Human Resources Respond to Human Psychology
If you’re a human resources professional you know you have a tough job, one that comes with huge responsibilities. Your decisions impact entire departments, divisions and often the whole organization. Those decisions include setting corporate policy for paid time off, merit increases, education reimbursement, retirement savings and the biggie today – health insurance.
The larger the company the easier it is to forget the individuals who make up the departments, divisions and organization. Never lose sight of this reality; a company is no more than the people who choose to work there. It can be extremely dangerous to focus so much on the big picture that individuals become an after thought. You won’t get emails or phone calls from a department or division but you’ll get LOTS of communication from individuals when decisions come down that are perceived to negatively impact them.
In the highly competitive business environment we’re currently in it’s often necessary to make decisions to reduce costs to keep the organization competitive. What’s an HR professional to do when caught between the proverbial rock and a hard place? This is where human psychology comes into play because human resources respond to human psychology. Sometimes it’s not what you say but how you say it that can make all the difference.
For more than seven decades social psychologists, and more recently behavioral economists, have been studying the decision-making process (science of influence and psychology of persuasion) and they’ve gleaned many insights that can help when it comes to communicating HR decisions.
In psychology there’s something known as the contrast phenomenon which describes the reality that you can change how anyone experiences something by what you present first. Perhaps you’re announcing merit increases will be limited to 3% in the upcoming year. If the national average is only 2% then you’ll want to mention that first because 3% will seem to be a good bit larger by comparison. Here’s how you might approach a conversation with an individual:
Bob, you may not be aware but according to Towers-Watson the industry average for merit increases this year is only 2%. However, because we’re doing well we’re giving 3% across the board. I’m sure you wish it were more but here’s the reality; that’s 50% better than most people are getting in this industry. If we keep doing well thanks to contributions from people like you that additional increase adds up to quite a bit over time and it’s what allows us to attract and retain top talent like you.
Another application of contrast might come up with regard to health care. According to the Kaiser Foundationout of pocket health care costs for employees have risen eight times faster than wages! Citing an organization like Kaiser taps into the principle of authority because people believe information more when it comes from perceived experts. As an HR professional you’ll blow a persuasive opportunity if you don’t weave that into your presentation to employees. Here’s how you might communicate this change:
You’re all aware that the cost of health care is skyrocketing. In most cases what you pay out of pocket has gone up eight times faster than your wages according to the Kaiser Foundation. We find that unacceptable. While we cannot afford to increase your wages at the same pace that health care costs are rising what we’ve done this year is go with a plan that caps your individual and family deductibles at amounts that are less than half the national average.
Another bit of psychology to remember is scarcity. People are more averse to loss than they are to gaining the same thing. In other words, losing $100 hurts more than the joy of winning or finding $100. Let’s continue on with the previous example:
We could have gone with a higher health care deductible this year and paid you a little more because we saved some money. However, the savings would have barely been noticeable in your bi-weekly pay and the reality is you probably would not set aside that small amount in case you needed it for your deductible. According to our health care provider, by going with the lower deductible many of you will avoid paying thousands more on health care bills this year.
The move from traditional vacation/personal/sick time to paid time off (PTO) which allows employees to use their time off any way they see fit can be tricky. Once PTO is in place, as new employees come to the organization they know what they’re signing up for so it’s not a big deal. However, introducing PTO to an organization can be challenging because of the perception of loss. Let’s say you had three weeks of vacation and five sick days available for a total of potentially 20 days off. The move to PTO might give you 18 days but you can use them however you want. Most employees don’t use all of their sick days and some don’t use all of their vacation days which means the typical worker might have 1-5 more days to use however they’d like under a PTO approach. Here’s how you might share this announcement:
To align ourselves with our competition we’re moving from the traditional time off model to PTO. The reason most competitors are going to PTO is because of the flexibility it gives employees. It’s not escaped our notice that some of you may perceive you’re losing time off. Recognizing that we’ve looked at our stats and less than 8% of you used all of your vacation days, personal days and sick time over the last three years. However, 80% of you used fewer than two days of sick time during that period. What that tells us is the vast majority of you will have more days at your disposal to use however you see fit. Many of you will take extra vacation days and that’s okay because that’s what PTO is for.
Will you still have some disgruntle employees? Sure, and you always will no matter what you say or do. After all, some people are only “happy” when they’re unhappy and others will always look at the downside rather than the potential upside. However, by framing your conversations using your understanding of social psychology and behavioral economics you’ll win over more people in the long run which means dealing with fewer calls and email from employees who don’t like change.
Brian Ahearn, CMCT®, is the Chief Influence Officer at Influence PEOPLE, LLC. His Lynda.com/LinkedIn Learning course, Persuasive Selling, has been viewed nearly 150,000 times! The course teaches you how to ethically engage the psychology of persuasion throughout the sales process. Not watched it yet? To see what you’ve been missing click here.