Why employing a ‘bottom-line mentality’ is dangerous for your firm’s success

Leaders of professional services firms who are driven by profits may actually be hurting their long-term chances to earn, as such a drive contributes to a loss of respect from employees, according to new research.

A new study from Texas-based college Baylor University – The Influence of Supervisor Bottom-Line Mentality and Employee Bottom-Line Mentality on Leader-Member Exchange and Subsequent Employee Performance, which was published in the journal Human Relations – has found that a “bottom-line mentality” (BLM) can lead to a loss of respect and loyalty from staff.

Based on the responses and the data collected and analyzed, the researchers found:

• High-BLM supervisors create low-quality relationships with their employees;
• In turn, employees perceive low-quality leader-member exchange relationships;
• Thus, employees reciprocate by withholding performance;
• When supervisor BLM is high and employee BLM is low, the damaging effects are strengthened; and
• When both supervisor and employee BLM are high, the negative performance is still evident.

“Supervisors who focus only on profits to the exclusion of caring about other important outcomes, such as employee wellbeing or environmental or ethical concerns, turn out to be detrimental to employees,” said lead researcher Dr Matthew Quade, assistant professor of management in 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.”

In conversation with Wellness Daily, Mary Digiglio, the managing partner of mid-tier law firm Swaab, said that while professional services firm need to be financially successful in order to keep their people employed, engaged and part of a positive working experience, “the culture of an organisation can be stripped naked with a focus on BLM as the first priority, to the exclusion of other people-focused considerations”.

“In professional services, the human capital is an organisation’s greatest asset. It is not the quality of bricks, tiles or window frames used, as is likely to be the case for a construction company. For professional services, the financial success of a business is directly linked to the quality of its human capital and very little else,” she outlined.

“If an employer is not investing in and nurturing its human capital but is rather prioritising bottom line first mentality, the organisation is conveying an odd message to the psyche of the people who are the sole deliverers of the output required for that organisation to achieve the bottom line result.”

“People have emotions – this is a fact. People have lives outside of work, challenges, celebrations, peaks and troughs – people respond positively to care and kindness and an interest in promoting their overall wellbeing. If an organisation adopts a clinical, black and white philosophy of success being a product only of the bottom line, the organisation runs the risk of people making choices to move on, resulting in a loss of continuity, corporate knowledge, culture and an increase in attrition, low morale and lack of loyalty and commitment,” she added.

Humans respond to feelings and emotions, Ms Digiglio continued, which are largely generated from the environment in which they function, she said.

“An inclusive environment which builds trust, offers empowerment and promotes respect and collegiality generates human emotions, which promote confidence, commitment, loyalty and responsibility. In the main, people have a similar bandwidth of emotional needs and desires,” she posited.

“It sounds simple, but people who feel they belong, have something to add, are trusted, respected and cared for are motivated to reciprocate with positive behaviour. In my view, reciprocal loyalty and trust is not lost in today's world and is not a foreign concept to our Millennials.”

When asked how professional services firms can practically and effectively balance the business’ bottom line together with staff productivity and performance, Ms Digiglio said team leaders must accept that not everyone will work in the same fashion or is motivated by the same things.

The key, she surmised, is balance.

“It is important that an organisation’s expectations of its people are properly communicated, understood and monitored. To think this specific communication is not important (or to shy away from the hard conversations) is naïve to what it takes to gain respect and have a successful business,” she said.

“However, the following are equally important: ensuring communication about expectations is clear and concise and is on ongoing two-way conversation, promoting the organisation’s culture continuously through the behaviour of the leaders (e.g. what the firm stands for and how it lives out its values), establishing and communicating a definite leadership structure so that people are not left wondering to whom they are accountable (e.g. reporting lines, workflow and accountability), communicating clearly and often an organisation’s staff benefits (e.g. salary continuance insurance, flexible working, social events and subsidies, flu shots, financial planning education), developing and implementing growth and development plans for people – oh, and don’t forget to tell them about it, and recognising the value that each person brings to the organisation and rewarding that value.”