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Why ADP IS Doing Behavioral Economics

By Jerome Gouvernel, Vice President, ADP

Think about the last performance and workplace review cycle you went through. If you’re in HR, you probably spent months preparing for it, developing targeted employee survey questions and strategizing ways to make sure that people actually responded to those questions. If you’re not in HR, you probably walked away from the annual performance review feeling like it made you less productive—you’re not alone, a CEB study found that 66 percent of employees feel the performance review process interferes with their productivity[1].

But regardless of the role you play in your organization, you probably felt you spent too much time asking questions like “where is that dropdown menu where I can input a goal?” and not enough time thinking “so how am I going to improve areas in which I’m struggling?”

We don’t (always) need another app. We need more solutions.

Most of us have seen it firsthand. Too often, we (or our organizations) buy or build HR technology without considering the real purpose—creating an empowered workforce. Today, ADP has put a stake in the ground to change that, and today, we’re taking another step forward to do just that. We have launched a group—the product incubator—a team specializing in exploring behavioral solutions in the field of talent management, combining behavioral economics and design thinking. The team’s mission is to design solutions for people as they are, not as we want them to be.

ADP: Where Behavioral Economics and Human Capital Management Meet

The workforce is saturated with technology intended to make people more efficient at work. But a more efficient workforce is still the goal—we just need to start with the human side of things instead of technology.

That’s where behavioral economics comes in. This is a well-established field of academic research whose application to enterprise software is nascent. It challenges the assumption that people always act in rational ways. For example, you know what behaviors lead to gaining weight, and yet when you want to lose weight, you continue to exhibit those behaviors. The research also shows that this seemingly irrational behavior isn’t just a one-off—it’s actually quite predictable across all of us.

For ADP, using behavioral economics means that we can better impact change in the workforce, in those recurring “we know we need to work on this” areas—fostering leadership skills, having more efficient and outcome-based meetings, creating clearer alignment between and among groups, and more. Specifically, the role of the product incubator team (which is part of our ADP Innovation Lab), is to apply design thinking and behavioral economics to “micro-moments” within the work day—moments that could be made a little easier, less painful, or more optimized to get a better outcome. We’re developing mini-applications to help nudge people to make change in a way that a regular enterprise-level application isn’t equipped to do. Here’s one example of a mini-application we’re testing now.

ADPcoach: Skills and Leadership Training Meets Behavioral Economics

The idea started with a program ADP already had in the works, called Leader Compass. The ADP HR team wanted to better map the leadership skills of the management team, and so they outlined what they defined as the 12 core areas of leadership that are important at ADP, designed a survey to be sent to all employees asking how their managers performed against these areas, and sent it out. The survey received an astounding 80 percent response rate, and the feedback was delivered to managers, followed by educational materials and webinars to help them advance.

Now in a perfect world, all leaders would process this feedback and coaching and use it as the basis to drive fundamental change in their behaviors moving forward. But alas, as I mentioned earlier, people don’t always behave in a way that makes sense—even when you know exactly where you can do better, and you desire to do better, it’s not enough to change behavior.

ADPcoach is designed to address this. It is essentially a 12-week curriculum, but the delivery is what makes the difference—we use a micro-application, which is integrated into ADP’s email system to ping the managers at the right moments and through the right channels. This strategy was built based on the works of the behavioral economic giants like Thaler, Sunstein, Ariely, Cialdini and Kahneman, and so we considered everything from heuristics and biases, to priming and intrinsic motivation to create the highest probability that it would influence and inspire positive changes in the managers.

It’s still in the early stages of testing, but the signals are positive so far. The biggest hurdle with projects like this is the launch, and I’m proud that of the 5,000 managers to whom ADPcoach was available, only 0.1 percent chose to opt out. And, 100 percent of leaders read the first two coaching emails, and beyond that, 70 percent read or skimmed through all of the coaching emails.

ADP started out in 1949, helping companies manage business processes that they didn’t have time to manage themselves. We have continued to do that in new and innovative ways, through technology like ADP Marketplace, and now with our product incubator team that looks at the challenge of human capital management through a behavioral economics lens. We know that the goal isn’t more technology—it’s more productive, engaged and effective employees.


[1]5 Reasons Your Performance Management Is a Failure. Scott Engler. February 4, 2014. https://www.cebglobal.com/blogs/5-reasons-your-performance-management-is-a-failure/.

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