Does scarcity make you dumb? A behavioral understanding of how scarcity diminishes our decision making and control

06 December 2016

When people lack the tools and resources needed to operate effectively, they fall prey to the scarcity mind-set. If left unchecked, scarcity can have deleterious effects on performance. The good news is, leaders have an opportunity to help prevent scarcity before it happens.

PERSON 1: So, I just sent a newsletter to about 1,500 people with a link that was broken.
PERSON 2: It was a relatively simple error that I made, and it ended up ruining everyone's severance packages.
PERSON 3: We have a code of ethics and the overarching theme is do no harm. Well, I almost did.

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We’ve all been there: made a mistake at work that was just plain knuckle-headed—or worse. Today we’re talking about why.

I’m Tanya Ott, and this is the Press Room, Deloitte University Press’s podcast on the issues and ideas that matter to your business today. We’re going to do something a little bit different this time, so bear with me. When we decided to do a podcast on why mistakes happen in the workplace, I put out a call on social media for people to share their workplace mistakes. I was flooded with confessions, and I’m going to share some of them with you today. I’ve taken out the names to protect the innocent—but here we go. See if anything sounds familiar.

Our first one comes from a former school teacher.

CONFESSION 1: It was back-to-school night, and it was crazy busy time. You know how it is when your children are young. You've got to make sure everybody gets fed. You're trying to meet all of your work obligations. It was just too much. Anyway, on back-to-school night, I got the classroom ready, and then the boys and I raced home. I fed them some sort of dinner. I don't remember. I just remember rushing back to school so that I could be in the classroom and greet the parents as they walked in. They all sat down, and I proceeded to tell them all about myself and what their children would be doing that year, hoping that they'd be excited about what they heard and feel that their expenditure of buckets of money on tuition would be justified. Everybody seemed pretty somber. I couldn't really understand why no one really seemed to be happy. I happened to glance down as I was talking and I noticed that on my left foot I had one pink rubber flip-flop and on my right foot a black ballet flat. I couldn't believe it. So I thought, “Well, I'll just [say it] myself.” I mentioned it to the parents and said how embarrassed I was and how maybe they would understand. Perhaps they too had raced around with their young children at some point. No one laughed.

CONFESSION 2: It was a crazy week at work.

TANYA OTT: This guy works at a church.

CONFESSION 2: It was a crazy week at home. Our boys had big things at school happening, and they were at two different schools, so we were running around, and we weren't eating dinner together. So I scheduled a work appointment over lunch on Friday, which is my day off. I got up on Friday morning, got my younger son to school, came back home, did some housecleaning, did some cooking for the week, looked up, and it was very close to when I needed to be at this lunch appointment. I grabbed a quick shower, threw some clothes on, ran out of the house, showed up with my hair wet, sat down, had our lunch meeting, went back home, did a few more chores, and got in the car to go pick up my son from school. We came into the house—my wife was home by then—and she said, “Why is your shirt inside out?” I had been to the meeting, been out running my errands, wearing a polo shirt inside out. I call the person I had lunch with and said, "Did you notice that my shirt was inside out?" He said, "I thought those were some pretty interesting seams on the shirt, but I thought it was the new style." It was a bad week.

TANYA OTT: And then there are screw-ups that aren’t as easy to laugh at after the fact. This guy leads a communications department of a major university.

CONFESSION 3: I just sent a newsletter to about 1,500 people with a link that was broken. Happens all the time, right? Except the link in this case was to a message from the vice president—and the newsletter is the vice president's baby. He's been in the job for six months. The newsletter is one of his calling cards. He uses it to show people that he's engaged and interested and really concerned about them. So his message is front and center on the newsletter. And nobody could access it. He didn't like that very much. But we moved on. It won't happen again. Probably. Most likely. Maybe a broken link would go to something else. But not to his message. I hope.

TANYA OTT: And then there’s this, from a social worker who works on a very fast-paced, multidisciplinary team.

CONFESSION 4: I got an email requesting me to just simply verify a mailing address so that a foundation with whom I work closely could provide financial assistance for a client. Easy enough, right? Well, that email came to me on a day in which my family was in turmoil. I had nonstop texts on my personal cell phone. I stepped outside of my office several times during the day for private phone conversations with family members. I had to take several breaks just to clear my mind and to try to refocus and regain control. I get a call several weeks later. The financial assistance had never arrived, and this had created a series of problems for this client and put them in a real risky situation.

I was absolutely certain I had taken care of this and went to my inbox to search for proof. And I discovered that email that I had never answered. I spent the rest of the day making many, many apologies and corrections. Fortunately, I was able to get everything back in order without too much significant residual to this client. I spent the rest of the evening, however, processing through all of this with my professional self—and by processing, I mean beating myself up. I don't make little mistakes like this. That was easy. That would have taken two minutes of my time. And it made me wonder what else is out there. What other balls did I drop? What is waiting for me right around the corner? In social work, we have a code of ethics, and the overarching theme is do no harm. Well, I almost did.

TANYA OTT: Some mistakes are small. Others are—there’s just no way around it—pretty big. I’ve got one more confession for you, and this one comes from someone who . . . well, you’ll hear more about her in a moment. First, her workplace mistake:

CONFESSION 5: I was an HR business partner and was charged with leading an outsource project for a company. As part of that (the unfortunate part), we had to go in and restructure and do layoffs. I was in charge of calculating the severance packages for employees. This should have been a relatively easy calculation: simply calculating weeks by tenure. Unfortunately, instead of putting in a 12, I put in a 10. So it was a relatively simple error that I made, and it ended up ruining everyone's severance packages. The first reaction from employees was, “Oh my goodness, where’s my severance? This isn't the right number.” When you have that by 250 employees, that definitely put me in panic mode and made me really want to reflect to understand, how did that happen?

TANYA OTT: She didn’t just want to understand how she made her mistake. She wanted to understand how all of us, at some time or another, make mistakes that really shouldn’t happen.

KELLY MONAHAN: My name’s Kelly Monahan, and I'm a researcher within the Center for Integrated Research here at Deloitte. Specifically, I focus a lot of my time and energy around researching initiatives that impact the talent space, and how behavioral economics can help explain some of the issues we sometimes have when we're at work.

TANYA OTT: Kelly and her research partners write about those issues in a new article titled Does scarcity make you dumb? I sure hope not!

KELLY MONAHAN: We're not necessarily talking about a physical scarce resource, but what we're saying is really the state of mind that happens when we perceive a sense of scarcity. Whether it be time or energy—it can even be relationships, you know, a sense of loneliness—what happens to our minds and the way that we think and make decisions when we feel like we're lacking something in our lives.

TANYA OTT: So why did you want to look at this?

KELLY MONAHAN: It's funny, the team that I work on, we spend a lot of time reading and researching and analyzing behavior in the workplace. At some point in time, our director had asked, “Why do people make dumb decisions?” You see competent people, people who are really talented and highly educated, and yet in certain circumstances, there's almost a breakdown in positive decision making. We really wanted to unpack the reasons and psychology behind that, because we have the sense that we're not dumb as humans. But a lot of times and circumstances and environment can cause us to do dumb things.

TANYA OTT: What does the research say about what's going on in our heads when we're feeling this sense of scarcity, whether it be time or relationships or something else?

KELLY MONAHAN: [Neuroscience] and technology really helps pinpoint how our brain is reacting to circumstances. What they've been able to prove now is when we're experiencing a state of psychological scarcity, we cannot help but be interrupted by the constant pull and thought of what we lack. We talk a lot about [how] you can be physically present but mentally absent because you're constantly going through, I have this deadline to meet, or I'm lacking this companionship. Whatever it is, it's constantly ticking over our thoughts completely outside of our conscious control. So we end up having to start making trade-off decisions: Do I go pursue this unmet need I have, and what am I going to have to give up in order to take hold of that?

Let's say I've got this pressing deadline today. But I also have to attend my son's play. You're going to have to make a trade-off decision. You have such a limited source of time. What do you end up doing? As you start making those trade-off decisions, we see our brains fatigue. We become much less vigilant in our thinking and in our decision making because we're just simply depleted. Our brains are much like a muscle: With use [it] begins to fatigue. A scarcity mind-set really causes us to constantly be engaging part of our brain that quite simply exhausts us.

TANYA OTT: I would imagine with the example that you give—do I work on this, I've got this major deadline at work, and yet I've got a kids play or a soccer game or something like that—[that] even if you choose one over the other, you're thinking of the other one you didn't choose.

KELLY MONAHAN: Correct, 100 percent. That's why we call this a cycle. It's so hard to get out of because even though you might have made a decision in attending one thing, physically it's still in the back of your mind what you may be missing.

TANYA OTT: That's something that, I imagine, most people struggle with. And you're looking at this from an organizational standpoint . . .

KELLY MONAHAN: I think what's happening in a lot of ways is because of blurring lines of work and personal that technology has now brought into our lives, it's really hard to stay focused on the main thing. So the very first thing is we tell organizational leaders is, “What is the mission of your organization?” Then set aside all else, because there's so much now you can go pursue. That is the opportunity that technology and globalization and some of these other microfactors have allowed organizations to pursue. But it also is a risk of entering the scarcity effect.

So, No. 1 to start with your mission: Why are you doing what you're doing? Then really start to evaluate from a timing perspective what is realistic. As humans, we have this optimism bias that we think we can accomplish a lot in a very short period of time. So instead of taking and looking at a year or two years, what we do a lot during strategy planning sessions, start with the next six weeks. Start breaking tasks and missions down to sizable chunks, as that is the way in which our brains are wired to think. We will be thinking much more rationally in the short term as opposed to the long term.

We also talk a lot about checks and balances: Have someone who sits outside of the task or the project and potentially the organization to double-check the work, to ask the questions that you might be missing based on this scarcity, and really get that outsider's opinion of, “Hey, what did I miss here?”

We think it's very important to create a sense of slack in the system. There's a tension with that. It's not just saying, “Hey, allow your employees 80 percent of their time to go pursue knowledge growth activities.” But what we do advocate for is the recognition that, especially as we continue that transition into a more knowledge- and data-based economy, we have to start questioning commonly held management principles and assumptions of how work should be structured. Very few of us today are actually making widgets or producing something, yet we structure our organizations as if we were. We still expect people to sit in a physical location X amount of hours a day, even if that's not necessarily optimal to how they work or think. So we start thinking from an organization perspective, we start getting into some of those meeting norms. [For example,] we set up 60-minute or 30-minute meetings. What if the company starts, instead of 30, to do 20–25-minute meetings that allow people to transition and start bringing up cognitive capacity before they move on to their next one.

A lot of this is creating almost the permission, as an organization, for people to take a step back, to engage in mindful activities again. We're doing some other research [where] we're finding it just takes 15 minutes on a Monday morning to really start the week off right by engaging in some sort of reflective, mindful activity. So what we're really advocating for at an organizational level is giving permission and almost some slack in the system to allow humans to be human and continue to operate in an optimal fashion.

TANYA OTT: You talk about assumptions in businesses about the way things should always be done. I wonder if all of this research that you're seeing and the work that you're doing has you looking differently at the idea of, for instance, an 8–10-hour day or a 40–50-hour work week?

KELLY MONAHAN: Oh, absolutely. I think there's a lot of really interesting literature that's out there, and we're starting to engage in some of our own primary research here as a firm as well to start testing some of these principles.

TANYA OTT: What are you looking at?

KELLY MONAHAN: What we're starting to measure is employee engagement and the perception of managers caring about the well-being of their employees. How does the amount of time without breaks influence that? Essentially, as we start seeing through manager and employee interactions, how productive are those when they're just kind of back to back to back? And how much does that actually lessen the manager’s ability to care about the well-being of employees? So really trying to understand, how do we structure and coach managers on how to manage their energy and to become aware that, “Hey, we're human, and we can only operate so long before we become depleted.” So that 4 o'clock meeting with your employee who's engaged and ready to go when you come across as uninterested isn't necessarily a reflection of you being a bad manager; it's just you haven't structured your day right to really take advantage of your optimal time to engage that employee.

Really what we're trying to investigate now is how can we teach and coach managers to use their best [strategies] to interact with employees, and then how to make them rest and really start to renew themselves as the day progresses to still make positive decisions. We're very early on in this, but we're starting to infuse these principles in coaching and teach them and determine their impact.

TANYA OTT: How receptive are those managers to that?

KELLY MONAHAN: To be honest with you, I think a lot of managers when we start talking say, “Oh my goodness, this is what has been missing.” I think so often we lose some of the human element in the business world. We tend to depersonalize it. We spend so much time talking about activities and tasks and productivity and how to become more efficient, and even a lot of times performance. But we don't necessarily take the step back and give permission for managers to question, hey, this is a more human element that we're dealing with. The majority of managers have been relieved to say, OK, this makes a lot of sense. This is what's missing. But then, of course we've got some managers that are so wired and conditioned to think in terms of efficiency and productivity and output that this necessarily seems like a waste of time.

So I think that's why continual research in this field to start proving, whether it's 9:00 to 5:00 or constant back-to-back meetings, [this] isn't necessarily going to work out to be our highest performance in the long run. High performance really comes in when we acknowledge we're human, when we take time for slack in rest and renewal to perform at our best. There's still definitely a lot of skeptics out there, and we need data to help prove these assumptions.

TANYA OTT: I'm married to a data scientist, and he does his research design and evaluation. So I would be super curious to know how it is that you're going to, from a scientific standpoint, tackle the idea of, does slack make you more productive, or does it better the workplace environment?

KELLY MONAHAN: Yes. You know, we also have a Center for Health Care Solutions that I've been talking through with this. What they're actually measuring is back pain in the workplace and how that's correlated with hours worked. And [they’re] actually starting to get into some of this physical health benefits or deteriorations that are happening because of this constant "on" that we have, where we're constantly asking ourselves to be mentally present. Those are some incidences where they're actually going through and looking at the physical health elements that people are experiencing, as well as the rising health care cost. [They are] trying to run those correlations and statistics to prove that there's probably a stronger correlation there than we may initially think.

TANYA OTT: Is this being driven at all by the entrance of Millennials into the workforce and an expectation that maybe work would be done differently?

KELLY MONAHAN: I think Millennials are definitely helping drive the conversation. I think there's a part of me that’s like, humans 40 years ago probably would have desired the same thing. It was just a much more production-oriented environment. But now that we're really coming into more of this knowledge economy, and we have this Millennial generation who knows how to use technology, who knows that they don't necessarily have to sit at a desk 9:00 to 5:00 to be productive, I think they're helping reshape this conversation and really helping drive that. And I think they're also more willing and open to consider alternative forms of work than what we've seen in the past.

TANYA OTT: Some industries have sort of this warrior mentality where you have to prove your worth. It's a rite of passage, and you just got to work those long hours, and you just got to have that phone and email open all night long if someone needs to gets you. That's a real hard thing to try to change.

KELLY MONAHAN: Yep. We talk a little bit in the article about the Henry Ford example. I think Henry Ford has been somewhat seen as an advocate of the employee because he was the one who realized the common work-hour work week was 60 hours, and people could actually be more productive if they worked 40. So we really came down to still a productivity game and a productivity measurement of, hey, what circumstances bring out the best in my employees. That's why he realized [it should be] eight hours, five days a week, and 8:00 to 5:00. That was seen as a very pro-employee move, but, from a business perspective, it was actually seen as a pro-business move. Productivity went through the roof about that change, and he was actually getting more output per the employees’ time there. It's going to be interesting to see what happens when we can actually start quantifying these periods of rest and recovery— [that they] make a lot of sense, and they're actually going to bring out higher performance. I know a lot of research has been done looking at high-performing athletes. What we're starting to see is it's not necessarily the hours trained but the hours that they take in between that has the most impact on their performance.

TANYA OTT: So corporate America is just like athletes—they need their rest.

KELLY MONAHAN: Very much so. Absolutely.

TANYA OTT: One of Kelly Monahan’s coauthors on the scarcity article agrees.

JENNIFER FISHER: My name is Jennifer Fisher. I'm the managing director of well-being for Deloitte LLP, which means that I am responsible for the health and well-being programs that touch all 70,000 plus of our people in the US and in India as well.

We’re all guilty of back to back to back to back to back, whether its back-to-back meetings, back-to-back calls. And we barely have time to breathe, go to the restroom. In between that, we’re all looking at our emails that are just piling up and piling up, so it's no wonder we're all coming from a place of scarcity. I think it's just creating that environment where it's okay to say, I need to take a 5-, 10-minute break—or actually I build it into my calendar. I actually block time. If you look at my calendar, I block chunks of time when I start to see my calendar getting too full, because I just can't operate in that way, and my team knows that. I tell them so they start to do the same thing.

TANYA OTT: You're almost stressing me out with the description of the back to back to back. Amidst a very, very challenging month at work, I had several days where I had seven or eight meetings a day back to back to back to back, and I finished the day and thought, I don't think any of them were productive.

JENNIFER FISHER: Yes. Do you ever sit down in a meeting or join a call and kind of say . . .  

TANYA OTT: What is this call or meeting about?

JENNIFER FISHER: Exactly! I find myself saying, “What are we talking about again?” Like you don't even know. You're like, “Where am I? What am I doing?” We've all been there, and these are things that we can control, right? You just have to kind of put the processes in place. For the people that we manage, we have to talk about it and give them the permission to do that as well.

TANYA OTT: That's interesting that you would say that because after I had that realization last week that I really didn't have much memory of any of those bazillion meetings I was in, I said, I'm going to set an internal rule for myself that I'm not going to have more than four hours of meetings a day. That's like half my day, and I'm going to have a buffer zone between each of those. But I never thought about taking it to the next step and actually communicating to my staff, this is what I'm doing. This is why I'm doing it. That's probably an important step there.

JENNIFER FISHER: Yeah, it really is, because they see your behavior, so part of it's modeling. But if you are virtual, and so many of us are virtual, [it] is also talking about it. Because if they see you going back to back to back to back, they think, that that's OK, that's the way we do things around here, and that's the way I need to do things around here to fit in. None of us operate well in that realm. So I think modeling is one thing, but also talking about it and demonstrating it.

TANYA OTT: You mentioned that the scarcity mind-set can be imposed by things happening at work but also things happening at home. And Deloitte has recently made some changes to policy around leave for women and men and family leave.

JENNIFER FISHER: Yeah, we have, and it's really exciting. We have our new paid family leave program, and it is leading. It's groundbreaking. It's not about maternity leave, paternity leave, although that is certainly part of it, but it's paid family leave. What is included in that is [it not only supports] new mothers, new fathers, but also for caregiving for anything from a sick child to a sick spouse to a sick mother, father, brother, sister—so anyone in your family. You tie that to a scarcity mind-set and a corporate culture and supporting your people.

Bringing a new child into the world obviously is a very exciting time, but you want to be focused, you want to be present, you want to be there with your child, you don't want to be worrying about work. But equally, on the flip side, talk about a highly stressful situation when you need to care for a loved one that's sick. [At] Deloitte, our program is 16 weeks fully paid for any type of caregiving that I just mentioned. For birth mothers, it could be up to 24 weeks depending on the type of birth and the short-term disability that's associated with it. It's really a groundbreaking program. It can be taken in large chunks, [or] you can take all 16 weeks at one time or more from a caregiving perspective. You just have to take it in three-day increments. So it really is very flexible, gives people the time that they need to focus on the people and the things that are really the most important to them.

When you tie that back to a scarcity mind-set, [it’s] having the comfort and the peace of mind that your employer supports you throughout your life journey and whatever you and your family's needs are, so that you don't have to burn the midnight oil. You can't focus at work, and you can't focus at home because you're worried about working, and vice versa. So it was really listening to our people, understanding what was most important to them, looking at the market, looking at the needs of our people, and the journey throughout their career, as well as the multigenerational workforce, and adapting to that. It's a perfect example of how to help create slack and create space and allow our people to create that space and send that message that says, you know, we're here. We got your back. Whatever your life needs are, we're here for you as an organization. We're very excited about it. Our people, the feedback has been phenomenal. And you continue to see how it goes. But it's really very much in line with creating that space and giving people the flexibility and the control that they need to live their lives, but also to have a very meaningful career as part of that.

TANYA OTT: What are the metrics on which you're judging whether or not this is successful?

JENNIFER FISHER: Say a little bit more about what you mean?

TANYA OTT: Sure. So obviously there is a huge human component to this, right?


TANYA OTT: Because you want to respect your employees. You want to take care of them. But there's also got to be a cost-benefit analysis that you've done behind the scenes when you're deciding to implement a policy like this. Can you talk me through that financial side of thinking about this?

JENNIFER FISHER: Obviously we did do a cost-benefit analysis, but I think ultimately what it came down to is that we are a people organization. Our people are professional services, so our people are our greatest asset. When we lose someone, over time, when you start to add up those costs of somebody leaving and having to replace them and all that comes with having to replace them, that really outweighed any cost of the associated program. But [it’s] also the real desire to be a leading organization when it comes to caring for its people, so it's as much about attracting and retaining the best talent, with the war on talent that it is. For us, that became a lot more important than whatever the cost we found would be associated with it.

TANYA OTT: I moved in my ninth month of a job for my first child, and I gave birth, and I had to be back at work a week later because I had no leave.


TANYA OTT: Yeah. It was intense, and I was 25 so I could tough it out and do it. But it was very intense.

JENNIFER FISHER: Yeah. Like I said, with a child, it's stressful, but when we talk about stress, it's often, you're having a new child, bonding with that child, bringing that child into the world. That's a very positive stress. On the flip side, when you're dealing with a sick family member, that's a whole different type of stress that burns you down and burns you out in a different way.

TANYA OTT: So we're talking about scarcity, and in many ways scarcity presents itself as stress, which can be a really bad thing, but it can also be sometimes a good thing.

JENNIFER FISHER: Absolutely. So often stress does get painted in a bad light. We're all always, I'm so stressed out. But I think, from a scarcity perspective, when you think about stress, there are moments of stress when stress can be very positive in that it does help us focus on what's urgent. When you think about—I'll use a recent example that we can both relate to—an impending hurricane. Hurricane Matthew.

TANYA OTT: I should tell our listeners [that] you're in Miami, and I'm in Georgia.

JENNIFER FISHER: Exactly. So when there's an impending hurricane, you get singularly focused on what it is that you need to do to prepare your family and your home for that hurricane that's coming, and nothing else matters. That's an example of potentially positive stress. I wouldn't say it's positive stress in that we want a hurricane to come—but you get very focused, and you're in a moment, and you get done what you need to get done, and you're tuning out whatever else. Whatever else is going on around you no longer matters.

Stress becomes very negative when it's chronic stress. When you move from stressful situation to stressful situation to stressful situation, and you don't have this (what we talked about before) slack or recovery. Think about a professional athlete. They train all year long to perform for a certain period of time. In the corporate world, we don't train all that much at all, and we're constantly on. We're talking about meeting to meeting to meeting to meeting—you're constantly performing. You're constantly on. So if you don't give yourself that ability to take a dip, to recover, to get those moments of slack, that's when stress becomes chronic. And that's what actually leads to burnout. Before burnout, you get into a scarcity mind-set. So continually making less-than-great decisions or bad decisions, that increases the stress.

It's kind of like this vicious cycle. I think the importance of building slack into the workplace, or recognizing when you need to recover and what are those things, what are those strategies, that are personal to you that help you recover. Everybody's recovery strategies are different. It could be going for a walk. It could be calling a loved one. It could be doing some deep breathing. It could be going for a run. It could be looking at pictures that make you laugh or watching funny videos or movies or TV shows. It could be anything, but what's important is that [it happens] in between those times of stress—which really are good. They help you grow. They help you excel. They help you do better—but you have to have those moments of recovery so that when you do come back you're equally as engaged, you're productive, and you're not going to burn yourself out.

TANYA OTT: Jennifer Fisher and Kelly Monahan take a deeper dive into this issue, including suggesting some techniques you can implement in your workplace, in their article Does scarcity make you dumb? It’s at, where you’ll also find our archive. On a recent show, we talked about holiday shopping trends.

ROD SIDES: What we've found is consumers’ expectations are misaligned to reality. When we ask a question, “Do you think you could order something after December 17 and get free shipping?” 64 percent of the folks said yes. Most people, I think, will be expecting blue skies with no precipitation etc. to be able to get products, and that's just not realistic.

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