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  • Writer's pictureStephanie Thum, Ph.D., CCXP

Sludge Audits: Calculating the Costs of Painful, Time-Consuming Employee & Customer Experiences

Too many rules and too much sludge can lead to a host of negative employee and customer experiences. Sludge audits can help attach a dollar cost to the customer and employee pain.

Some years ago, I worked with a superstar sales executive. She frequently traveled the United States meeting with clients.

One day over lunch she mentioned she had never submitted a travel expense reimbursement form to the company we worked for. I was surprised. We all know how expensive travel can be, right?!

In my mind, and according to the company’s rules, she was entitled to reimbursement!

But following the rules meant taking the time to detail one’s travels on a form, and then uploading copies of expense receipts into a system that frequently glitched. For her, requesting reimbursement was just too cumbersome and time-consuming.

It took too much time away from… well… being a superstar sales executive! In her view, the administrative work was sludge. Burdensome. Red tape. Friction. It wasn’t worth the hassle.

And it’s not uncommon. Personnel and finance activities are often noted as being sources of employee experience strain and pain.


I recently summarized a heap of scholarly findings on sludge, red tape, friction, and its impact on employee experience, customer experience, and organizational performance. Red tape and sludge are about:

  • Lengthy paperwork.

  • Confusing forms.

  • Long hold times waiting to speak to someone at a customer contact center.

  • Rules that make it hard to cancel a subscription, get a refund, get a rebate, or get help.

Too many rules and too much sludge can lead to a host of negative employee experiences—

also outlined on my blog.

What the Heck is a Sludge Audit?

In my blog, I suggested Dr. Sunstein’s sludge audit idea for identifying the actual costs and sources of red tape and customer and employee friction. After my blog went up, the replies and DMs started flowing. People wanted to know more about sludge audits. Since sludge isn't exclusive to the public sector, sludge audits shouldn't be, either.

Resources on Sludge Audits

So, I rounded up the most excellent reads I could find. Here they are.

This article should be required reading for customer experience professionals in practice today, no matter the sector. Nobel prize winner Dr. Cass Sunstein wrote a scholarly piece that is the most understandable, thorough primer on sludge: What it is, what it is not, how much it costs, how it impedes organizational performance, and how it applies to customer and employee experience in the public and private sectors.

The article doesn’t suggest steps involved in a sludge audit. However, it does include a detailed suggestion on how the costs of sludge can be calculated. It notes that sludge audits can be quantitative or qualitative.

Source: Behavioural Public Policy, January 2020, pp. 1-17.

A quick read by Dr. Richard H. Thaler, also a Nobel prize winner who is a colleague of Dr. Sunstein. One of the key takeaways also covered in Dr. Sunstein’s article: Not everything is sludge. Dr. Thaler outlines a related concept called “nudging.” He and Dr. Sunstein wrote a book about it in 2008. Nudging should also be in the mix for customer experience professionals when considering the impact of sludge.

Source: Science, August 3, 2018, p. 431.

This easy-to-read article gets to the nitty-gritty of where sludge lives and breeds: In our organizational processes. Oftentimes, leaders don’t realize rules, friction, and burden are building for customers and employees. This article points to a reality of communication in customer experience: Too much information can have the unintended consequence of being perceived as sludge.

Source: Ethos: A Journal of Public Policy & Governance, November 12, 2019, pp. 1-12.

Sludge audits are an actual thing, and they are being put into practice. The New South Wales government in Sydney, Australia, has developed a sludge audit methodology. They recently hosted their first sludge-a-thon, designed in the spirit of commonly known hackathons. Another sludge-a-thon is planned for October 2021.

In the U.S., a recent report suggested sludge audits for reducing the administrative burden that exacerbates inequities among citizens in accessing government services.

Sources: New South Wales Government, March 2021; United States Federal Government, 2021.

In this article, the author suggests some starting points for conducting a sludge audit, mainly from a customer experience perspective. He suggests some ideas on how to sell the concept to internal stakeholders.

Source: Columnist, February 12, 2021.

My federal government customer experience pals are going to love this one! Dr. Sunstein leads into this scholarly piece with a critical view of the Paperwork Reduction Act—a law that was intended to lighten the load for customers of government. This one should be on the reading list for anybody practicing CX in the U.S. federal government space. It notes some of the justifications for sludge, like program integrity and combatting fraud.

Source: Duke Law Journal, February 2019, pp. 1843-1883.

Bonus! Prefer a video or book? Look at these.

Prefer a video to learn more about sludge? Look at this one. Dr. Sunstein goes into some detail about the customer personas most likely to be faced with the burdens of sludge. He also outlines some of the steps of a high-level sludge audit, and how to socialize the concept, practically speaking, among internal stakeholders.

Dr. Sunstein has a book coming out next month called Sludge: What Stops Us From Getting Things Done and What to Do About It. Preorder it here. I’m going to.

Getting Specific About Employee and Customer Experience Pains

Sludge, red tape, administrative burden, friction… whatever you call it… it is important to be able to identify the sources of employee and customer strain.

However, if customer and employee experience professionals want to be taken seriously, we need to be specific about what those pains are, how much they actually cost, what can be saved by addressing the problems, and the techniques for getting the work done.

Sludge audits are a newer concept. If you’ve ever been part of one, I’d love to hear from you. Meanwhile, join me on LinkedIn, Twitter, and Instagram.

Photos by Pixabay.


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