Psychology of Compliance

Posted: 30 May 2017
Topics: Blog

How to stop business travellers breaking the rules

Over the years that the Business Travel Show in London has conducted its annual travel buyer survey, compliance has always been high on the list of priorities, often not much lower than the perennial challenge of cost-cutting. It is easy to see why trimming costs remains high on the list of priorities but you might imagine that travel buyers would be getting smarter at ensuring compliance. Not so.
 - The problem is that humans are hard-wired to exploit loopholes and bend the rules. And some do it more than others.
A paper by Francesca Gino and Dan Ariely of Harvard Business School called The Dark Side of Creativity: Original Thinkers Can be More Dishonest demonstrated that people who would be considered creative according to various standardised psychological tests had “an increased motivation to think outside the box and that in turn, this increased motivation promotes dishonesty.” When you think that it is often a company’s most creative employees who are the regular business travellers, it means that these are the very people who are more likely to go maverick or to try and work out the loopholes in a travel policy.

How can travel managers prevent this happening?

A 2016 study on behaviour and compliance in organisations carried out by the Financial Conduct Authority found that people tend to break rules “when they can rationalise the benefits of rule breaking as being consistent with their status as a good, virtuous person”. “There is, therefore, a trade-off between external incentives to break rules, and internal incentives, which include rewards and punishments such as feelings of satisfaction for acting virtuously and shame for doing wrong,” the authors said. This is why gamification has shown at least some success in a business travel context. If you reward travellers with points and these points are displayed on a very public league table, the glow felt for acting in compliance with travel policy can work wonders.
 - The problem is that the benefits of being outside policy are often very attractive: staying in a better hotel or adding more frequent flyer points to your personal account for example.
Gary Becker in his 1968 paper Crime and punishment: An economic approach  looked at how we could quantify the likelihood of someone breaking the rules. Becker found that someone will break the rules if the benefits of rule-breaking are greater than the probability of detection multiplied by the punishment. In a business travel context this means that those in charge of monitoring rule-breaking – travel managers – should aim to increase the probability of detection or increase the punishment if someone is non-compliant. This could mean forcing all trips to be pre-approved, for example, or using the threat of non-payment of expense claims for those who do not comply.

But is punishment the right thing or should we instead be rewarding compliance?

Research by Dr Jan Kubanek, a postdoctoral research associate in anatomy and neurobiology Washington University in St. Louis, has found the answer. Subjects in the study were played a series of clicking noises in their ears or shown a series of flashes inn their eyes. They had to decide whether more were heard or seen on the left or right and were given a reward of between 5 and 25 cents for a right answer and the same amount taken away for a wrong answer. Subjects who were rewarded tended to repeat their previous choice and that tendency grew stronger as the award increased. Subjects who were punished strongly avoided the previous choice However, unlike the response to a reward, no matter how large a sum was lost, subjects showed a strong and consistent tendency to avoid the previous choice. Kubanek said, “Objectively, you’d think that winning 25 cents would have the same magnitude of effect as losing 25 cents, but that’s not what we find.”
 - The conclusion of the research was that sticks, or punishments, are better than carrots, or rewards for getting people to comply.
Interestingly, the FCA’s research shows that people behave differently when they are in groups, meaning that rule breaking depends on the culture and social norms within firms. The report says: "Wrongdoing can, therefore, be reduced by promoting a positive culture of compliance. Firms can do this through their tone of communication, training and the expectations that they set for their staff, as well as by ensuring that staff have the right incentives, combatting negative ideologies and publicising examples of good behaviour". Travel managers therefore need to look carefully at how they communicate rewards for compliance and punishments for non-compliance.
 - The research shows that punishments are best but not paying expense claims can be too extreme for some companies.
Here’s an idea. How about throwing a party for the company’s most compliant employees? Anyone who breaks the rules loses their invite. It doesn't just have to relate to travel either. Those who reduce their stationery usage, use fewer paper cups or save the company carbon emissions can also come along.   Find out more about Egencia's Traveller Risk Management solution

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