The magic of behavioral science

For this entry to the UNLEASH Podcast Network we check out a recent episode of Recruiting Future – author, speaker and HR expert Matt Alder’s podcast that tackles all things recruitment, talent and HR.

You know sometimes you get a guest who just captures your attention and speaks with such clarity of thought, even when they go off on a tangent about the Beatles’ HR disasters, or why reconditioned mobile phones erode trust? Vice chairman of Ogilvy, Rory Sutherland, is one such guest. In an episode stacked full of bon mots and one-liners that covers diversity, equality of opportunity, the dangers of being too transactional, and of course, behavioral science, their conversation starts with a bit of talk about company cars. Here’s Rory:

“It’s much, much easier to get fired for being irrational than it is for being unimaginative. And so there’s a distinct rationality bias in all business decisions. I’ll give you a great example from labor economics and I’m talking about this quite a lot, which is, if you ask people, would you like a company car or would you prefer the cash alternative? Nearly everybody will say the cash alternative, because that sounds like a rational answer. After all I can go and lease a car myself with the money.

“I would argue that there was huge value to employers in providing company cars, because it showed long-term commitment to the employee, but it also gave the employee something they may value more than money, which is a guilt-free luxury. We’ve turned business into a rationality competition and an efficiency competition because those approaches are very, very safe in what you might call career insurance terms.”

The talk turns to Uber, and the reason behind why the map works so well.

“It’s a piece of psychological magic because it relies on the fact that actually we’re not that bothered about the duration of our wait for a taxi, whether it’s five minutes or 12, doesn’t really bother us that much. What we really hate is the degree of uncertainty about its arrival. And so the map, doesn’t reduce arrival time appreciably, if all you were measuring was how quickly a taxi turned up. [But] psychologically it’s transformative because instead of going, oh my God, why isn’t he here yet? I bet they lied. He’s not coming at all. You look at the map and you immediately go, oh, look, he’s stuck at those traffic lights. I’ll have another pint. And your emotional state returns to a happy norm.”

At one point Sutherland also highlights the struggles of HR when it comes to diversity – it’s complimentary, but far from an ideal situation for HR to really do its job properly:

“In order for [diversity policies] to be meaningful, you have to create an environment in which it’s okay to be diverse and which in which you feel comfortable being diverse. And that’s not just about ethnic diversity, it’s about every kind of diversity. I always make the point that marketing in any organization, along with HR actually suffers from a fundamental problem, which is that in HR and in marketing, if you’re doing your job correctly, you’re principally concerned with the future, not optimizing on the past. And you’re also concerned with messy complex systems and emotional qualities, not just deterministic Newtonian ones. And so being an HR guy in a board meeting or being a marketing guy in a board meeting is extraordinarily difficult because you’re completely against the grain of the dominant culture and the board meeting.”

Let’s finish with some kind words about Gen Z:

“I don’t think it’s unhealthy for companies actually to start thinking, how do we keep people? How do we look after them? And also, can we make the relationship between employer and employee a bit less transactional? Because the assumption that my job was infinitely replaceable by hungry people coming from elsewhere, [makes] labor economics ridiculously transactional. You turn up and don’t cock up. We’ll give you some money this month, but don’t think we’re committed to you in the long term, medium term, because we don’t care. Gen Z noticed. We always keep saying, oh, Gen Z, they flip from job to job. They don’t really commit. Maybe that’s because employers started treating work as though we’re transactional, not relational. And these guys noticed.”

A lot of areas are covered in the 40 mins, and it flys by in the company of a marketing expert and raconteur Rory Sutherland. Check out this great podcast episode above for the full conversation.

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