Bottom-line Mentality Has Negative Consequences

Dr. Matthew Quade
Dr. Matthew Quade

Excessive concern for profits could hurt supervisors’ coveted bottom lines, a study shows. Dr. Matthew Quade, assistant professor of management in Baylor’s Hankamer School of Business, was the study’s lead researcher.

“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 employers,” Quade said. “This results in relationships that are marked by distrust, dissatisfaction and lack of affection for the supervisor. 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.”

The study, The Influence of Supervisor Bottom-Line Mentality and Employee Bottom-Line Mentality on Leader-Member Exchange and Subsequent Employee Performance, was published in the journal Human Relations (July 24, 2019). Quade was joined in the research by Dr. Benjamin McLarty (Mississippi State University) and Dr. Julena Bonner (Utah State University).

Other studies have examined the impact of bottom-line mentality (BLM) on employee behavior, but Quade said this is the first to identify why employees respond with negative behaviors to supervisors they perceive to have BLM.

The research team surveyed 866 people: half were supervisors, and half were their respective employees. Data was collected from those who work in a range of jobs and industries, including financial services, healthcare, sales, legal and education. Researchers measured supervisor BLM, employee BLM, task performance and leader-member exchange — the rating employees gave of their relationships with their supervisors.

Employees rated their supervisors and
leader-member exchange by scoring statements on a scale. Supervisors also scored on a scale statements about employees performance.

Collected data revealed that high-BLM supervisors create low-quality relationships with their employees, who in-turn perceive low-quality leader-member exchange relationships and reciprocate by withholding performance. When supervisor BLM is high and employee BLM is low, the damaging effects are strengthened. When both supervisor and employee BLM are high, the negative performance remains evident.

Quade said the last finding is particularly significant because it contradicts a common belief that when two parties think alike and have similar values, there will be a positive outcome. Not so much in the case of BLM, the study shows.

Researchers noted that “when supervisors 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 study also revealed that employees who maintain a BLM prefer managers who focus on interpersonal aspects of the job.

The profit-performance relationship can spark a conundrum for companies, Quade said, because organizations want to be profitable, and performance is an important indicator of an organization’s health and vitality.

Researchers suggest a few practical steps for leaders who believe a negative BLM dynamic exists in their organization. First, they should be cautious of a BLM approach or emphasizing bottom-line outcomes that could neglect other organizational concerns. Managers also should be aware of the message they pass along to employees when they tout bottom-line profits as the most important consideration. Lastly, researchers suggest organizations that need to emphasize bottom-line outcomes should consider pairing the BLM management style with other management approaches known to produce positive results, such as practicing ethical leadership.

“Supervisors undoubtedly face heavy scrutiny for the performance levels of their employees,” researchers said. “As such, they may tend to emphasize the need for employees to pursue bottom-line outcomes at the exclusion of other competing practices, such as ethical practices, personal development or building social connections in the workplace. However, in doing so, they may have to suffer the consequences of reduced employee respect and loyalty.” 