Category: Behavioral Economics.

How many of us have landed our ideal dream job? According to the Gallup report, only 33% of the US workforce and 15% of the world’s workforce are engaged in their work. We define engagement as a genuine interest in what you do for a living. Most people are just trying to make money to get through life. This article focuses on the topic of employee engagement and the theories that behavioral economics has to offer in order to stay motivated.

What Exactly is Employee Engagement?

Employee engagement essentially defines how employees relate to their respective workplaces. An engaged organization tends to possess authentic, robust values built upon fairness, trust, and, above all, mutual respect.

From an employee’s perspective, the term signifies getting out of bed to take on another day of work. It means having a complete understanding of the company’s goals and how pivotal every team member is to its pursuit of these goals. It translates to looking forward to work instead of coming up with excuses to stay at home. A high number of sick leaves and half days might mean that the company’s employee engagement levels are low.

From an employer’s perspective, employee engagement directly translates to the extent to which your employees are willing to work for the pursuit of your company’s goals and objectives. It relates to them feeling a sense of pride and loyalty while working for the organization and their willingness to go the extra mile to ensure a piece of work gets done on time. Engaged employees know that their insights are considered valuable and directly translate into the organization’s products and services.

The Decisive Role of Behavioral Economics

“The human mind is a complex thing” has become a cliché, it puts some perspective to the thoughts that enter our brain from time to time. Some theorists tend to argue that monetary incentives are the way to go to produce better results in the workplace. However, others might consider it to be a rather worn-out practice and counter it with something along the lines of Maslow’s Hierarchy of Needs, in particular, the need to be recognized and appreciated.

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human mind

The above-mentioned theories are just the tip of the iceberg. There is a high chance that most employees might not feel motivated by either one. This is where Behavioral Economics makes a mark. Compared to traditional economics, behavioral economics has proven to be a more lucrative tool about enabling employers to delve deeper into what truly motivates employees. Behavioral Economics tends to justify that the majority of human decision-making is based more on emotions rather than rational thought processes. It stands against the age-old notion of traditional economics that states that money is the universal motivator for all employees. Different behavioral theories have been set in place to justify employee inclination toward diverse forms of incentivization. For this discussion, I have chosen the following three theories:

Behavioral Economics and Employee Engagement

Employee engagement and Behavioral Economics tend to go hand in hand. The latter has managed to provide companies with fool-proof ways to avoid unnecessary sick leaves, improve productivity, and boost overall progress.

Employee engagement can be thought of as a workplace culture that establishes certain conditions pivotal for every member of an organization to give their 100 percent each day. It is essential to point out that by no means can employee engagement ever be attained through manipulative measures. Making use of apathetic approaches that seek to maximize performance by exploiting emotions can drive employees to reciprocate similarly. It often leads them to exhibit cynicism and untrustworthy behavior in the workplace. If continuous dedication and hard work are necessitated from an organization’s employees, positive reinforcement and suitable incentivization is always the way to go.

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