“The Trojan Horse in Changing Business: Human Resources or Cognitive Neuroscience?”

I’m looking to test some hunches I have about human behaviour in my MSc research project.  It seems clear to me that there needs to be a transformational change in the way in which we *conceptualise* and understand the ‘firm’, our notions of what business provides, and how we view business from the perspective as consumers, academics and employees. I am focusing my research on catalysing a positive shift towards sustainability in employee values, attitudes and ultimately behaviours. Integrating sustainability into the organisational culture and values is increasingly becoming a key challenge for many businesses. This is particularly pertinent as many  businesses attempt to bolt on sustainability to their operations with marginal change and investment leading to increased skepticism from customers and employees alike.

Unfortunately changing behaviours, attitudes and ideas is an often overlooked aspect of organisational transformation traditionally thought of as soft and nebulous; more the jurisdiction of Human Resources than board level strategy. Despite this view applicable and significant insights are being discovered from the forefronts of cognitive neuroscience, neuroeconomics and related fields that may just hold the key to solving the issues mentioned above.

David Audretsch states the following in the introduction to *Neuroeconomics and the Firm*:

“The branch of research that deals with human behaviour within the firm mostly focuses on employee wellbeing and motivation factors that are evaluated somewhat distinctly from the firm. To date, little effort has been placed on understanding the connection of what happens to the firm as a consequences of the human within.” Audretsch goes on to state that ‘there is a two way communication between the decision making abilities of of the employees and the environment in which they have to make those decisions’. He concludes by stating ‘thus the question is not just about who to hire or promote to advance the success of the firm, but how does the environment of the firm affect its own success by influencing the decision-making abilities of those it hires or promotes’. Most interestingly, Audretsch notes that there it is assumed that there is little difference between employees in the workplace and at home. Crucially for me, the authors proposes personality tests ‘employed as part of the hiring/promoting process have been designed to measure a desired bundle of skills and knowledge and some basic psychological traits’. Such tests function on the basis that such traits are stable and that ‘no factor may induce a personality type on a person in the business practices of the firm’. The picture at the start of this post might look pretty but for me it represents an exciting bridge between science and sustainability.

It is hoped that understanding and applying the latest insights from cognitive neurosciences and neuroeconomics will provide us with opportunities to shape businesses for the better. We will be able to create environments in which employees are ‘nudged’ and encouraged to think, behave and act in a more sustainable manner. We will be able to design spaces in which employees will consciously deliberate over decisions rather than defaulting to heuristics inclined to reach ‘the wrong decision’. This is the Trojan Horse for better business. The authors of ‘Neuroeconomics and the Firm’ also believe that firms can change ‘how much people trust each other inside the firm’.

This is about elevating sustainability from a ‘nice to have’ to the level of core strategy whilst expanding the remit of what we understand of sustainability. Enlarging it to encompass financial sustainability, longevity, increased employee engagement, reduced environmental footprint, decreased employee turnover, improved profitability and brand differentiation. These arguments are not only used by advocates for a positive change in business. In 2006 half of the American workforce who were not fully engaged or disengaged cost US businesses $300 billion per annum in lost productivity says Alan Saks from the Rotman School of Management, University of Toronto (2006). There are good reasons why senior management ought to be tackling employee engagement and changing the way their employees conceptualise their organisations, their values and the company culture because behaviour follows from attitudes and attitudes are formed from the environment in which people operate.

We are not selfish agents maximising our utility and minimising our efforts in a rational fashion, nor are we automatons who only care about the outcomes of our choices. It has been demonstrated in experimental game theory that humans can be shown to care about the welfare of others. Similarly, modern technology is allowing us to answer questions and provide useful insights to business by peering inside the physiology of the human brain. Not only will this ease the transition to more sustainable and more environmentally aware business models but it is hoped that with the right evidence managers can encourage the best from their employees and see the results on the balance sheet.

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