Behavioral Economics for Workforce Professionals

“The goal of this paper is to show how an understanding of behavioral economics could help practitioners in their work with employers and employees” (p.8).

“Many workforce professionals find it challenging to engage employers openly in a candid conversation about the employer’s business practices—practices that the workforce practitioner may view as barriers to worker recruitment and retention….

Yet if done well, within the context of a trusting relationship developed over time, these conversations can be vitally important to addressing key issues facing the employer’s own workforce development challenges. Moreover, it may open the employer to explorations of his or her employment practices that could prove beneficial not only to the firm, but to employees and jobseekers as well.

As with all decisions, employers’ decisions are influenced by a range of factors and motivations. As practitioners, it is critical to understand, and to work with, those factors and motivations” (p.1).

The author organizes the paper as follows:

1. An introduction to the theory of behavioral economics
2. Key concepts that guide the theory, specifically:
   1. Kahneman’s System 1 & System 2 Thinking
   2. Motivation
   3. Categorization
   4. Heuristics
   5. Biases
   6. Context
3. Strategies for building trust, specifically:
   1. Establishing a personal connection
   2. Sharing goals
   3. Asking questions and listening
   4. Demonstrating commitment and competence
   5. Seeking feedback
4. Four examples that demonstrate how behavioral economics could be used “in the context of specific situations in which a workforce practitioner might find herself” (p.4).Each example describes a setting, identifies potential biases at play, and suggests various strategies a practitioner could employ to engage in conversation or meaningful work with an employer.

“Traditional economic theory holds that people always make rational decisions that optimize their outcome toward a particular objective….Behavioral economics [BE] applies psychology to how people think, decide, and act – in real-world economic decision making….BE addresses how people make decisions under uncertainty. When uncertain, people often save time and ‘thinking energy’ by relying on heuristics (mental short-cuts) and cognitive biases to make decisions, and this explains many of the ‘misses’ of the traditional rational decisions theory” (p.1).

(Abstractor: Author and Website Staff)

“Most decisions happen without conscious thought—they are automatic, habitual, or cued by things in our environment. They are reactions, not decisions” (p.2). “Before [workforce professionals] can engage in a substantive conversation with employers to help them meet their business goals, [they] need to establish trust” (p.3). • “Establish a personal connection[.] Find and talk about personal things that you have in common with the employer as people; look for shared connections and values. Connections should be authentic, shared, personal experiences. The goal is to see commonalities in each other as people, and not see only differences in our work roles. • Share their goals…. BE informs us that any person on the ‘receiving end’ of an influence attempt will have their guard up. What they want to know is this: Is the other person trying to help me achieve what I want (response: approach), or is the other person trying to achieve what they want (response: avoid)? • Ask questions and listen. Generous listening builds trust. Ask questions about the employer, her business goals, her employees, and her needs going forward….Generously and authentically listen with undivided attention. Play back what you hear to demonstrate your interest, commitment, and your ability to understand…. • Demonstrate commitment and competence[.] Trust builds and evolves over time. Within each interaction, remind the employer of your understanding of their goals, barriers or issues, before bringing forth ideas, publications, industry case studies, wisdom, and guidance, tailored to help meet those goals. This demonstrates your commitment to their goals, and your competence. When the time is right, offer multiple solutions….Encourage the employer to seek other solutions – especially from their own frontline employees – before making a decision…. • Seek feedback[.] Ask how you are doing. Ask what else you can do, or do differently to be of more help. Demonstrate that you are open to hearing from the employer how to make your work for them better….This action strengthens the trust-building steps above, fully demonstrating that you are there to help the employer meet her or his business goals, and to do so by helping them leverage the full capabilities of their frontline workforce” (p.3). (Abstractor: Author and Website Staff)

• Last Updated:
• Created:
• Resource Publication Date: 2017
• Author(s): Bauman, Joe.
• Organizational Author(s): National Fund for Workforce Solutions
• Funding Source: National Fund for Workforce Solutions
• Resource Availability: Publicly available
• Posted by: Wesley Peterson
• Posted in: Workforce System Strategies