Low productivity? It might be time for a sludge audit

How many times have you, as a job applicant, quit the process because it was long-winded to complete? We engage in a straight-forward transaction only to find we have wandered into what feels like bureaucratic quicksand. We feel like we are sinking, and the more we do, the deeper we sink.

These kinds of experiences are due to what the Nobel prize-winning economist Richard Thaler calls sludge. According to Thaler, sludge is an unnecessarily difficult process that stops you from achieving your goals. 

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Think of the overly difficult process of getting help from a utility company, the complicated process of applying for a permit from local government or the mind-bending complexity of modern procurement processes

According to Thaler, sludge is the opposite of a nudge. A nudge is a gentle push in the right direction – for example, Uber gently nudges drivers to take the next piece of work by making it really easy to accept another passenger.

Many organisations sludge their subcontractors by requiring them to jump through all sorts of bureaucratic hoops to take on the next piece of work. In some settings, doing the administrative processes to get paid for the work is often more difficult than doing the work itself.

Sometimes sludge accidentally builds up over time. This can happen when new compliance and regulation requires additional steps to be added. But in other cases, sludge is purposefully designed into a system.

Think of the process of cancelling a subscription service – often it is unnecessarily difficult and can take hours. This is not an accident. The company providing the service wants you to think cancelling the subscription is too difficult so you should give up and keep paying them. 

Sludgy HR processes can get in the way of an organisation receiving job applications, having staff sign up for training or ensuring employees are paid on time. When processes are too sludgy, it can make it difficult for an organisation to do the basics right. Sludge can also impose a huge unaccounted cost on the people who are using a system.

The Harvard Law Professor Cass Sunstein recently calculated that US federal government processes impose about 9.78 billion paperwork hours on the national population. If these hours of form filling were treated as paid work, the costs would be astronomical. 

Although sludge has its downsides, it can also have some unexpected benefits, such as helping to ration out scarce goods. The MIT economist Benjamin Olken showed this in a study of hassles in government services like healthcare or social security.

He found introducing a small hassle into the process of accessing a service meant the people who did not really need the service tended to give up, whereas those who really needed it more likely to persist. What this suggests is that introducing sludge creates a barrier to the less needy.

The research on sludge has some very practical lessons for HR practitioners. First, it is important to understand how much sludge you have in your system. In a 2021 book on the topic, Sunstein suggested that organisations conduct sludge audits. The objective is identifying the often overlooked sludge in organisations and considering how much these cost the organisation in terms of the time it takes to comply. 

After you have understood the sludge that HR processes might inadvertently introduce into your organisation, you need to develop a strategy. This involves working out how you can selectively use sludge to achieve your objectives.

You can do this by carefully preserving good sludge – to ration out scarce services, while progressively eliminating the bad which needlessly gets in the way of people doing something you want them to do.

Eliminating bad sludge in your processes can be done in three ways. The first step involves cleaning out HR systems. Go through the most widely used processes and identify any unnecessary sludge which is part of them.

The next step is ensuring new sludge stops coming out of HR processes. This can be achieved by asking where the unexpected difficulties and hassles are that a non-expert user might experience when using the process.

The final step is to stop sludge from entering the system in the first place. Often new demands or requirements might seem exciting or important at the time. However, today’s pressing issue can easily become tomorrow’s sludge.

It is vital that HR managers exercise a little circumspection before jumping on a bandwagon that could easily lead them down sludge street.

HR processes can sometimes be a little more sludge-ladened than they need to be. By minimising sludge, HR can help to make a business more efficient and effective. It can also make an organisation a nicer place to work. 


André Spicer is professor of organisational behaviour at Bayes Business School, City, University of London, and ranked 29 on the list of HR Most Influential Thinkers in 2021