Is “nudge management” the new scientific management approach?

This article is part of a series critiquing nudge theory.

In a recent “point of view” article in the Journal of Organization Design, Philip Ebert and Wolfgang Freibichler propose “nudge management” as the new scientific management approach¹.

Pioneered in the industrializing United States in the late 19th century, scientific management proposed that laborers should work according to processes analyzed and designed by management for optimum efficiency. American mechanical engineer Frederick Winslow Taylor is one of the best known advocates of the approach, with his book The Principles of Scientific Management rated as the “most influential book on management ever published.” ²

In their article, Ebert & Freibichler draw attention to the more recent view of Peter Drucker, who has been described as “the founder of modern management”, that it is the productivity of knowledge workers, rather than blue collar workers, that represents the management frontier for the 21st century. According to Wikipedia, knowledge workers are “workers whose main capital is knowledge”, and examples include “software engineers, physicians, pharmacists, architects, engineers, scientists, design thinkers, public accountants, lawyers, and academics, and any other white-collar worker.”

Ebert & Freibichler argue that it is human science, particularly behavioural and psychological studies, that can contribute to increased knowledge worker productivity, rather than the process efficiency approach of Taylor. They state that:

Roughly speaking, nudge management is a management approach that applies insights from behavioural science to design organizational contexts so to optimize fast thinking and unconscious behaviour of employees in line with the objectives of the organization.

“Nudge management” is based on nudge theory, which rose to prominence with the publication of Richard Thaler and Cass Sunstein’s 2008 book Nudge: Improving Decisions About Health, Wealth, and Happiness. According to Wikipedia:

Nudge theory (or nudge) is a concept in behavioural science, political theory and economics which proposes positive reinforcement and indirect suggestions to try to achieve non-forced compliance to influence the motives, incentives and decision making of groups and individuals.

Nudges aim to harness the instinctive, emotional responses of the “System 1” described in Daniel Kahneman’s best-selling 2011 book Thinking, Fast and Slow, rather than the reflective and logical responses of “System 2”.

Ebert & Freibichler put forward Google as an example of the successful application of nudge management, for example the way that Google lays out healthy food choices in its cafeteria to improve the health and therefore productivity of its workforce. They suggest that nudge management could be potentially used to improve the efficiency of meetings, long-term planning, task performance, and knowledge sharing.

Only telling part of the story

Remarkably, however, Ebert & Freibichler’s article is missing a large and prominent part of the nudge story, which includes strongly contrary academic voices.

In 2010, David Cameron, then Prime Minister of the United Kingdom, established a “nudge unit” in the Cabinet Office with the aim of using nudge theory to improve government policy and services and deliver cost savings. Known formally as the Behavioural Insights Team, the unit took advice from Richard Thaler, co-author of the Nudge book, and has carried out a number of projects.

The UK nudge unit has since become independent of the UK government, but remains partly owned by the Cabinet Office. The work of the unit has expanded from the original focus on government policy and services to encompass nudging employees to do the right thing, as shown in the 2014 video above. This is what Ebert & Freibichler also propose in their article.

Stimulated by the UK nudge unit, governments in the United States and Australia have similarly adopted nudge theory. In 2015, President Barack Obama signed an executive order directing the US government to adopt the nudge approach. In Australia, the New South Wales Department of Premier and Cabinet established a Behavioural Insights Unit in 2012, and this year the Victorian Government has followed suit.

So does all of this activity demonstrate the successful application of nudge theory? Let’s look at the criticisms of nudge theory from a number of perspectives.

Criticism 1: Nudge theory ignores the full range of determinants of behaviour

The UK government’s application of nudge theory has been criticised since it was first announced in 2010. For example, in 2011, several academics from the Faculty of Public Health and Policy at the London School of Hygiene and Tropical Medicine published critical comment in The Lancet³. They argue that:

…the government has misrepresented nudging as being in opposition to their use of regulation and legislation to promote health, and that this misrepresentation serves to obscure the government’s failure to propose realistic actions to address the upstream socioeconomic and environmental determinants of disease.

and:

[Nudge] largely ignores the socioeconomic determinants of behaviour. Rather than combating poverty and injustice, nudgers can only hope to compensate by nudging people who are poor more vigorously. But how can one nudge away the poor life-chances of children living in poverty, the societal harms arising from income inequality, or the obesogenic effects of the excessive use of fossil fuels? How could nudges have combated cholera from poor hygiene in the 19th century or respiratory disease from pollution in the 20th century?

Transferring these criticisms to a workplace context, will the example given by Ebert & Freibichler of Google laying out healthy food choices in its cafeteria to improve the health of employees really work? The US Centers for Disease Control and Prevention (CDC) advises that:

Obesity is a complex health issue to address. Obesity results from a combination of causes and contributing factors, including individual factors such as behavior and genetics. Behaviors can include dietary patterns, physical activity, inactivity, medication use, and other exposures. Additional contributing factors in our society include the food and physical activity environment, education and skills, and food marketing and promotion.

The food environment is only a part of the spectrum of issues that influences healthy eating, so laying out healthy food choices will at best only nudge some people towards a healthier life. The full spectrum of issues would need to be addressed for large-scale success.

Criticism 2: The policy recommendations of the UK nudge unit are not actually in accordance with nudge theory

Judd Ryan makes a damning assessment of the work of the UK Behavioural Insights Team (BIT) in a recent master’s thesis⁴. From an analysis of the 43 distinct policy recommendations in the 22 BIT publications issued between its founding in 2010 and 8 July 2016, Ryan concludes that:

The BIT was the first example of an institution claiming inspiration from nudge theory, but its lack of consistency with nudge theory indicates a few reasons to doubt its utility. The pattern is strong enough for it to not be explained by administrative reasons. The first finding is that the BIT often found non-psychological approaches more useful than psychological ones. The second is that the BIT found it difficult to remain within the ethical framework described in Nudge, and eventually abandoned any pretence of using this framework. Thirdly, there is a trade-off between effectiveness and freedom of choice when using psychology.

and:

Though it is wrong to condemn nudge theory as being without utility for policy-makers, there is every reason to be disappointed with the performance of both the BIT and nudge theory. The evidence does not suggest that nudge theory provides a third way that will unite the left and the right around a policy approach that will provide welfare gains while respecting freedom of choice. It managed to provide policy recommendations that do not rely on coercion, but still had little reservation about using its power to influence the thought and behaviour of subjects, even when the thoughts it sought to instil were a degraded version of the truth, and the behaviours not in the subjects’ interest.

No evidence exists to suggest that nudge theory can be any more successfully applied to employee management.

Criticism 3: Nudging is paternalistic, manipulative, and sometimes deceitful

In 2016, UK nudge unit head David Halpern published the book Inside the Nudge Unit: How Small Changes Can Make a Big Difference which lauds the achievements of the unit. David Campbell from the School of Law at Lancaster University has recently published a review of the book in the journal Social & Legal Studies⁵.

Like Judd Ryan, Campbell is damning in his assessment of the work of the UK Behavioural Insights Team. He states that:

…the first thing that must be said is that Inside the Nudge Unit is not an academic book in the sense that most of its arguments and such support as it gives them could not possibly satisfy decent academic standards, and it would not be fair to evaluate those arguments according to those standards. The book is written for the educated layperson with the aim of achieving a commercial success judged by the standards of the non-fiction bestseller lists, effectively in order to advertise the services of BIT. But, really, even after saying all this, one is flabbergasted by the slovenly mixture of common sense, ingenuity, craftiness, manipulation and deceit celebrated in this book. It is best to look on it as a rag bag of examples of what is called nudging. The significance of the book, and the reason to review it in a journal like this, is that it does describe, indeed it is part of, an important development of the practice of government under a constitution the principal legitimacy of which lies in its claim to promote democracy, a claim which
nudging ridicules.

and:

I have given this review an epigraph drawn from one of the philosophical foundations of liberal democracy and in my opinion evaluating nudging on the basis of that philosophy would conclude that nudging’s celebration of manipulation and deceit is dreadful. This book makes it obvious that liberal democratic political practice has taken some considerable distance from that philosophy, no matter what intellectually unscrupulous equivocations are entered about libertarian paternalism. … Nudging does not treat citizens as children; it treats them as mugs.

The use of workplace management practices that are paternalistic, manipulative, or deceitful—or that are perceived as such—is very likely to result in disgruntled employees, leading to a backlash or high employee turnover.

Should nudge management be given the nudge?

The criticisms of the London School of Hygiene and Tropical Medicine academics and Judd Ryan and David Campbell cast significant doubt on the evidence base for the successful application of nudge theory in the areas of government policy and service delivery. There is no evidence to suggest that nudge theory can be any more successfully applied to employee management. However, given the prominence and proliferation of nudge units, “nudge management” could gain considerable momentum and become a widespread management fad. I just hope that at least some managers could take the time to make evidence-based decisions.

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Also published on Medium.