Leveraging behavioural psychology to design contemporary professional services firms

Over the last few decades, behavioural psychology has emerged a long way, from designing best-in-class consumer experiences to solving mafia crime. However, an element where it has not been explored to the fullest is in designing better employee experiences in professional services firms (e.g. law, IT, BPO, consulting, investment banking, corporate banking, etc.). Here are some well-known behavioural psychology themes that can be deployed and can provide for a superior employee experience at such firms.

Deploy powerful imagery and availability heuristic to drive physical and mental fitness

Poor health—both mental and physical—is a massive pain point for people-oriented professional services firms. It is well established that graffiti and imagery are powerful in manipulating the human mind. The interiors of a company (or a laptop screensaver in the times of Corona) can be painted appropriately to drive desired behaviour leveraging the heuristic of availability bias. Rather than having imagery of abstract notions on the walls with limited direct meaning, it makes sense to portray an image of a lean, fit, mentally sound person working in a diverse group plastered away on every wall of the company. In addition, the canteens can be intelligently designed by providing smaller plates (people will tend to eat less), serving the fruit bowls first during lunch, and keeping the junk food vending machine in a far-away corner.

Redesign the elements of monetary compensation, leveraging the principles of mental accounting and power of defaults

It is not necessary that too much choice is good. It is also well established that people indulge in mental accounting. Mental accounting implies dividing the same currency (e.g. money) into different buckets (e.g. for travel, food, and medicines) but treating each bucket differently without transferring it from one bucket to another, although money is fungible and can be shifted from one bucket to another in case of need. Similarly, to drive ideal behaviour, professional services firms can divide yearly leaves into vacation leaves, sleeping leaves, study and skill upgrade leaves, or just sick leaves. Salary packages can have components along the lines of fitness allowance, mental health allowance, travel allowance, social service allowance, and skill upgrade allowance.

To leverage the power of sound defaults (most people don’t like to alter the default choice they were provided with), all employees can be directly enrolled by default into sound investment instruments like the National Pension System (NPS) and the Voluntary Provident Fund (VPF). In addition, a portion of the salary hikes in the subsequent years can be automatically allotted to these vehicles by default. Employees will have the option to change these default choices, but they will rarely indulge in such seemingly difficult activities.

The principle of smart anchoring and endowment effect can go a long way in creating differentiated career paths

Most professional services firms have manpower attrition in the range of 15%-18% with an average employee tenure between 1.5 years and three years. To increase this, consistent celebration of employees with longer tenures, say 10 years, can be done at induction batches for new employees (10 years is being anchored as the base). In addition, differentiated visible material experiences, for instance, a leadership programme at an Ivy League institution for someone who finished five years can be great way to reset the tenure expectation in a company.

To keep top performers happy, it is counterproductive to give them a higher pay hike compared to the average performing employees. Leveraging the principle of endowment effect and social jubilation, what might create greater impact is public celebration through awarding them with Oscars, handwritten notes, and company sponsored programmes. Given the difference in salary hikes are rarely material enough (endowment effect kicks in as a 15% difference in hikes does not make a visible impact in lifestyle), visible but more economical measures to differentiate top performers might have greater impact. I would say a salary difference of ₹1 will do if the remaining experience can be blasted away on social media.

The principle of collaborative filtering can be leveraged to drive an IMDB-style database for all the firm’s leaders

The bane of most professional services firms is often the brutal work culture. While there have been many numerous initiatives leaders have taken from coaching to HR policies, most of them seem to have shown academic results at best. Interestingly, the principle of collaborative filtering and social shaming can come to the rescue. Imagine if there is an IMDB-equivalent page for every leader in a professional services firm with ratings and qualitative feedback against that person. Everyone in the company, including summer interns, can view these pages. As an employee, who would you want to work with? A rated 9-pointer or a 5-pointer? Coaching and one-on-one feedback have limited impact compared to cult worship for good leaders and social shaming for their poorer cousins.

In conclusion, it will be an interesting and cost-effective experiment to try some of the above suggested ideas. When, and not if, these succeed, there are far more radical interventions than can be designed once there is a mindset shift for people who are key decision makers.

Views are personal. The author is an MBA from IIM Bangalore and a strategy course holder from INSEAD. He has been a strategy consultant for over a decade. He is the author of two books, ‘Yours Sarcastically’ and ‘Satan’s Angels’.