employee performance. So, the million-dollar question is: How can we change people’s behavior to drive better results?

Enter behavioral science.

What is behavioral science anyway?

The overall concept is quite simple: behavioral science is the science of human behavior. It’s based on the principle of determinism, which says that all of our actions are determined by previously existing causes.

Every time you make a behavioral decision, it’s based on your past experiences behaving that way or expectations of how you should behave. If the consequences of your behavior are positive, you will probably continue behaving like that. But if the consequences are negative, you might change.

This happens all the time in the workplace. Manager expectations, company policies, or how you communicate to influence how you behave initially. The feedback, rewards, and support you receive (whether positive or negative) will then influence whether you make the same behavioral decision next time, or change how you act.  

Positive leadership

Once you realize this, it becomes clear that companies have a huge influence on how their employees behave. And the main tool of encouragement they have is positive leadership. According to research, where a leader falls on the “positive extreme” can influence the behavior of their employees.

For example, imagine you’re at work, and your manager is consistently late, never recognizes your strengths, and has you doing the same menial tasks day after day. Not only are they inadvertently encouraging you to care less about your own punctuality, but they’re not encouraging you to grow in your role. After a while, this will affect your productivity, efficiency, and morale, negatively affecting the whole company’s progress.

Now imagine a leader that seems to have that “Friday feeling” every day of the week. They always have a positive moral outlook, always focus on people’s strengths, and have excellent interpersonal skills. Not only are you likely to copy these traits, it will also have a direct impact on your productivity and morale.

Sequence the campaign

Incentivizing employees

When it comes to incentives, most people instantly think of money. But research shows that money is not the be all and end all. Although it may result in a short term boost in a company’s performance, the effect doesn’t last for very long.

So, how do you encourage employees? Well, it seems that social incentives might be the answer. These consist of a small financial bonus paired with a token of less traditional recognition. For example, employees may be given a monetary reward but are instructed to spend at least half of it on their colleagues. This encourages the employee to interact with their colleagues and increases the company’s internal cohesion.

Additionally, employees like to feel appreciated—don’t we all? If their ideas are carefully considered, demonstrated through attentive listening, note-taking, and asking questions to ensure understanding, they’ll feel more motivated to contribute. Such a support network increases employee motivation, encourages creativity, and nurtures the growth of individuals.

Feedback and awareness

The old adage “you have to be cruel to be kind” was once commonplace in the business world. Unsurprisingly, this isn’t the way forward. Instead of getting your employees to “pull themselves up by the bootstraps” negative feedback results in defensiveness and shame, and some people shut off or even resent those who gave them the criticism.

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To combat this, some companies have begun to separate developmental feedback from evaluative feedback, and generally aim to focus on the positive. In fact, praise for employees should outweigh negative feedback by 6:1 to achieve optimal performance within an organization.

Avoiding bias

While conscious behavior is a huge part of encouraging your employees, often this doesn’t go far enough. Our subconscious biases can stop us making the right decisions for our company, especially during the recruitment process.

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Behavioral design can be used to create a recruitment process that avoids the “similarity error,” which is the tendency for recruiters to subconsciously prefer individuals who remind them of themselves. This often leads to the same type of people being hired again and again, until a company resembles a pack of identical minions, which stifles diversity and creativity.

A sample technique

One debiasing technique used by McKinsey is combating “groupthink,” a psychological phenomenon where groups make irrational decisions motivated by the urge to conform or fear to dissent. The consulting firm avoids this by asking members of a group to formulate and write down their own opinion of a candidate before they discuss their thoughts together. This prevents groups latching on to a certain opinion put forward before other members can contribute.

Successful negotiations

As well as helping to avoid bias, behavioral science can also be used to make the recruitment process more efficient. One global service company wanted to make their selection process more coherent, so they predicted which type of candidate would go through to a round of interviews and automatically put forward the top five percent of candidates. This both sped up the process, while also increasing the number of women who were selected for the first round of interviews.

World-leading organizations now recognize the importance of understanding the psychology of our behavior, and how this informs our decisions, productivity, and motivation at work. When the right behaviors become ingrained in employees, companies can create a more sustainable work culture and achieve superior performance.