The Role of Choice Architecture in Organizational Decision-Making

Last week, my children asked if the kid across the street could come bike-riding with us. I said, "Sure". Then they asked, "Can his little brother, Tommie, come?" I said "Sure". Then they told me that Tommie didn't know how to ride a bike, he wanted to ride his Big Wheel. I quickly replied, "Oh, Tommie can't come." My 7-year old said, "That doesn't make any sense. His brother can come but not Tommie?" I said, "What doesn't make sense:  Tommie riding the Big Wheel while we're on bikes? Or the fact that Tommie wants to ride the Big Wheel for a 5-mile bike ride?" My kids went outside. When my husband and I came out, there were 4 kids trying to show Tommie how to ride a bike. I had to laugh because Tommie was walking that bike back to his house! He changed his mind about riding that day. 

Choice Architecture is a relatively new concept. It is the process of "altering the environment in which decisions are made."  The term was originally coined by Richard Thaler and Cass Sunstein in their 2008 book Nudge: Improving Decisions about Health, Wealth, and Happiness.  In the book, Thaler and Sunstein endorse the thoughtful design of environments as a means to improve decision-making by minimizing biases and errors that arise as the result of bounded rationality. This approach aims to "nudge"  individuals toward choices that are in their best interest without limiting choice.

In Tommie's case, it was apparent that riding a Big Wheel was not an option. Kids being kids, however, they came up with other creative ideas: (1) Tommie could ride on the back of his brother's bike; (2) Tommie and his brother would not go; or (3) Teach Tommie how to ride a bike. They chose option 3, but option 2 wound up being the best answer-- for the time being.

According to Thaler, there are three key features of choice architecture: default, giving feedback, and expecting error.

• At a conference, Thaler once said, "Default is what happens if you do nothing, such as leaving your computer unused until the screen saver appears". In the diversity and inclusion space, default occurs when there are no formal policies-- supervisors will simply do what they believe is best. Sometimes, this results in lawsuits.
• Giving Feedback occurs when people are aware of the data, and can relate it to their behavior. For example, some utility companies have begun mailing "efficiency" reports to advise consumers about their energy consumption in comparison to their neighbors. The reports contain tips (or feedback) about how families can become more energy efficient by using smart meters or setting one's thermostat at a certain temperature all year round.
  
  In the realm of organizational culture, HR or the Office of Diversity can share the latest employee survey data directly with supervisors. Instead of doing nothing with the feedback or simply handing managers a report to read on their own, translate that data into specific actions that organizational leaders can take to improve satisfaction rates or scores.
• A great example of Expecting Error occurs when you prepare an email and write the word "attached" in the body of the message, but forget to include the attachment. Companies like Google and AOL have developed choice architecture to prompt (or nudge) users when the system detects the word 'attached' but no attachments are included. It will ask, "are you sure you want to send this message with no attachment?"
  
  In the workplace, unconscious bias in management is one area where we ought to expect human error. Authors Emilio J. Castilla, associate professor of management at the Sloan School of Management at the Massachusetts Institute of Technology in Cambridge, Mass., and Stephen Benard, assistant professor at Indiana University in Bloomington, explored "the Paradox of Meritocracy", which found that organizations with meritocratic values are often the worst offenders of bias.
  
  Indeed, meritocracy is not as simple as stating "I hire the best qualified candidate". So much about this seemingly neutral statement is subjective, such as one's evaluation of communication, polish, and cultural fit, as well as the assessment of a candidate's work history (e.g., gaps in employment) and educational background (e.g., college attended). Once we unpack the definition of merit, we will find that each supervisor describes it differently.

It is through a thoughtful approach that Diversity and Inclusion (D&I) and HR leaders can drive culture change, organizational development, agility, and engagement.  Choice architecture is not neutral; it is a proactive process that protects people's rights to make choices, while steering them into an objective and unbiased direction through environmental influences.

Let's think about what that means. IF, for example, diversity and inclusion is really valued by the organization, it will be reflected in its decision-making processes. Real-world application may entail a team of people thinking through where choice architecture would be most beneficial, and constructing alternative scenarios that would immensely benefit the organization or considering how such decisions will adversely impact the company. Start with complex organizational realities and then expand the effort to seize opportunities. For example, you can use it when:

Hiring Diverse Candidates
if hiring diverse candidates is a problem, the company can institute a policy where an equal number of diverse candidates are presented with traditional candidates for interview.  Not sure where to start? First, obtain employee feedback about how to increase the size of your candidate pool, or consult with diversity recruiting experts. Next, alter the decision-making process. Instead of one person acting as the sole decision-maker, the candidates would be rated by a panel of trained interviewers, with the finalists going through a series of interviews. After the individual is hired, identify a consistent onboarding process that explains the 'unwritten rules' and shows the new hire the ropes.

Retaining Millennials
At one point, FedEx faced a workplace imbalance where turnover was particularly high among Millennials. The problem concerned time. Baby Boomers, who were primarily in management positions, regarded time as finite: If you are supposed to start at 9, you should be here by 8:45 period. Millennials, on the other hand, believed "if I am supposed to start at 9, I will get there around 9:00, 9:03, 9:05..." This generational conflict resulted in many terminations. The company had to make a choice at that point: should the older people handle all of the packages, possibly leading to an increase in workers comp injuries? Can we afford to exclude Millennials from the management ranks? Or can we be a little more flexible with the time? Accordingly, FedEx chose the final option: let's show some flexibility in order to be inclusive. (As a sidebar, this type of conundrum presents a great opportunity to do generational diversity training.)

A few years ago, I attended a Forum on Workplace Inclusion conference, where the CEO of U.S. Bank was a keynote speaker.  He admitted, "Diversity and Inclusion is the last thing on an executive's mind". Literally. In fact, most executives still do not have a clear understanding what Diversity and Inclusion is, how it benefits everyone, and whether it can achieve organizational goals. Instead of the default, which is "let 'em alone until there's a problem", companies can make it a requirement that: in order to receive a promotion, you must have demonstrated leadership in diversity and inclusion (e.g., as an executive sponsor of a resource group). Or, in order to be a member of the senior leadership team, you must serve as the facilitator for at least one Executive Diversity Council meeting. Or, if you want to supplement your bonus, you must clearly demonstrate how diversity and inclusion helped you achieve divisional goals. Believe me, folks will figure it out quickly.

Choice Architecture takes measurement out of the realm of being an after-thought and causes it to exist as a fore-thought. It can be applied to inappropriate workplace behavior, teamwork/collaboration, work assignments, and other employment decisions where you seek specific improvements. The effort can be expanded to address innovation, client service, market expansion, and meshing cultures upon a merger or acquisition. Initial progress should be evaluated frequently-- every 3-months, 6-months, and 1-year-- and it should be charted on a graph. Frequent monitoring can also allow you to evaluate whether there are any unintended consequences.

In the words of Roy E. Disney, "When your values are clear to you, making decisions becomes easier."

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Leah Smiley, CDE, is the President of the Society for Diversity, the #1 professional association for Diversity and Inclusion. For more information about Choice Architecture, enroll in our D&I crendentialing programs at www.diversitycertification.org