16
HR
West
®
T
oo often, HR departments are their
own worst enemies when it comes to
engaging employees with their benefits.
he common approach – overwhelming
employees with information and assuming they
will use it – falls flat. Instead of hitting employees
with information, we can identify the specific
behavioral obstacles that employees face, and
enable employees to overcome them, with the
help of behavioral economics.
Employees, like all of us, struggle to follow through
on our own goals: we want to do something, like
exercise more or save for retirement, but we just
don’t follow through. Behavioral economists and
psychologists call it the
intention-action gap,
because people intend to act, but don’t. There’s
a powerful body of research that HR practitioners
can use which describes how it works, and what
we can do about it.
Many of you may be familiar with auto-enrollment,
which is the quintessential example of behavioral
economics in the human resources world. With
auto-enrollment, employees are automatically
included in their retirement program unless they
elect not to participate. This approach can
double
participation rates, and almost 60% of companies
now have auto-enrollment in place for their
retirement plans.
It’s a small, simple change in how options are
presented to employees (defaulted in or out),
which builds on a core behavioral lesson—that
people naturally follow the path of least resistance.
In survey after survey, most employees want to
save for retirement, but they fail to actively do so.
By making
saving for retirement
the path of least
resistance (your employer sets up everything for
you unless you choose not to save), employers
help workers meet their own goals without
coercion. Auto-enrollment is the single most
powerful action that employers can take to boost
retirement contributions.
But, auto-enrollment is only the tip of the iceberg
when it comes to applying behavioral research to
employee benefits. Here are some of the other
behavioral obstacles that employees can face,
and what employers can do to overcome them:
Inattention
Every day, we’re overwhelmed with information
and our minds naturally filter out or ignore most
of it. Consider that many employees receive
hundreds of emails a day;
it’s no wonder that your
email about a new benefits program is missed.
Potential Solutions
At HelloWallet, we’ve found
that by varying the time of day in which you send
messages, you can triple response rates and
benefits uptake. Researchers have also studied the
impact of simple reminders (assume employees
didn’t read the message) and changing subject
lines and sender names to overcome inattention.
Procrastination
Employees naturally take action on things that
are urgent (finishing up a report; picking up their
kids from soccer practice), and everything else
gets delayed. Unfortunately, benefits programs
are often important, but not urgent. For example:
employees can always exercise or save for
retirement tomorrow.
Benefits
By Steve Wendel
THREE
REASONS
DON’T USE THEIR BENEFITS
E M P L O Y E E S
