How to resource your Behavioural Economics function
Category: Blog & News
In my last article we covered the business case for behavioural economics (BE), including how to engage and convince your stakeholders.
Now let’s consider how best to resource your BE function.
Where should your BE function sit?
Make no mistake, BE is a whole of business opportunity. In other words, behavioural techniques can be applied to how your receptionist answers the phone, how your invoices are designed, a proposal or tender document and presentation, supplier negotiations, pricing strategy, product design, marketing campaigns…even how the staff cafeteria is set up.
But let’s not get overwhelmed. Frequent readers will know that too many options can result in decision paralysis!
So instead let’s start with some clear decisions about where the BE function should sit.
Should you centralise or decentralise the function?
A centralised BE function is a team or person who provides subject matter expertise to projects. Like any shared service (like customer insights or HR), the value of the centralised BE function will rely heavily on the influencing skills of its representatives to convince internal stakeholders of worth.
- Pros: Best way to establish depth of skills within the BE team, creates heightened visibility of the function, easier to recruit because you are looking for BE specialists, efficiencies of scale as the BE team works across projects and can create standardised processes
- Cons: Difficult to develop breadth of BE knowledge across business, team may have limited bandwidth to input into a broad range of projects, requires champions from lines of business to seek out the involvement of BE, seen as ‘nice to have’ or even a nuisance that makes projects more cumbersome, can be sidelined
With a decentralised, democratised BE function, on the other hand, each and every person within your organisation sees themselves as an agent of behaviour change. BE is infused at every opportunity, from payroll form superannuation “nudges”, to procurement team tenders, HR rewards programs, the annual report narrative and sales team pitches. This distributed BE function requires a significant commitment to training, and while its reach is greater, the risk is you wind up paying lip service to it.
- Pros: Maximises impact of BE because it improves every touch point of business, increases engagement of workforce as everyone sees how they can make a difference
- Cons: Difficult to up skill and maintain quality skills across larger workforce, purity of BE gets lost as more links in the chain, harder to measure and tease out “BE” aspects of activities, no one “owns” it
My recommendation? Start with a centralised BE function, whether it is formalised as such by name or simply a collective of like-minded individuals who are acknowledged as BE champions. From there the aim should be to disseminate BE across the organisation, up skilling colleagues and democratising BE’s use.
In-house or outsource your BE function?
Ultimately I believe you need to have an in-house BE function. Your aim is to have BE infuse your organisation as business as usual.
However, recruiting and establishing a BE resource or team can be difficult. Demand is starting to outstrip supply, particularly in the senior ranks. BE hasn’t been its own discipline for very long which means it will take some time before appropriately qualified and experienced people enter the market.
That means you may need to call upon outside expertise to get you up and running in the short-term. As part of that engagement, however, you should require them to help you transfer the knowledge in-house. Yes, I realise advocating in-house BE function is to my personal disadvantage, but that’s honestly how I see the BE function evolving.
BE function reporting lines?
The reality is that someone needs to be responsible for the BE function. So where should it sit in your organisational structure? This will of course depend on your size of organisation.
- Sales and Marketing: If you are looking to invest in BE to better influence customer outcomes, then it makes sense to fold it into sales and marketing. These are the teams who most directly play the role of customer custodians.
- Customer Insights: If you have a market research function then BE fits very nicely alongside other techniques to understand customer behaviour. As the Insights function is already called upon for subject matter expertise, this eliminates confusion for stakeholders.
- Finance: All roads lead to finance so you could make a case for BE to sit within its ranks, especially for work involving billing, suppliers, incentives and payroll.
- Operations: If yours is a business where the main points of behavioural friction involve procurement (how you buy) and distribution (how you ship), BE could sit under the Operations umbrella.
- Human Resources: There’s a clear learning and development angle to BE, as well as “people” stuff and culture change. From attracting to developing and retaining staff, BE is clearly the hard edge to what has been known as “soft” skills.
My recommendation? The most obvious home for the BE function is within sales and marketing. Being close to the customer experience means BE will be able to more directly impact both revenue and profit. Once it’s established there, seek to broaden its use across other business units.
Get your FREE download of the 8 page "Embedding Behavioural Economics in your Business" PDF containing this article as well as Part 1. The Business Case for Behavioural Economics and Part 3. Embedding BE.
This article also appeared in Smartcompany.
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