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The HR News Wire: When Focusing on the Bottom Line Backfires

02 August
by Josh Hrala
4 minute read

Welcome to The HR News Wire, a series where we examine some of the biggest HR stories. This week, we look at new research about bottom-line mentality - also known as BLM - and how it backfires.

When managers and supervisors care too much about the bottom line and not enough about other important factors - like employee wellness - the bottom line actually suffers, according to a new study.

This counter intuitive finding suggests that if managers really want to increase the bottom line, they need to first focus on their staff members and other big picture things instead of always chasing the dollar.

"Supervisors who focus only on profits to the exclusion of caring about other important outcomes, such as employee well-being or environmental or ethical concerns, turn out to be detrimental to employees," said lead researcher Matthew Quade, from Baylor University's Hankamer School of Business.

"This results in relationships that are marked by distrust, dissatisfaction and lack of affection for the supervisor. And ultimately, that leads to employees who are less likely to complete tasks at a high level and less likely to go above and beyond the call of duty."

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In other words, employees can see through these types of managers. They feel like managers do not care about them and are driven only by profits, which - in turn - leads to employees not trusting their managers and performing at a lower level. The researchers phrases this as "withholding performance."

These findings help to backs up anecdotal evidence that many of us have probably felt and adds to previous research about 'bottom-line mentality' (BLM). However, this is the first study to find that employee's actually react with negative behavior towards this type of management style.

The Study

To come to their conclusion, the team surveyed nearly 900 people, dividing that pool between managers/supervisors and their staff members to get both sides of the coin.

They then took measurements to gauge manager BLM, employee BLM, and 'task performance and leader-member exchange.' At the end of the day, the team was able to create a rating based on what employees thought of their managers and vice versa. This then allowed them to examine the different levels of BLM and see if there was any correlation between outcomes.

They did this for both the employee and the manager. So, for example, the manager may rate an employee by saying that they met and/or exceeded expectation, while the employee may rate the manager on how much they believe the manager cares about them and things of that nature.

Basically, the team wanted to see how BLM impacted these questions. Would, for instance, higher BLM lead more employees to rate their managers in a non-caring way? And, if so, would that mean that the bottom line suffers?

The Results

Once all of this data was collected, the result was clear.

According to the team, higher BLM supervisors created a lower quality relationship with their employees. These employees also perceived low-quality leader-member exchange relationships and, therefore, 'withheld performance.'

That last bit is very important. This means that when a manager is perceived to be less caring and more concerned with the bottom line, the employees recognized that and literally didn't work as hard for that manager.

The study also found that these two forms of BLM extend to both parties. For example, they found that managers with high BLM and employees with low BLM made performance the worst, but they also found that when both the manager and the staff member share similar levels of BLM, there is still evidence of negative performance.

That's an incredible find because you'd think - logically - that if both parties are driven by the bottom line, they'd both put more energy into increasing it. However, that is simply not the case. It turns out that not caring about people is always bad no matter how each party feels about the bottom line.

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"When supervisor and employee BLM is similarly high, our research demonstrates the negative effect on performance is only buffered, not mitigated—indicating no degree of supervisor BLM seems to be particularly beneficial," the team said.

"It seems even if employees maintain a BLM, they would prefer for their managers to focus on interpersonal aspects of the job that foster healthier social exchange relationships with their employees in addition to the bottom line."

The Takeaways

So what are managers supposed to do when confronted with these issues? After all, isn't it part of management's job to get employees to be productive in order to increase the bottom line?

The team suggests that the best solution is to understand that the bottom line will increase not by focusing solely on how to increase it by a numbers perspective. Instead, managers need to understand that treating workers well and having ethical standards will increase the bottom line instead of hurting it.

They also say that managers need to be extra careful of the messaging they are using towards employees. If employees see that their manager only cares about the bottom line, they will likely rebel even if they too care about it.

When all is said and done, the team recognizes that managers and supervisors are often pressured from upper management to increase productivity, but the fact is that many of these very pushy and, frankly, inhuman ways of doing business hurt instead of increase productivity.

If employees are treated right and respected by their bosses, they will perform better and - most likely - stick around longer.

The study was recently published by Human Relations. Read the full thing here.

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