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How can behavioral economics help to keep people motivated in their home offices?

As a result of the Covid-19 pandemic, working from home has become the norm for millions of workers in the EU and worldwide. While around 60% of German employees of small, medium and large companies state that they prefer to work from home in the Covid-19 health-threatening situation, people often report that working from home leads to lower motivation and productivity. One major challenge is the lack of physical contact with colleagues. Accordingly, in this challenging time, how can behavioral economics help to keep people motivated in their home offices?


Behavioral economics has shown that focusing on intrinsic motivation, such as self-esteem or peer effects, is much more effective than extrinsic motivation, such as wages and salaries, to increase employee engagement. This is due to the fact that humans are driven by internal factors that give them a sense of purpose, pride, and fulfillment in their work. In this blog post, we will describe two critical behavioral insights in detail that offer the possibility to engage employees who need to work remotely.

Can working from home be social?


Human nature is social, suggesting that we feel a strong need to belong and interact in a social group. Firstly, it is important to delineate that the concept of social distancing – which was introduced as one of the most important measures in the fight against the pandemic – is misleading as we should not distance ourselves socially, but physically. So how can behavioral economics help to create a sense of community while people are physically apart?


One way is to focus on the team’s shared identity and experiences. It is a challenging time for all of us. How is everyone coping with the difficulties? Share your thoughts and feelings at a virtual coffee or lunch break! Employees should be encouraged to continue to have coffee and lunch breaks with the same colleagues they used to spend their breaks with just now virtually. Spontaneous communication is key as it increases awareness of others' moods and states and helps to build social ties. Show each other that you care about them as human beings. Form new virtual coffee break habits by messaging each other “Hey Sarah, should we have a virtual coffee together after this meeting?”


A key problem when working from home for an extensive period of time is that every working day appears to be identical, in terms of place, people, and tasks. Why not create a new role that switches every week: a happiness commissioner? We know that being isolated and living with a lot of uncertainty creates mental distress and anxiety. Being a happiness commissioner who simply chats with the team members individually or in groups about whatever is in one’s mind disrupts routines; this would not only promote social interactions but also draw attention to shared personalities and experiences.


The other critical aspect to create a feeling of community is context. A shared context exists when colleagues have access to the same information and share the same tools, work processes, and work cultures. Consequently, it is important that the employees see what their team members are doing (shared online projects, to-do-lists, etc.). One should also focus on having fun at work. Start collaboration and competitions between teams or team members and plan virtual activities or events such as virtual pub quizzes.


How can feedback increase engagement?


People are interested in statistics and information about their performance. Evidence, however, shows that the type of feedback and the way it is given can be differentially effective. Feedback is most effective when it involves information about how a specific task was performed and how the task could be done more effectively. Feedback that addresses self-regulation is powerful to the extent that it leads to further engagement with the task, increased self-efficacy, and credibility.


However, not only the subject but also the timing of the feedback matters. When an employee performs well in a task, do not wait too long to say it. It has been shown that the longer the time span between the behavior and the feedback, the harder it is to link the actual behavior to the feedback. When feedback and performance appraisals are conducted later, it is more difficult to provide personal and constructive feedback and to link employees' behavior more closely to their actual behavior.


There is also evidence that humans respond differently to prompts depending on when they occur. The Behavioural Insights Team studied the effectiveness of prompts on fine payment rates and showed that sending people well-timed text messages increased response rates by two to three times. Choose some mornings to send personalized prompts depending on weekday, weather, community, and interests. There is also much evidence that productivity, motivation, and comprehension are at the lowest after lunch. Use this knowledge and set a feedback session this time a day. A short “well done” can do wonders. Furthermore, prompts and notifications motivate employees to overcome their challenges and accomplish their goals. Allow employees to comment on each other’s progress and set team awards for team challenges. Why not create a new routine and set up a virtual beer on Fridays to talk about the progress of the team members together?


From an overall perspective, the Covid-19 pandemic has changed not only where people work, what they buy, and how they live, but also the ways by which employers can motivate their employees to enhance productivity and facilitate camaraderie. Insights from behavioral economics suggest that focusing on the team’s shared identity through holding virtual events and providing personalized feedback at the right time can significantly improve the current situation. Everyone deserves a pat in the back once in a while, especially during these challenging times.


References & Further Readings


Behavioural Insights Team (2012). Applying Behavioural Insights to Reduce Fraud, Debt and Error. Cabinet Office.


Festinger, L., S. Shachter, K. Back. 1950. Social Pressures in Informal Groups. Harper, New York.


Hattie, J., & Timperley, H. (2007). The power of feedback. Review of educational research, 77(1), 81-112.


Hinds, P. J., & Mortensen, M. (2005). Understanding Conflict in Geographically Distributed Teams: The Moderating Effects of Shared Identity, Shared Context, and Spontaneous Communication. Organization Science, 16(3), 290–307.


Milasi, S., González-Vázquez, I., & Fernández-Macías, E. (2020). Telework in the EU before and after the covid-19: Where we were, where we head to. Science for Policy Brief.


Olson, J. S., S. D. Teasley, L. Covi, G. Olson. (2002). The (currently) unique advantages of collocated work. P. J. Hinds, S. Kiesler, eds. Distributed Work. MIT Press, Cambridge, MA.


Singh, R. (2016). The impact of intrinsic and extrinsic motivators on employee engagement in information organizations. Journal of Education for Library and Information Science, 57(2), 197-206.


Statista (2020a), https://de.statista.com/statistik/daten/studie/1104331/umfrage/einsatz-von-homeoffice-infolge-des-coronavirus/#statisticContainer


Statista (2020b), https://www.statista.com/statistics/1154098/poland-home-office-productivity-during-covid-19-by-age/


Statista (2020c), https://www.statista.com/statistics/1110727/challenges-with-working-from-home-during-the-coronavirus-pandemic-in-denmark/


Tajfel, H. (Ed.) (1978). Differentiation between social groups: Studies in the social psychology of intergroup relations. London, UK. Academic Press.


Turner, J. C. (1991). Social influence. Thomson Brooks/Cole Publishing Co.

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