106 Communications

6th Sense

The Latte Levy and driving change

January 2018 | Employee Engagement

Levies are today big business.

It started with the Plastic Bag Levy.

Next we had the Apprenticeship Levy.

And now we await the so-called Latte Levy.

A Levy is in essence a tax, fee or fine.  But it’s the nature of these levies and the behaviour that they are designed to drive that is interesting.  Before the Plastic Bag Levy came into force, we were given the impression that the world was about to implode.  The reality is that millions of consumers have changed their behaviour and this is down to a few key things:

So what has made the Plastic Bag Levy so successful?

According to the world of behavioural economics, it is our aversion to loss.  Despite only being 5p, the Levy triggers in us a sense of loss so deep that we will happily juggle a few groceries to the car to save buying a bag.  Over time, this has led to millions of us searching out our bags for life every time we head for the shops.  It’s now a habit, and we chastise ourselves when we forget to take our own bags.

Despite the fact that our behaviour has been manipulated, it doesn’t stop us from giving ourselves a collective pat on the back for saving billions of plastic bags and some 1% of plastic waste produced in the UK.  It’s also given government and consumers a desire to take this principle further.  For government, it gives the impression of empowering consumers and also doesn’t allow businesses to design something to their own advantage; for consumers, the initial shock turns into a habit that gives us a feel-good feeling.

Potentially a Latte Levy could have the same effect.

That manipulation of our behaviour is nothing new.  When low-cost airlines introduced charges for hold luggage, millions went out and bought small suitcases that we could squeeze into the overhead lockers.  So much so that Ryanair have now decided to charge us for taking luggage on board.

We also see it (or maybe we don’t) when in store or online.  Retailers have been supreme manipulators of our decisions – and although we’ve become increasingly cynical about multi-buy savings, they still continue to drive a lot of purchasing decisions.

Going online, we see more subtle tactics employed, especially because it we’re less of a captive audience.  For example, when booking a hotel on a comparison site, we are reminded that XX amount of people have recently booked this hotel or are viewing this hotel.

So how does this relate to the workplace?

Organisations are, on the whole, also extremely cautious (loss aversion).  That is why innovation and change can be extremely difficult, especially in big organisations.  We often look at what our competitors are doing rather than what our customers need; and the thought of losing position or power (or simply losing face) can stop us from challenging others or proposing new ideas.

If you’re trying to encourage your colleagues to adopt a new way of working or to help drive new innovations, how do you tell a story that will lead to action?

Often organisations will simply accentuate the positives and the opportunities; but it can be just as important to show what you could be missing by not doing something.  WHAT IF WE DON’T is as much a motivator as WHAT IF WE DO.

Equally, focus on the little things that matter, the little nudges and supports that can help change behaviour day by day, step by step.

Don’t be afraid to try out different scenarios.  Organisations often want to present a ‘new way of working’ out of the box, whereas consultation and testing can be the best way to engage people as well as bring about the change desired.  Behavioural economists are advocates of A/B testing – essentially taking the same scenario but presenting it in two different ways.

Look for social reinforcement.  We are social animals and we are often compelled towards something because of what our peers are doing.  The more we can provide social proof, the more our colleagues will follow suit.

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