Nudgetech! What It Is, and How It Can Aid the Total Rewards Function

Organizations are generally aware that artificial intelligence (AI) can help them execute tasks — but what if it could also help them grow their culture, develop their employees and maximize their benefit offering?

“Nudgetech” may be a solution to enable these outcomes. This set of AI-powered tools could enhance collaboration and cohesion in increasingly complex work environments.

“AI-enabled nudge technology provides organizations with a powerful tool to drive behavior change aligned with a wide variety of key business and talent priorities,” said Megan Steckler, the director of leader and workforce transformation at consulting firm Perceptyx. “By integrating behavioral science with AI, nudge technology ensures that employees receive timely, relevant and personalized prompts that make adopting new behaviors supportive and natural — ultimately driving business success through intentional, incremental change.”

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A Deeper Dive into Nudgetech

Put in more layman’s terms, nudges are AI-powered, science-based, personalized action recommendations that are delivered seamlessly within employees’ daily workflows, such as via Microsoft Teams, Slack or email.

“These nudges encourage the development of behavioral traits linked to individual and organizational goals, making it easy for both managers and employees to create a high-performing culture at scale,” Steckler said.

It’s not a particular set of software but rather a strategic framework leaders can use to develop their people, added Rania Stewart, a vice president and analyst at Gartner.

“A nudge is not dissimilar to a reminder on the surface, but where a reminder is targeted at a specific task, a nudge is about encouraging action in a particular direction,” Stewart said. “Think ‘gentle reminders.’”

They are particularly effective where a shift in mindset is desired, such as in fostering innovation, she said.

“Culture is not always a direct objective,” Stewart said. “You can’t systematize innovation — but you can use nudges to reinforce that there is space for failure.”

Nudge frameworks also adapt to the user, she said — so if an employee always skips nudges that suggest an action but always clicks through those with a quick read, then the framework will send the employee more of the latter.

So far, Stewart has seen organizations use emerging nudgetech to foster a culture that is more:

Agile/adaptive/innovative,
Security-minded,
Development-oriented, and/or
Grounded in human-centric leadership.

“Nudgetech can be transformative in its potential to enable high-impact behavioral change, often with low-effort investment by the individual,” Stewart said.

Nudgetech and Total Rewards

Total rewards professionals invest heavily in benefits, recognition and well-being programs, yet employee participation and adoption of these offerings often fall short, Steckler said.

This is where AI-enabled, behavioral science-backed nudges might be able to make a difference, she said.

At scale, nudging can benefit both the worker and organization by reinforcing the individual and collective components of benefits, well-being and recognition programs. They can also align recognition with desired cultural and business outcomes, Steckler added.

In the area of employee recognition, Steckler said AI-driven nudges can:

Reinforce key employee behaviors aligned with corporate priorities, values and leadership principles,
Ensure investment in recognition efforts directly support cultural transformation and critical focus areas, and
Drive strategic business priorities by encouraging the types of behaviors that fuel success.

“By making it easy and natural for employees to take action, AI-powered nudges ensure that total rewards programs deliver maximum impact — without overwhelming employees with information or mandates,” she said.

Nudges also can reinforce key focus areas after employee surveys or 360-degree assessments. These nudges help translate broad action plans into small, sustainable habit changes, making continuous improvement more achievable and impactful over time, Steckler said.

Better Managers, Increased Engagement

Another significant use case is helping managers become better managers, Stewart said. For example, a nudge could be a pop-up prompt asking a manager if they’ve taken a coffee break with an employee lately, or it could be a blurb that says something like, “Employees often feel shocked at annual review time. Have you been having one-on-ones with your employees?”

To illustrate the value of nudges on an individual organization, consider that Kraft Heinz began implementing them with their managers in 2021. In a late 2023 webinar with Perceptyx, Rachel Dillon, Kraft Heinz’s head of leadership development, revealed their managers who regularly engaged with nudges were more likely to be rated highly effective by their direct reports. Specifically, the small minority of managers (7%) who did not regularly engage with nudges were rated by their direct reports as needing support 2.5 times more often than those managers who engaged with nudges.

When the multinational food company expanded the nudge program to all salaried employees, they saw an average employee engagement increase of three points for those who consistently engaged with nudge emails or messages.

A Word of Caution

If embarking on a nudgetech pilot or initiative, Stewart advised organizations to consider the following:

Timing is key to developing nudges — figure out what works for employees, so you aren’t bombarding them with suggestions.
Ensure employees truly have a choice about whether they want to engage with nudges, she added. “When we’re talking about behavioral change, there is a risk of the framework being used for Machiavellian purposes,” she said.
Teams may be tempted to track engagements with nudges or by offering incentives. If you are considering that, ensure such programs don’t undermine that employee choice or punish those who do not engage.

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