The Power of the Default Option

Here’s how the human tendency to “do nothing” can be used to influence behavior.
default hr benefits

It’s a refrain I hear often in my work as a behavioral economist: Human beings are inherently lazy.

“Amid a war for talent, no way!” you might think. “Everyone I know has more than enough on their plates.”

I agree. “Lazy” certainly falls short of accurately describing the sum total of human aspiration, conjuring images of the couch, Netflix binging and pizza delivery. But consider the sentiment more closely. Lazy, in this situation, is not describing work ethic, but cognitive thinking.

We know most of the workforce is being stretched thinner and thinner these days, everyone being asked to do more with less, but people do not possess an unlimited amount of mental energy and focus. Throughout our day, we have to choose where and how to spend it, oscillating between what psychologist Daniel Kahneman refers to in his book “Thinking, Fast and Slow,” as System 1 (automatic) and System 2 (reflective) thinking. To illustrate, compare dashing off an email to a co-worker — something you’ve done hundreds of times on autopilot — versus meticulously crafting, editing and proofreading an email to a company executive or new client. One takes a lot less mental effort than the other, right?

To understand people, we must recognize that the human condition causes us to revert to automatic thinking whenever possible, which is crucial. If you engaged exclusively in reflective thinking from the moment you woke up, you’d be useless by lunch.

This mental-energy conservation tactic, in part, sets the stage for the behavioral economics technique known as “the default option.” The default option takes advantage of the very human status quo bias — the tendency for people to leave things as they are — and to avoid making changes whenever possible. In laymen’s terms, it’s what happens when people do nothing.

To better understand the default option and how it can be deployed in the workplace, it helps to consider three foundational concepts from renowned behavioral economists Richard Thaler and Cass Sunstein: mindless choosing, choice architecture and libertarian paternalism.

  • First, mindless choosing describes the function of making choices while engaged in automatic thinking. While in this state, people don’t think through all options, making them particularly susceptible to biases or influences.
  • Second, choice architecture is the idea that there is no such thing as an unbiased choice. The choice between red and blue is different than the choice between blue and red, particularly relative to other environmental factors. The way choices are presented are inherently biased, favoring one choice over the other, even at an unconscious level. Therefore, creating and presenting choices requires a great deal of architecture.
  • Finally, libertarian paternalism, an oxymoron created by the authors, describes a foundational principle by which choice architects should abide. Maintaining the freedom to choose is crucial, but the choice architect has an ethical responsibility to nudge choosers toward decisions that serve their best interests.

Understanding these concepts, we can begin to see how the default option can be used as an incredibly powerful tool. The conditions that make it succeed are ingrained in the ways we naturally think and act. If your knee-jerk reaction upon hearing that people can be encouraged to make particular choices through the default option is, “that’s obvious,” I would tend to agree.

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However, when it comes to the workplace, you might be surprised to learn there are a number of instances today where the default option is not set to the desired outcome, and the results can leave employees out of the loop and disengaged. Business and HR leaders who understand and harness the power of the default option as a tactic for influencing behavior can make small adjustments behind the scenes that ultimately drive employee engagement. Here are a few ways it can be deployed:

  1. The default option in benefits.

We all know that benefits are an important part of talent recruitment, retention and engagement. Research by SHRM shows that benefits are the third-most important factor influencing job satisfaction, yet only 27 percent of employees are very satisfied with their benefits. The default option can be used to increase participation in benefits enrollment. For instance, within the past few years companies have begun to default employees into retirement savings programs (from which they can opt-out), and it has made a massive difference. The default option and libertarian paternalism are being utilized to nudge employees toward a program beneficial to them, ultimately leading to increased job satisfaction.

  1. The default option in learning and development.

The default option can also be deployed to drive participation in any kind of program related to learning and development. Given how busy employees are, development training can often feel like a burden, encouraging people to abstain from participating. Nonetheless, social science tells us that employees are actually much more engaged when they are working on their own development. Making participation in L&D programs opt-out-able can lead to increased participation among employees, but employers must be conscientious of not seeming authoritarian. That is why it is so crucial for the opt-out choice to be clear and easy to do.

So long as people have the freedom to choose, they are much less likely to perceive the initiative as being forced upon them, making them more positively inclined to participate. This approach leverages several behavioral economic principles: the aforementioned status quo bias, psychological reactance, which highlights the importance of autonomy in decision-making, and commitment and consistency, from which people feel compelled to remain consistent with past choices, such as signing up for an L&D program.

  1. The default option in coaching.

The default option can also be used to help catalyze coaching between managers and their employees. For example, ADP introduced the Compass talent activation solution to provide feedback to managers via anonymous survey. To drive true behavior change, we created multiweek email-based coaching curricula for each item that was measured to provide coaching on the subject for which the recipient received the lowest score. We made this program opt-out. The result? Ninety-nine percent of leaders remained signed up for coaching, and over the next eight weeks, less than one half of one percent unsubscribed. More importantly, though, leaders saw their scores on the coached subjects improve 10 percent in a subsequent assessment. (Leaders scores in the uncoached items remained unchanged.)

Had the email-based coaching been accessible through an opt-in approach, only a small fraction of leaders likely would have participated. Given the actual impact of the coaching, that lack of participation would have deprived ADP of the benefits of widespread leadership growth across the entire organization. In this case, opt-out vs. opt-in meant the difference between a smashing success and an insignificant blip.

This list is by no means exhaustive of the ways the default option can be deployed throughout a business to drive engagement. HR leaders should take inventory of their choice mechanisms throughout their business, study whether they are set to the desired employee outcomes and consider the default option as means for adjustment.

Jordan Birnbaum is chief behavioral economist at ADP. To comment, email