Need to know:
- A behavioural psychology approach to workplace savings communications can help employees develop positive savings habits.
- The language used in communications should target different motivators to ensure that the underlying message resonates with as many employees as possible.
- Employees sharing personal experiences can help to motivate behaviour change, but employers must have a proactive plan in order to inspire action.
Behavioural psychology, which explores the use of conditioning to form and change behaviours and habits, has expanded from the world of academia into the workplace.
Take, for example, pensions auto-enrolment. Thanks to the government’s initiative to harness the natural inclination towards inertia, more than 9.5 million employees are now enrolled in workplace pension schemes, according to The Pensions Regulator's annual commentary and analysis report, published in September 2018.
With this in mind, how can employers utilise behavioural psychology techniques to encourage employees to save more?
Small habit changes
Employees who are successfully managing aspects of their daily lives such as work, sleep, health and fitness are also more likely to be good savers, according to research by communications consultancy Like Minds and the School of Life, published in May 2017. Nick Throp, co-founder at Like Minds, explains: “What this suggests is that positive savings behaviours are all to do with good habits."
Therefore, communications that centre around making incremental lifestyle improvements can, in turn, help create the positive habits that lead to good savings behaviours.
“We try to get people from the psychological equivalent of, ‘I am not really in control of my money’ to the next day, suddenly exhibiting all these massively positive behaviours. It doesn’t work like that, [they] have to work up to it," Throp adds.
One way to help incentivise and create this incremental change is through gamification. if employees can track their progress and receive positive reinforcement, they are more likely to feel encouraged to continue.
“A good example might be a savings website that tells [employees they] are halfway to becoming a savvy saver, because [they] have used a modelling tool or watched a video. This helps people feel they are making progress and moving towards something," says Throp.
Communications linked to motivations
Employees have different motivations when it comes to saving. Hannah Lewis, director at communications agency Behave London, says: “Some are motivated by gains, by the opportunities we could take advantage of. Others are motivated by avoiding pain and conserving our resources to protect ourselves for rainy days.
“[Employers] need to use both types of language to make sure [they] talk to both saving types. Such as, ‘whether you’re saving for the trip of a lifetime, or to protect against life’s twists and turns...’ Generally, we only pay attention to the messages which resonate with us and ignore those which do not."
Personal stories to nudge behaviour change
A behavioural psychology approach can also use employees' personal stories, says Heidi Allan, head of employee wellbeing at Neyber. “Personal stories are so important and so motivational," she explains. "For instance, looking back now that they are in a more positive situation, what would someone have done differently?”
Employers might provide workshops that enable employees to talk about the psychology of pension saving, rather than just giving traditional pension plan presentations. “It’s interactive and people are meant to share what they have learnt through their own experiences. The idea is to attract a mixed audience, so that [there is a] diversity of experience," Throp adds.
The danger with this method, however, is that although employees may feel uplifted at the end of the workshop, they might not follow through with decided actions.
To combat this, employers could ask staff to write a postcard to their future selves about what they have learnt and what they are going to do as a result. Six months or a year later, the workshop participants then receive their postcards in the mail as a timely reminder.
Tailoring communications
Tailoring communications so that they resonate with the chosen audience is vital, especially if employers wish to change behaviours. “There’s no point in talking about saving for [their] children’s education if [employers] are writing to a group of 18 to 24-year-olds,” says Allan.
That said, employers should not assume that the usual generational tropes are all true. Saving for retirement often resonates with a variety of employees, irrespective of their age. Similarly, two 40-year-olds may have very different savings priorities, depending on whether or not they have had children.
“It is dangerous to put people in a box," Allan explains. "[Employers] need to come up with a range of ways to engage people. Try sending messages in several formats, because something will resonate. There will be that one key thing that makes someone sit up and think, ‘I should be doing that.’”
Equally, employers should not bombard employees when they first join an organisation, says Helen Dowsey, director of employer and intermediary experience at workplace pension scheme Nest. “We are looking for what we call teachable moments,” she explains. “When an employee first joins an organisation is not necessarily the right time to communicate about their pension. They have so much to absorb that the pension message might not hit home. It’s better to communicate in bite-sized chunks and keep things simple.”
Auto-enrolment is successful for a reason: it makes saving easier. The same approach should be applied when it comes to all forms of workplace saving. For example, employers should limit the need for various, complicated logins to different platforms, as this can put employees off. Nest, on the other hand, provides a pension calculator on its website, which members do not have to log in to in order to access it, says Dowsey.
Lewis concludes: “An iPhone doesn’t come with a manual, because it’s designed to be easy to use. Make it easy for people to save, offer incentive schemes they don’t have to think about, and do the heavy mental lifting for them.”
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