Behavioural psychology was first popularised in 2008, with the publication of the bestselling book Nudge: Improving decisions about health, wealth and happiness, written by University of Chicago economist Richard Thaler and Harvard Law School Professor Cass Sunsteinand. Since then, there has been a growth in the application of ‘nudge theory’, both in public policy and commercially.
In a nutshell, behavioural psychology looks at how individuals make economic decisions, considering the psychological, emotional, social and cognitive factors at play.
Although the introduction of auto-enrolment pensions came about largely because of nudge theory, few HR and reward teams seem to be knowingly using behavioural psychology to understand their people better or to create more tailored reward strategies.
In 2017, ACCA (the Association of Chartered Certified Accountants launched a behavioural psychology approach to improving financial wellness, in conjunction with provider Nudge, as part of our wider focus on improving wellness within the workplace.
One of our key motivations for tackling financial wellness in this way is that finances can be a taboo subject in the workplace. We believe that the most effective way to deliver the help our employees need is to give them access to very personalised financial education that is entirely confidential and can be accessed when and where they need it.
Staff are nudged through a programme of tailored education based on their financial goals, interests and lifestyle choices.
As a reward team, we receive a benchmarked analysis every quarter that enables us to keep track of how actively engaged our employees have been. We can see how different groups are engaging with their money and get detailed insight into their needs, lifestyles and financial goals. Receiving these insights, as well as understanding our people’s communication preferences, for example what method they prefer and when they are most likely to interact, helps us refine our reward strategy and communication to match employees’ true needs and wants.
Steven Doyle is benefits specialist at ACCA