How business owners can retain workers in today’s labor shortage

  • Refusal to adapt can become one of the biggest pitfalls for a business owner.
  • Staying in your old habits can frustrate employees, hinder sales, and stunt company growth.
  • Wharton professor Adam Grant suggests that business owners “think like scientists.”
  • This article is part of Talent Insider, a series featuring expert advice to help small business owners navigate a range of hiring challenges.

Even some of the biggest companies that refuse to adapt will eventually fail, said Adam Grant, a Wharton professor and organizational psychologist. The key to a company’s success is the ability to rethink how things are done, which in turn improves employee morale and retention, he added.

One of his first consulting jobs was for the Borders bookstore chain. “I watched this company go bankrupt,” he said during a leadership talk at the Goldman Sachs 10,000 Small Business Summit on July 19. He added that the same patterns are seen at BlackBerry, Blockbuster, Kodak and Toys “R” Us.

“None of these leaders were bad at thinking, they were just too slow when it came to rethinking,” Grant said. “They fell in love with the way they had always done things and didn’t question their assumptions until it was too late.”

Today, amid record high attrition rates, employers must adapt to a changing environment to attract and retain talent. For example, some employees prefer telecommuting, while others seek attractive benefits.

Grant shared how business owners can adapt to ensure this mental stagnation doesn’t seep into your company’s culture and hinder growth.

Build a culture where scientific thinking is encouraged

Too many leaders think like preachers, prosecutors or politicians, Grant said. In other words, when a manager is questioned, he often either convinces others of his own views, attacks someone else’s views, or dismisses opposing views, he explained.

These leadership styles can become markers of a toxic culture within the company and prevent it from growing. “What scares me about all three of these ways of thinking is that you’ve already come to the conclusion that you’re right and other people are wrong,” he said.

Instead, business leaders who think more like scientists make better decisions, he said. “You don’t let your ideas become part of your identity, and you’re as motivated to look for reasons why you might be wrong as you are to look for reasons why you should be right.”

Test your ideas through experimentation

Once you adopt the mindset of a scientist, put it into practice by conducting experiments that test your hypotheses. For example, if you are developing a new work-from-home policy, you may want to survey your employees to better understand their needs.

“If you’re afraid to experiment, then you’re closing the door to learning,” Grant said. “You’ll never try anything new. You’ll never adapt.”

He cited a study conducted in Italy that found that new entrepreneurs who tested their products as experiments generated 40 times more revenue than a control group that did not use scientific thinking. “When you teach a small business owner to think like a scientist, they become more than twice as likely to turn around when things don’t go as planned,” he said.

In contrast, the control group still preached that they were right even when their product failed.

Ask employees for honest feedback

Thinking like a scientist means considering multiple perspectives, Grant said. “You start listening to the ideas that make you think harder instead of just the opinions that make you feel good,” he said. “You also start to surround yourself with people who challenge your thought process instead of just those who confirm your conclusions.”

Grant suggested making feedback a regular part of your company culture. Ask employees for their honest opinions—and show them you’re willing to listen to them, no matter how brutal their input may be.

“You start to hear that a lot of your best practices were created for a world that no longer exists,” he said. Instead of relying on these practices and old traditions, ask, “Are they effective for us in the business environment we’re in now?”

There may be times when stakeholders, co-founders, or staff resist your change efforts. The best way to combat their concerns is to ask questions that will lead to a better understanding of their concerns, Grant said.

“When you’re in scientist mode, you have the humility to know what you don’t know and the curiosity to seek new knowledge.”

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