To error is human, and there are times when simple mistakes are made to cause a major issue. However common it may be to fault, it can also have an impact on business. Often, a state of scarcity can cause talented professionals to do dumb things.
Time pressure can make even the smartest person seem incompetent. As some research suggests, people have a limited capacity for making good decisions, and a state of what is called scarcity can drain us of the limited capacity we have.
In the boardroom, this becomes extra important to pay attention too, as the governance decisions being made are impacting a large scale of business.
Handling the scarcity mindset
In a publication from Deloitte, the question is asked if scarcity will make you dumb. The answer to that is no, but there are issues with the “scarcity mindset” that can be damaging to business and decision making.
Scarcity in psychology works much as the term in economy. The scarcity phenomenon, when focusing on social behaviour, means that humans put value on an item based on how easily it can be lost. It occurs when someone is lacking a skill that is considered important, and causes them to focus on acquiring something in the short-term which often leave them worse off in a long-term perspective.
Shortly said, making stressed decisions can be harmful. In order to make sure that business is governed properly, it is important to make sure everyone who is concerned regarding decision making is up to date and keeping a sharp mind.
Scarcity and decision making in a digital age
With the digital transformation, stress has become a high factor at work. And as described in the article from Deloitte, stress can be a trigger factor for bad decision making.
Scarcity exhausts the mind. It can trick someone to believe they are staying on focus, that they have all the facts and competence needed and making the best decision possible. In reality, this may not be true.
With a digitalisation where there’s a necessity to stay connected most hours of the day, this can become problematic. A decision hastily made can be spread throughout and implemented in a company in no time.
HOW TO STEER AWAY FROM BAD DECISION MAKING
A good antidote for the scarcity mindset is to create slack in the work environment. When someone is overly tired and stressed, that is when the bad decision making makes an entrance. To keep on track to what should be done and stay effective there are some core rules:
- Define core missions and goals. Clarity about a bigger picture is known to give focus.
- Evaluate timing – plan to make decisions when the mental capacity is high.
- Acknowledge the need for mental rest.
- Minimise distraction and interruption by planning to go offline from emails and internet while completing important tasks.
- Fight the tendency to be overly expectant about the big demand, and break large projects into small, step-by-step commitments.
Keep on your toes with DiliTrust Software
Learning how to manage time can be tricky, especially for people who have a lot on their plate such as business directors. With a digital assistant keeping track of old documents, minutes and votes, the task becomes easier for board members. The DiliTrust Exec board portal is there for such type of tasks and more. It will help to keep board meetings streamlined and documents up to date, while keeping the strict confidentiality chain.
Learn more about the subject and read “Software alongside man: when corporate governance excels“.