Context

Experimental research shows that we make many of our decisions by rules of thumb or shortcuts – known as heuristics – that allow the human brain to cope with complex choices with lots of factors to take into consideration. Financial well-being advice should be based on a realistic picture of human psychology – a picture that takes into account heuristics, emotions and other behavioural influences. The report provides insights about using behavioural insights (BI) approaches to influence employee behaviour. It is aimed at organisations already taking action to help support employee financial well-being (FWB). The report was commissioned by the CIPD, the professional body for HR and people development.

The study

The study comprises an overview of key insights from BI literature about how BI can contribute to improve FWB in your workforce. The questions it seeks to answer are:

• • People aged 18–25, typically starting their first job or apprenticeship
  • People aged from late 20s to mid-40s, possibly with a young family to support, balancing demands and costs of childcare, rent or mortgage payments and costs of family life
  • Workers in their late 40s onwards preparing for later life who need to maximise their retirement provision while at the same time dealing with caring responsibilities

Key findings

The report gives detailed breakdowns of various behavioural heuristics and how they relate to workplace FWB, within each of the segments. The authors conclude with advice on how to overcome barriers to FWB through ‘BI top ten tips’, summarised as follows:

• – paint a clear and simple picture for employees of the financial benefits of joining a pension scheme
• – saving can be made more attractive by adding lotteries that give individuals a chance to win randomly allocated prizes
• – financial education programmes should increase their saliency and relevance to their target consumers, taking into account variation in preferences, limited attention and emotional responses
• - material should be provided in the appropriate language and at the appropriate grade level.
• and relationships
• , to reinforce the lessons. Check in with employees’ progress at pre-agreed periods
• , or how much they stand to benefit
• such as how much they have gained to date
• to participants may find more willing participants

Points to consider

• o No details are given of the review process and how papers were chosen or excluded.
  • The literature cited comes from reputable sources such as government, bodies such as MaPS, and from peer-reviewed journals.
• A useful summary of behavioural insight biases and their implications
• The report addresses financial wellbeing in the workplace but the insights could also apply to working-age adults in other settings
  • Aimed at employers, but likely also to be of interest to anyone working with improving financial capability more widely such as government, policy makers, support agencies and educators.