In this two part series, Scott Young considers the opportunities for applied behavioural science in the private and corporate sector, and the hurdles that need to be overcome. This is blog 1 of 2.
Applied behavioral science has flourished in the private sector over the past decade. Today, there are an estimated 154 corporate behavioral science teams. And this figure doesn’t begin to capture the full magnitude of this work, including recent projects by such disparate companies as Unilever, Indeed and Meta.
Anecdotally, it seems that a great deal of this behavioral science energy is being directed to customer-facing initiatives. It’s easy to see why. External efforts typically have access to larger budgets and a more direct connection to revenue goals. Plus, there are many potential “win-win-win” opportunities for shifting customer behaviors, such as promoting more sustainable choices and consumption.
However, we shouldn’t let this customer focus obscure or crowd out other opportunities for applied behavioral science in the private sector. With that thought in mind, here are three areas that I find particularly promising: Compliance, Cybersecurity & Human Resources.
Legal, Compliance & Ethics
Firms spend millions annually on whistleblower hotlines, training, and other efforts to ensure adherence to laws, regulations, and company policies. Yet misconduct remains a challenge and compliance is often a “check the box” exercise in many organizations.
That’s because the legal and compliance toolkit relies heavily on traditional thinking and tools. There’s an implicit assumption that motivation is all about incentives and deterrents – and that properly informing, educating and persuading employees will drive the right behaviors. Unfortunately, relying on “carrots” “sticks” and training sessions is not always effective.
The reality is that most noncompliance is inadvertent. The vast majority of employees don’t deliberately seek to ignore policies: They do so only when the compliant path is too difficult or confusing to follow – and they can easily rationalize that “others aren’t doing it anyway.” So when we introduce complex policies, procedures, and communications – in the name of informing and educating people – we inadvertently overwhelm them and exacerbate the problem.
For this reason, compliance is an area that’s poised to be viewed through a behavioral science lens, with an emphasis on simplifying processes, removing frictions, and leveraging social norms to drive compliant behaviors. In fact, BIT has already seen the impact behavioral science can have. An intervention we designed for Arup led to a dramatic increase in employees completing disclosure surveys, primarily by simplifying the input form and sending targeted reminder notes
Cybersecurity & Anti-Fraud Efforts
Companies spent well over $150 billion on cybersecurity in 2021, and this sum is growing by about 12% annually. While these investments are justified, given the enormous risks that come with digital threats, they are not particularly efficient. That’s because ultimately, cybersecurity is a human challenge. The most elaborate investments in technology will not be effective unless employees are consistently taking the necessary actions and serving as a “human firewall” against attacks. And taking choice out of the equation – by mandating long, complex security procedures – can also be quite costly and counterproductive, in terms of productivity and morale.
So how can behavioral science make a difference? By helping employees to recognize and avoid phishing attempts, to pause and reflect before sharing information – and to follow cybersecurity procedures more consistently.
For example, we’ve found that the visceral experience of being scammed is more powerful than any peremptory educational message. Thus, in a project for the London Metropolitan Police, we paired a simulated phishing attempt (which gave some employees the visceral feeling of falling victim to an attack) with preventative training, which reduced the force’s susceptibility to such threats in the future. Similar behavioral approaches have also helped consumers identify and resist online scams. Given that banks are spending over $20 million annually on fraud prevention, there seems to be a need and opportunity for applied behavioral science here as well.
People are clearly companies’ greatest asset. Salaries aside, investments in employees are huge. For example, spending on diversity, equity, and inclusion efforts alone reached $7.5 billion in 2020 and is expected to double by 2026. Yet many large companies remain far behind their goals in this area. Large organizations also spend approximately $1,000 per employee on health/wellness programs. However, only about 20-40% of employees participate, and burnout and high turnover remain significant challenges in many sectors.
These figures speak to the massive potential for behavioral science to address core pPeople challenges, such as employee motivation, well-being, productivity, and retention. We’ve been fortunate to complete successful projects tied to such objectives, from delivering more inclusive recruitment to increasing retention. However, an even larger opportunity looms in improving the “wiring” of organizations themselves. As BIT’s Michael Hallsworth explains in 2023’s his Manifesto for Applying Behavioral Science – applying a behavioral science lens to enhance core functions within HR, such as recruiting, compensation, training, and performance reviews holds potential for significant impact and vast ripple effects. For example, the Applied recruiting platform leverages behavioral science to reduce bias and increase diversity and quality of hiring at scale.
Framing behavioral science for the private sector
These three areas (compliance, cybersecurity and HR) share important commonalities. They all struggle with persistent challenges, despite significant investment to address them via information, education/training and persuasion. They are all areas in which most people have positive intentions, yet often fail to consistently act upon them. And they are all areas in which relatively inexpensive changes (in communications, environments or processes) have driven outsized changes in employee behavior.
These commonalities should guide how behavioral science professionals position themselves and direct their efforts with private sector companies. Most importantly, we should focus on solving the problems that are already keeping business executives up at night, rather than leading our conversations with heuristics and biases. Tied to this, we should position behavioral science as a new “lens” for viewing these challenges (and opportunities) – and a way to make current efforts/investments more efficient and effective.
Certainly, the right framing and focus are a necessary foundation for growing behavioral science in the Private Sector. Yet even the most promising circumstances (and compelling of arguments) won’t ensure receptivity. So in my next article, I’ll address the most common hurdles to Behavioral Science adoption and offer several strategies for overcoming them.
If you’re looking to improve the way your organisation makes decisions and meets its people goals, BIT’s #executiveeducation program offers tangible solutions informed by real behavioural science: