Behavioural economist, Dr Eraj Ghafoori, shares some insights around creating a happier and more productive workplace

Most of us understand that not all behaviour is consciously directed or rational in its origins. Everything from simple choices like the breakfast cereal you start the day with to your choice of bank are influenced by both conscious and underlying emotional factors. And the same applies to behaviour in the workplace. So what insights does psychology offer to influence the behaviour of employees for improved happiness and productivity?

A branch of Psychology known as Behavioural Economics – which uses learnings from psychology, neuropsychology, economics and sociology – may well have the answers.

Dr Eraj Ghafoori is a Behavioural Economist currently working with AustralianSuper to encourage members to save and plan for retirement. According to Dr Ghafoori, human behavior emerges out of dual mechanisms operating in tandem.

”The reality is, as humans we’re armed with two processing mechanisms to make sense of our world and make decisions on a daily basis: the rational and the emotional brain”, he says.

”Almost always, leaders and economists base their predictions on the assumption that humans make their decisions solely on rational basis while the reality is we often use our emotions in our decision making.”

When it comes to influencing how people feel or think about an issue or set of circumstances, Dr Ghafoori recommends keeping something called unconscious biases in mind – biases that can work in your favour as a Manager.

”The reality is, humans operate most optimally in a positive and constructive environment and the idea is to manage the environment and decision making to create this – that’s the challenge for business leaders and managers”, he adds.

Here are three biases and suggestions on how to manage them in your businesses favour:

1. Dunning-Kruger effect

The Dunning-Kruger effect refers to an over-estimation of our ability to complete a certain task or challenge. Combined with under-estimating the difficulty of any given task, the Dunning-Kruger effect could lead to under-preparation and potential failure – dynamics that can play out in the workplace when employees are faced with a new challenge.

Solution: lead and implement an evidence-based culture in the workplace. An accurate estimate of any given task requires good information and data about the capabilities and the challenges. So encourage your staff to collect case studies and data to truly estimate the business case and the associated challenges.

2. Information bias

Information bias refers to a distorted evaluation of the information needed to complete a task or project. It’s intuitive to believe the more information we have the better decisions we can make while as in reality, information-overload can be as damaging as misinformation or a lack of information.

Why? Because information overload can lead to what’s called decision paralysis, and that can impact on your employees’ health and performance. It can make people feel unable to make the right decisions and actually lower confidence and feelings of being in control. Let this situation continue and the perception of not being in control can erode your people’s actual control and confidence.

Solution: start by identifying the over-arching problem you want to solve. Then break it down to more questions to identify what type of information you need to make an accurate estimate of in-house capabilities and abilities to meet the business challenge.

3. Ostrich effect

The Ostrich effect comes into play when we are faced with failure and describes a tendency to justify our actions to avoid responsibility or simply ignore the information that points to a failure.

We do this to avoid the fear or psychological discomfort associated with the failure. And it comes at a cost of individual anxiety and stress as well as your business ignoring critical information leading to potential future losses and costs.

Solution: the ultimate solution is to develop a safe-to-fail culture. Your people should learn the potential costs of ignoring information and failures to their organisation and feel safe to document any failures. They need to understand that learning from failures are as important as learning from successes if not more so. If employees don’t feel safe to discuss unsuccessful outcomes, they may experience a long-term period of fear and shame which can harm their health.

We know if leaders do not define and provide road maps, employees will carve their own. As such developing processes to equally view the value of learnings from successes and failures is the first step in developing the right culture that fosters psychological health, engagement and performance.

Simple workplace mechanisms like those mentioned above reduces confusion, anxiety and stress and increases job satisfaction and happiness.

Dr Eraj Ghafoori is a registered Organisational Psychologist and Behavioural Economist. In his previous roles, he collaborated with the government on sustainable practices and helping people live a better life. Now, he is helping AustralianSuper improve the quality of their services across the business to help the members save more for a better retirement experience.