Canadian HR Reporter

SEPTEMBER 8, 2014 CANADIAN HR REPORTER & STRATEGIC CAPABILITY NETWORK BY MELISSA CAMPEAU What goes into the decisions we make? Whether the choice is what to have for breakfast or whether to accept a job off er, understanding what goes into those decisions is a necessary step in understanding how to infl uence action. Exploring what factors play a role in our decisions — and how that can impact HR policies and programs — was the theme of a recent Strategic Capability Network event held in Toronto recently. Guest speaker Julian House, research scientist at the Ontario government's Behavioural In- sights Unit and research fellow at the University of Toronto's Be- havioural Economics in Action Research Hub, shared insights into why people choose to do the things they do, and how human resources professionals can har- ness some of that understanding to benefi t both employees and organizations. Two thought systems For centuries, generally accepted theory held that people make decisions based on rational self- interest. Recent science, though, tells us making choices is a more nuanced and complex process. House's colleague, Daniel Kahnerman — author of the book Thinking, Fast and Slow — proposed that we have two thought systems. e fi rst, said House, is an automatic system. "It's the default," he said. "It's de- ciding what to have for breakfast or what route to take to work. It's habit and mental shortcuts." is system, said House, parses complex information into sim- ple questions, involves stereo- types, and is emotional, impul- sive, focused on the present and hard-wired. "'System 2' thinking is capable of complex, rational things like putting a man on the moon or curing disease," said House. e two systems are often at odds with each other. "You can have all kinds of good intentions and make plans to act on them tomorrow," said House. "And tomorrow is always a day away… Off in the distance, we're all training for a marathon and eating kale and saving for retirement." While those intentions can be genuine and sincere, the pull of the immediate is in direct confl ict. "We think about those goals in the future, but decide that 'to- day I'll sit on the couch and eat a cheeseburger and watch this Sein- feld rerun,'" he said. e Last Mile Even when an employee makes an eff ort to employ system two thinking, hurdles can easily get in the way. House spoke about the negative impact of obstacles during the fi - nal phase of a program — some- thing his colleague Dilip Soman has coined " e Last Mile." " e last mile suggests it's the last phase — the interface be- tween the programs and the end user — that can really shape the outcome of a program and make or break its success," said House. Logical, rational thought doesn't always win, though. When it comes to post-secondary educa- tion, for example, "the cost-ben- efi t analysis is really stacked in support of going to college. You wouldn't think something as small as paperwork would prevent peo- ple from acting in their own best interest," he said. House then outlined a 2009 U.S.-based experiment involving families in the process of fi lling out end-of-year tax paperwork. Some were given no informa- tion about fi nancial aid for chil- dren approaching college age and some were given pamphlets and instructions about how to apply for aid. In a third condition, the company involved took all the information people had given for their taxes and pre-populat- ed the fi nancial aid form. is meant a 100-question, eight-page questionnaire was reduced to a 10-minute in-person interview. " at small change made it 40 per cent more likely that the chil- dren of those families would sub- mit an aid application and 29 per cent more likely that they would attend college," said House. "A little bit of paperwork at the last mile is enough to totally change someone's life." HR professionals can help re- move some of those obstacles, he said. "With a pension plan, for exam- ple, employees generally have to fi ll out paperwork to sign up, and lots of people, despite wanting to be part of the plan, don't sign up because the paperwork is a pain." Instead, they should cater to their default, present-day, system one thinking and have them sign papers to opt out of a plan. Research shows it makes a dif- ference, said House. "For things like fl u clinics at work, remove the barriers," he said. "In some experiments, what researchers have done is just as- signed people an appointment. It increases the likelihood that they'll attend by more than 40 per cent." Fear of loss, anticipation of gain Offering incentives to help achieve goals isn't a new idea, but a non-traditional approach might be more eff ective, said House. One study looked at whether incentives based on performance could actually improve employee performance, he said. Employees were asked to reach a goal of 7,000 steps each day. ey were off ered either $1.40 for each day they reached the goal, or a total of $42 for participating in the program, less $1.40 for each day they didn't reach their target number of steps. "Only the loss scenario of losing $1.40 each day helped employees meet their daily step counts," said REMOVE > pg. 20 Decoding employee decisions Understanding a necessary step in knowing how to infl uence action While intentions can be good and sincere, immediate desires often confl ict.

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