What do you think of when you see the term organization? Does it evoke images of organization charts, reporting lines or role and responsibility descriptions? Or perhaps it conjures up business processes, procedures and rules, appraisals, objectives and targets.
All these things can (and often do) form part of organizations. But they are all there for a common purpose. They are there to ensure that the members of the organization behave in a particular way.
And they can do a reasonable job. As an employee, it helps if you know who your boss and your colleagues are, and if it is clear what you are responsible for. And it stands to reason that if you have objectives with the promise of a sizeable bonus if you reach them (and the threat of a black mark if you don’t) can motivate you to perform as best you can.
This rests on a set of fundamental, common assumptions. Employees know what is good (and bad) for them, and behave accordingly. They are rational, pursue their self-interest, and seek to maximize their benefit – just like that mythical species, homo economicus.
In world at large, the realization is growing that customers and citizens are – in the word of Nobel prize winning behavioural economist Richard Thaler – “misbehaving”. Yes, people do respond to incentives, but often not quite in the intended way, or in their apparent self-interest. So companies and public bodies turn more and more to behavioural insights to improve the effectiveness of their relationships with customers and citizens.
Within organizations, however, the myth of the homo economicus is largely alive and kicking. Bribes (in the shape of salaries and bonuses) are still the primary instrument to make employees do things they would not otherwise do, and the threat of punishment (from reassignment to written warnings or even dismissal) is the main lever to stop them straying. A caricature? A little, for sure, but caricatures invariably contain a grain (or more) of truth.
And yet, employees too “misbehave”. Deadlines are missed, and budgets are overspent. Nicely described cross-functional processes are no match for organizational silos. Carefully crafted organizational values are not reflected in the behaviour of the people.
Why do employees “misbehave”? Out of incompetence or malice? Rarely. There are two more likely key reasons why they may not quite act as you might expect (or want them to.). One is that it is not possible to guide organizational behaviour entirely through conventional instruments. No matter how comprehensive you try to be in describing the right way of doing things, the full complexity of the operations of even the simplest organization cannot fully be captured in structures and rules. The second one is that we do not only respond to incentives (like our salary, bonuses, or sanctions). There are other, mostly unconscious influences on our behaviour: we follow mental shortcuts (known as heuristics), we have certain (often systematic) behavioural tendencies (known as biases), or we are nudged by the context or by what others do.
These two reasons complement each other. If rules and structures leave room for interpretation (or where we choose to interpret them!), we rely on other guidance. We make choices according to our beliefs or assumptions, or we automatically apply heuristics, act out biases or follow the unseen cues in the environment. It is when this happens, that employees appear to misbehave.
And that is a tough challenge. The familiar mechanisms, based on rules and rewards or sanctions, are not very effective to address this kind of misbehaviour. So, what to do?
A better approach is to use insights from behavioural science and behavioural economics for diagnosing and remedying the misbehaviour. A fast growing body of research is untangling the complex web of human behaviour, well beyond the realm of incentives. This is where rich seams of new knowledge emerge, and they can help manage “misbehaviour“– not just in customers and citizens, but also in employees.
Some of the more striking findings are featured in the bestselling books by authors like Dan Ariely, and Nobel prize laureates Daniel Kahneman and Richard Thaler. There are many ‘aha!’ moments when you read them, and it is tempting to jump straight from insights in these books to a solution to a tough misbehaviour challenge.
Pause for a moment, though, and beware of the illusion of skill. Research at the University of Chicago found that the more people watch others perform certain tasks in YouTube videos, the more they believe they too have acquired that skill. When things are made simple – in videos, or in bestselling books – they feed the illusion that they are simple. When you read Nudge or Predictably Irrational it is tempting to believe that, armed with what you’ve just learned, you can just sprinkle a bit of magic behavioural dust over your organization and fix all that misbehaving.
Unfortunately, that is not a recommended route, as United Airlines discovered. In some circumstances, lotteries have been found to be a more powerful motivator than direct cash, e.g. people prefer a chance of 1/50 to win a £50 voucher over a certain payment of £1. They decided to apply this finding to their employee bonus system: instead of lots of small bonuses of a few per cent of salary, they gave their staff the chance to win one of a few large prizes (like holidays or luxury cars), assuming that would go down well. It didn’t. Within days the new system was ditched.
Even if you feel able to change a washer in a tap without flooding the house, you would probably not entertain the idea of ripping out and completely replacing all the plumbing. There are tough challenges that are beyond DIY – whether in plumbing or in the practical application of behavioural science. A little knowledge is a dangerous thing, and diagnosing and remedying employee misbehaviour requires a lot of knowledge and experience.
If you think that people in your organization are misbehaving, think of United Airlines, and don’t start tinkering yourself. Better call in the professionals.
Koen Smets is an organizational development consultant and an accidental behavioural economist. He serves as a Senior Advisor to the BVA Nudge Consulting, who stand ready to help with all your “misbehaviour” challenges.