Valued at $69 billion, Uber and its growth journey is inspirational for entrepreneurs and startups. Recently, however, a New York Times investigation uncovered the ways in which the company uses "psychological tricks" to encourage its drivers to behave in ways that are beneficial for the company (and in some cases, not necessarily in the drivers' best interests). These initiatives are rooted in findings from behavioral economics. While the ways in which Uber implements them may feel unempathetic, there are ways you can use behavioral economics principles for good so that both your company and your employees win (notably, Uber drivers are not legally Uber employees). Here are four science-backed techniques that will motivate your employees in ethical ways.

1. Encourage progress toward individual goals

Building on research that people are motivated by concrete goals, Uber sends notifications to new drivers to nudge them toward hitting a goal of 25 rides. This earns the driver a signing bonus, and based on Uber's data, also decreases the chances that the driver will leave Uber's platform. While these notifications might be effective retaining all drivers, it overlooks the fact that different drivers may have different goals, and that Uber may not be a good long-term fit for all new drivers.

Though it may take more upfront effort, take time to understand individual employees' or teams' long-term goals and collaborate around how these goals can benefit both the company and the individual. Then, provide encouragement to individuals as they make progress toward their individual goals.

2. Use gamification to make boring tasks more fun

As described by psychologist Adam Alter, games like Tetris are addictive because they induce a mental state called the "ludic loop," continually pushing us toward a goal that is ever-so-slightly out of reach. Uber uses a game-like interface to push drivers to drive a little more. Some have criticized the company for manipulating drivers with rewards like in-app badges which have no monetary payoff.

While gamification seems unethical when it overworks employees without any tangible reward, it can be welcomed and effective when it helps make boring, yet necessary, tasks fun. For example, you might come up with a monthly competition for timely submission of expenses.

3. Don't let employees lose out on things they care about

Findings in behavioral science have shown that people fear losing. We feel the weight of a loss more than the benefit of an equivalent gain. Uber, and competing ride-sharing company Lyft, have experimented with using loss aversion as a way to encourage drivers to stay on the road. When one Uber driver tried to logout at 7 AM on New Year's Day, he was prompted with a notification that highlighted the $10 he would give up by going offline after already earning $320 that night. Arguably, after driving all night, it was probably better for the driver to go home and sleep.

It is important to motivate employees to work hard and achieve their own goals as well as those of the company. As a leader, however, it is important for you to help employees live balanced lives, which in the end, makes them more effective and productive employees. When possible, prioritize milestones and goals so that employees can make their own analyses of gains and losses. For example, missing a child's birthday party or staying late to work on a task that is only "nice to have."

4. Help employees make decisions that benefit them

Behavioral science has shown that people's decisions are largely driven by inertia. We take the path of least resistance. Uber uses this finding in an algorithm called forward dispatch. Drivers are shown their next possible ride before their current ride is over. Much like the Netflix feature that automatically starts a new episode when one finishes, forward dispatch limits self control and makes it difficult for drivers to go offline.

Companies can use people's inertia for good. Defaults that work in people's favor could be automatic enrollment in a 401K or basic health insurance. This means that even if people didn't take initiative, they would be covered under a basic program. In the day-to-day, you might consider offering only healthy snacks at the office or secure locations where employees can leave their laptops overnight.

Understanding the way people make decisions has long been foundational to designing effective products and marketing. Applying this knowledge in the workplace is just as important. After all, nothing good comes out of employees operating on overdrive.

Published on: Apr 11, 2017
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