Managing “Scarcity Traps” in Your Team

We are living in a time of unexpected scarcity. The basic resources, routines, and stability that we once took for granted now seem in short supply. Under these conditions, it is easy to fixate on what we don’t have or what we might lose moving forward. When this happens, we put ourselves at risk for what behavioral economist Sendhil Mullainathan calls “scarcity traps.”

When we get stuck in scarcity traps, our brains become hijacked. We tend to focus excessively on the short-term and on surface-level problems. Through our tunnel vision, we fail to think through situations rationally and strategically. This leads to poor decisions, with a prime example being the panic-buying seen in the wake of COVID-19.

But scarcity traps don’t just affect individuals. They impact teams, too. As a leader, you need a plan for preventing and working through scarcity traps with your team. We’ve put together three tips to get you started.

1 Respond proactively.

While scarcity is sometimes planned, it often catches leaders and team members off guard. Without effective ways to cope, people quickly fall into scarcity traps and start acting in unexpected ways. For instance, team members who used to be calm and collected suddenly become moody and anxious. Or thoughtful employees begin making rash and senseless decisions. The worst thing a leader can do is sit by idly while their team transforms before their eyes. Scarcity requires a rapid and proactive response. To start:

  • Conduct an “asset inventory.” Even in times of scarcity, you often have some assets (e.g., cash, clients, knowledge, people) still at your disposal. Truly knowing what you have is the first step to leveraging your assets efficiently and strategically.
  • Fight scarcity with abundance. Determine where the biggest scarcity pain points are for your team, then find creative ways to leverage your assets to meet those needs. Remember to show abundant care and support, which are some of your most “renewable resources.”

2 Manage negative spirals.

In teams, scarcity begets scarcity, as team members deplete their mental and emotional energy coping with the situation. This exhaustion often morphs into negativity, which can quickly spread throughout the team, creating feelings of mistrust, conflict, and confusion. Leaders have to step in and manage these reactions before they spiral out of control. So, take time to:

  • Monitor the team closely. Listen for signs of complaining, misunderstandings, subtle disrespect, and frustration. To take this to the next level, use anonymous feedback tools like TeamPulse.
  • Manage the team directly. When you see unacceptable behavior, address it as quickly as possible. Label the behavior respectfully and objectively, without character accusations. Provide alternative solutions and establish clear expectations moving forward.

3 Model rational decision-making.

Under scarcity, the default reaction is to focus on the crisis and move as quickly as possible to address it. But, this can result in shortsighted decisions that jeopardize long-term success. As a leader, you need to model thoughtful, rational decision-making practices for your team. To do this make sure you:

  • Define the entire problem. When solving a problem, question your initial read of the situation. Ask five “whys” to drill deeper into what is really going on before trying to find a solution. Incorporate your asset inventory to help you have a better read on your options.
  • Leverage good process. Problem-solving can be broken down into (1) problem definition, (2) idea generation (e.g., brainstorming), (3) idea evaluation, and (4) idea choice. As much as possible, make these distinctly separate steps. A common mistake under scarcity is to try to save time by skipping or combining steps. Inevitably, this results in confusing, subpar decisions.

A final note. Sometimes, scarcity traps can seem too big to escape. If you’d like help and support leading your team through scarcity, get in touch with one of our coaches.