Why Companies Should Nudge Workers

Last Updated Mar 6, 2008 5:42 PM EST

Can regulation be gentle? A suggestion, perhaps, more than a line drawn in the sand? And will that work in business? A softer, less dictatorial form of regulation can be tried, and should be given every chance, argues When Shove Comes To Push, an essay driven by the pending book Nudge: Improving Decisions About Health, Wealth, and Happiness. The book is by Cass Sunstein, a legal scholar, and Richard Thaler, an economist, and advances the idea that people can be pointed in the right direction without taking away their individual choices. Nudging offers a way to get around the reality that people do not, by-and-large, make rational decisions (which is to say, decisions that are in their best interest). They sell when they should hold, spend when they should save, speak when they should keep their mouths shut, and so forth.

While "Nudge" aims as much at policy makers as business executives, the concept will hold attraction for companies, which already provide nudges to people by doing things like automatically enrolling them in 401(k) plans, or letting customers opt-out of having data shared. Companies, especially in this age of 'consumerization,' want new ways to deal with customers who think things should be personalized for them, Gen Y employees that don't believe in hierarchy and above all, ways to avoid government regulation. Nudging might get them there.

But the dark side of nudging is that it would seem to actually act to limit choice -- by nudging, companies are creating an incentive for something to happen. This may be fine for retirement savings, but what about innovation? Managers don't usually give employees the chance to pick which goals they'll achieve, for instance, or in what timeframe (and yes, companies like Google present exceptions to that rule). Nor do many companies like having customers get too many choices.

Here's a nudge for you: make a comment about what you think.

  • Michael Fitzgerald

    Michael Fitzgerald writes about innovation and other big ideas in business for publications like the New York Times, The Economist, Fast Company, Inc. and CIO. He’s worked as a writer or editor at Red Herring, ZDNet, TechTV and Computerworld, and has received numerous awards as a writer and editor. Most recently, his piece on the hacker collective the l0pht won the 2008 award for best trade piece from the American Society of Journalists and Authors. He was also a 2007 Templeton-Cambridge Journalism Fellow in Science and Religion.