When Irrational Humans Make Good Decisions

News flash. Humans aren’t rational. We often don’t make decisions based on what would be determined as “optimal” or in our own best interests.

Case in point – this Harvard Business Review article by Harvard Business school professor Francesca Gino in which she points out, “Public policy has often relied on assumptions of rationality when accounting for human behavior, which has led to suboptimal policies in the past.”

That statement alone could fuel many long conversations, but the simple truth of it is often something we ignore when thinking about how best to support our employees in bringing their own best selves to work every day. Gino goes on to say:

“Organizations can identify more effective management practices through a better understanding of human behavior. The implications could be wide ranging, from helping employees adopt healthier habits to increasing their happiness and productivity at work.”

What does that potentially look like? It’s not the easy answer you might expect of free food and nap pods. Gino continues:

“Consider how simple interventions can increase employee happiness and productivity. Lalin Anik, Lara Aknin, Michael Norton, Elizabeth Dunn, and Jordi Quoidbach conducted a series of field experiments in which they found that when employees share their bonuses with coworkers and charities, they are more satisfied and perform at a higher level than those who don’t. Giving employees opportunities to spend money on others increases happiness, job satisfaction, and team performance, their research discovered.”

We are happier and perform better when we’re able to give our hard-earned bonuses away. That finding makes me want to give three cheers for humanity as it shows we, on average, tend to understand two important truths:

1. We succeed through the efforts, help and support of others.
2. There’s always someone else in more need than we are.

While bonus structures might be considered sacrosanct, we should consider making it much easier for our employees to do what they seem to want to do anyway, namely:

1. Enable easy peer-to-peer recognition in a form with economic value. Empower employees to notice the good work and contributions of their colleagues and then recognize and reward them for it in meaningful ways.
2. Make a very wide variety of global charities far more accessible as reward option for employees who wish to redeem their own recognition awards by giving them away to others.

Humans might not be rational, but on the whole, we tend to be generous and altruistic. That’s the kind of behavior we should foster and encourage more in the workplace, often simply by removing barriers to what’s in our nature to want to do anyway.

In what ways are your employees or colleagues positively irrational?

As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. He is the co-author of "The Power of Thanks" and his articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.

Comments

[E. James (Jim) Brennan]

Great topic, Derek! Every HR professional should read all of Dan Ariely's books. His behavioral differentiation between social and commercial transactions alone is vitally important to understanding intrinsic motivations. Although some academic experiments don't translate perfectly into the actual workplace, they do illustrate many of the emotional trends that defy logic and thus continue to puzzle us.