Pay or Nudge Employees Into Change? An Experiment on the Effect of Nudging for Organizational Change

Abstract

Organizational change often fails due to employees’ resistance to change resulting in unforeseen expenses, delays, or other disruptions in organizations. In our experiment, we compare behavioral interventions—a pro-change default rule and a pro-change recommendation—with a costly pay raise to foster supportive behavior. We support the effectiveness of a default nudge in enhancing change-related success. Our results indicate that a recommendation nudge has no significant effect in change-related scenarios. In addition, we find that a pay raise has a positive effect that is likely to be triggered by positive reciprocity. If this pay raise fails to materialize, we report supporting evidence for negative reciprocity. We compare the effect sizes for these nudges and the pay raise and provide insights for the relative cost-effectiveness of such nudges compared to a pay raise for organizational change. We conclude with managerial implications.