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Summary: What Your Employees Need and Can’t Tell You: Adapting to Change with the Science of Behavioral Economics by Melina Palmer


People embrace change all the time – new phones, new apps, new platforms. Change itself isn’t the problem, it’s the way people’s brains react to it sometimes that causes resistance and failures. Behavioral economist Melina Palmer explains how her field is yielding powerful insights into the reasons people rebel against change, and lightens her conclusions with engaging personal stories. An accessible, actionable guidebook to getting smarter about change management.


  • You can only be a good leader if you understand the human brain.
  • To change people’s attitudes, focus on subconscious drivers.
  • Cognitive biases underlie people’s behavior, choices, communication and decision-making.
  • Manage at the level of the moment, using nudges to support people in making sound decisions.
  • By reducing people’s cognitive load, you can make it easier for them to absorb change.
  • Carefully prepare people for news about a change and avoid negative primes.
  • Consider each team member’s specific context and motivations.
  • Build motivation by fostering unity, transparency and trust.

Summary: What Your Employees Need and Can’t Tell You: Adapting to Change with the Science of Behavioral Economics by Melina Palmer


You can only be a good leader if you understand the human brain.

Behavioral economics, a field combining traditional economics and psychology, illuminates the rules of the brain – the cognitive biases and fallacies that can explain why people act and think the way they do. Knowing about how the brain works can help managers excel in their role and, in particular, help them lead teams through change. Gallup research suggests only 10% of managers possess the natural talent needed to perform well in their roles. Despite that discouraging statistic, any manager can shine by learning and understanding how their people think and applying that knowledge in daily interactions.

“Behavioral economics…is built on the rules of the brain that help us predict what people will actually do instead of what we think they should.”

For example, Nobel Prize winner Daniel Kahneman’s research shows the brain has two systems for decision-making: the subconscious, termed System 1, and the conscious, System 2. The subconscious brain makes quick decisions and can handle large amounts of information. The conscious brain moves more slowly and can handle only a limited amount of information. These two systems don’t speak the same language, and as a result, people don’t always consciously know why they’ve made a decision, taken a certain action or feel resistant to change.

To change people’s attitudes, focus on subconscious drivers.

Change doesn’t have to be difficult. People adapt to some kinds of change naturally and seamlessly, when those changes are introduced properly – such as adopting new smartphones and other technologies. The key to making change easier is to work with the way the brain works – its rules – and not against them. Managers who understand this will waste less time trying to change people’s conscious thoughts and instead focus on subconscious drivers.

For example, humans’ herding instinct plays an important role in whether people accept or resist change. This herding instinct means people look for social proof to guide their decisions and actions, especially in times of uncertainty. The herding instinct can lead people to follow the majority, even when it’s not the best choice. Managers who understand the herding instinct can leverage it to present information about change in a way that encourages acceptance.

“When you understand how to look at change and properly align it with the rules of the brain, change becomes easy and natural.”

From an employee’s point of view, change happens in everyday micro-moments. Managers need to be mindful of the micro-moments their people are experiencing and the memories they’re forming of those experiences, including memories based on false impressions. A single micro-moment can result in widespread ripple effects, either positive or negative.

For example, imagine a boss gathering his team and saying, “Many of you probably won’t like what I’m about to say, but please don’t shoot the messenger here. Some big changes are coming, and I need you all to get on board whether you like it or not.” This statement can have a negative ripple effect because it prepares people to dislike the upcoming changes, which can spur resistance and conflict. A small moment like this can have a significant impact on a change initiative. On the other hand, through small, consistent efforts to create positive micro-moments and memories, managers can instead spark a chain reaction that will lead to positive change throughout their teams and organizations.

Cognitive biases underlie people’s behavior, choices, communication and decision-making.

Biases are necessary for survival, and everyone has them – it’s unrealistic to try to eliminate bias from organizations or individuals. But biases can lead to misunderstandings, distrust and conflicts among team members and can hamper decision-making. By being aware of your own and others’ biases, you can reduce the negative impacts. Your goal should be to recognize, manage and challenge biases rather than try to eradicate them.

Researchers have identified more than 200 cognitive biases and are discovering more every day. The following powerful biases can have a significant impact in the workplace:

  • Naïve realism – The belief that you see reality exactly as it is, objective and unbiased, and other people should see things the same way and agree with you. This bias is foundational to every other bias.
  • Naïve cynicism – The belief that other people are more biased than you are, leading to the expectation, for example, that they will fail to recognize your contributions.
  • The egocentric bias – The tendency for people to overestimate their own contributions and downplay the contributions of others.
  • The false uniqueness bias – The tendency for people to believe they’re more different from others than they actually are. People tend to underestimate the number of others who share their positive traits and overestimate the number who share their negative traits.

The following biases often underlie misunderstandings and conflicts:

  • The focusing illusion refers to the brain’s tendency to select certain things, focus on those things and ignore others.
  • Confirmation bias is the brain’s desire to prove itself right by confirming its assumptions.
  • In the IKEA effect, people value things more when they put effort into them.
  • The fundamental attribution error happens when people judge others based solely on their actions and fail to consider external factors.

Manage at the level of the moment, using nudges to support people in making sound decisions.

People’s days are made up of individual moments that leave a cumulative impression: either stressful, busy and sometimes meaningless or, at best, full of joy, fun, growth and positive influence. Managers can help their teams experience more positive moments by giving them clear goals, building trust within their teams and using nudges to subtly support people in managing their time well and making sound decisions.

“The everyday changes that seem small are critical moments of opportunity. They are the snowflakes that come together to form a snowball of change.”

Many cognitive factors contribute to poor time management and faulty decision-making, including the optimism bias, leading people to believe they are better than others at various tasks; the planning fallacy, which causes underestimation of time and resources needed for a project; time discounting, the tendency to prioritize immediate rewards over future ones; and bikeshedding, which happens when people focus on trivial matters instead of more important ones. Managers who are aware of these tendencies can gently steer their people away from them by using nudges – subtle prompts or small adjustments that can guide behavior or a decision-making process, the way a car dings until everyone is buckled up.

By reducing people’s cognitive load, you can make it easier for them to absorb change.

On average, a person makes 35,000 decisions daily, half of them work-related. The psychological effects of these small decisions accumulate over time and can work either for or against change initiatives. Being under time pressure can also stress the brain, and this stress can hamper decision-making and cause people to resist change. You can compare this to a person riding an elephant. When the brain – the elephant – is distracted or overwhelmed, it tends to become stubborn, clings to the status quo, and, hence, becomes harder to guide. A high cognitive load leaves little mental bandwidth to accept changes.

“Reducing the cognitive load by being thoughtful is your key tactic for calming the elephant.”

Managers can calm the elephant – help people become more receptive to change – by reducing their cognitive load. To alleviate people’s stress, managers should prioritize resources and narrow people’s focus. Focusing on fewer things will boost teams’ effectiveness, innovation and productivity while also increasing people’s openness to change. Being understanding of employees’ personal issues, too, can help reduce their cognitive load and improve their performance.

Carefully prepare people for news about change and avoid negative primes.

Whether a change initiative succeeds or not doesn’t depend on the change itself but on how well leaders sell the change. The way you prepare people for the change, the specific way you communicate about the change and the way you time the change will all determine the ease with which people will embrace it.

Priming refers to the use of subconscious influence to affect people’s perceptions of information. Imagery, verbiage, video, emojis and even scents and tastes can act as primes. For example, when a bakery allows the smells of fresh bread and cookies to waft out onto the sidewalk, they’re priming people to think about purchasing baked goods. A well-chosen prime can place people in a receptive frame of mind for a proposed change, while the wrong prime can make them rebel.

“Change doesn’t have to be hard, but it does take thoughtfulness, consistency and focus.”

The details of communications about change matter, too. How you say something can be more important than what you say. For example, asking “Does that make sense?” can cause offense. By asking instead, “Did I explain that well?” you take responsibility for the communication and encourage conversation. The subconscious associations that people have with certain words and concepts can influence their receptiveness to communications about change – so choose your words carefully, and be intentional in the way you frame change.

Timing can have a significant impact on people’s responses to change. The fresh start effect means people are more likely to embrace new goals when they’re tied to a fresh start, such as New Year’s resolutions or milestone birthdays. In keeping with the fresh start effect, people tend to have more openness to change at the beginning of a week, month or quarter.

Consider each team member’s specific context and motivations.

Imagine walking down a street and you suddenly smell the delicious scent of cookies baking. You follow the scent to the store and go in. Someone gives you a sample and tells you there’s a special deal today – buy three and get one free. Before long, you’re leaving the bakery with a bag of cookies, enjoying one as you walk out the door.

Now imagine an alternate version: You’re walking down the street, and suddenly someone puts a flier in your face, shoves a tray of cookies at you and says, “Today only, buy four cookies and only pay for three!” Most likely, you would walk away thinking how rude this person was.

“Using the right concepts in the right order is necessary for change to flow naturally.”

This illustration suggests an approach to change called the “It’s Not About the Cookie” framework. The framework highlights the fact that the thing you’re trying to sell matters less than the power of many concepts related to cognitive functioning and biases: priming, framing, herding, social proof, loss aversion, perceived ownership, the IKEA effect, reciprocity and scarcity. This framework reminds leaders of the need for thoughtfulness, planning and an understanding of biases as they introduce change. In implementing the framework, managers should consider each team member’s specific context and motivations.

Build motivation by fostering unity, transparency and trust.

Teams work together better when people remember that they’re on the same side and are working toward a common goal. To promote unity in teams, managers need to be aware of the biases that can get in the way, practice empathy and focus on building trust and understanding. Transparency and fairness, especially with regard to rewards, will promote both trust and motivation: People care about what others receive, and studies show even monkeys will become angry and disengaged if they perceive they’re being treated unfairly. Cognitive biases such as the endowment effect, loss aversion and status quo bias also play a role in how people perceive fairness.

“Your investment in giving the gift of transparency and trust to your team can help them establish autonomy – one of the key factors of intrinsic motivation.”

The human affinity for the status quo can undermine efforts to build unity by fostering an us-versus-them mentality within teams and causing stagnation and disgruntlement. Applying a brain-based change approach can help teams overcome this mentality and become more productive. That approach might include creating a fresh start or a new context to help the team become more open to change and collaboration. Managers and team leaders can gradually change perceptions and behaviors within the team through repeated small actions over time. This process will require dedication, authenticity and focus.

A positive and enjoyable environment in the workplace will help improve engagement, too, as well as productivity and employee satisfaction – but managers should consider individual preferences for fun and avoid forcing activities on people. By being thoughtful and applying behavioral economics principles, leaders can achieve big dreams and create united, energized teams.

About the Author

Melina Palmer is a behavioral economist. She is CEO of The Brainy Business, providing behavioral economics training and consulting around the world, and host of The Brainy Business podcast. Palmer teaches at the Texas A&M University’s Human Behavior Lab.


“What Your Employees Need and Can’t Tell You” by Melina Palmer is a thought-provoking book that combines the principles of behavioral economics with practical strategies for understanding and meeting the needs of employees in a changing work environment. Drawing on the author’s expertise in behavioral economics, the book offers insights into the psychological factors that influence employee behavior and decision-making in the workplace.

The book begins by introducing the concept of behavioral economics and its relevance to understanding employee motivation, engagement, and productivity. It explores how traditional economic models often fall short in explaining human behavior, and how behavioral economics provides a more nuanced understanding of the factors that impact employee performance.

Throughout the book, Palmer identifies key psychological factors and biases that affect employee behavior, such as loss aversion, social norms, and the influence of framing. She explains how these factors can shape employee responses to change, and provides practical strategies for leveraging these insights to foster positive organizational outcomes.

The author offers a comprehensive framework for understanding employee needs and provides actionable advice for addressing them effectively. She emphasizes the importance of communication, feedback, and recognition in creating an environment that supports employee well-being and productivity. Palmer also explores the role of incentives and rewards in motivating employees, highlighting the need to align these incentives with employees’ underlying psychological drivers.

In addition to discussing individual employee needs, the book delves into the importance of understanding group dynamics and the influence of social context on employee behavior. Palmer explores how organizational culture, leadership styles, and peer relationships can impact employee satisfaction and performance. She provides practical guidance for fostering a positive culture and creating an environment that encourages collaboration and innovation.

“What Your Employees Need and Can’t Tell You” is an insightful and practical guide for managers and leaders seeking to understand the underlying motivations and needs of their employees. Melina Palmer’s expertise in behavioral economics shines through, as she effectively combines theory with real-world examples and actionable strategies.

The book’s strength lies in its ability to bridge the gap between academic research and practical application. Palmer presents complex concepts in an accessible manner, making it easy for readers to grasp the underlying principles of behavioral economics and apply them to their own organizational contexts.

One of the book’s standout features is its emphasis on communication and feedback. Palmer highlights the importance of open and transparent communication channels, and provides practical tips for creating a culture of feedback that promotes employee growth and engagement. By understanding the psychological factors that influence employee decision-making, managers can tailor their communication strategies to resonate with their employees and drive positive behavioral change.

Palmer’s insights into the role of incentives and rewards are particularly valuable. She cautions against relying solely on monetary incentives and instead advocates for a more holistic approach that considers employees’ intrinsic motivations. By aligning incentives with employees’ underlying psychological needs, organizations can create a more engaging and fulfilling work environment.

The book could benefit from more in-depth case studies or real-life examples to further illustrate the practical application of the concepts discussed. While the book covers a wide range of topics, some readers may find it overwhelming, and a more structured approach to organizing the content could enhance readability.

Overall, “What Your Employees Need and Can’t Tell You” is a worthwhile read for anyone in a leadership or management role. Palmer’s blend of behavioral economics and practical strategies provides a fresh perspective on understanding and engaging employees in an ever-changing work environment. By incorporating the principles outlined in this book, organizations can create a culture that fosters employee well-being, productivity, and adaptability.

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