Bottom-line mentality and its implications for leaders

Introduction

In my last article I wrote about directionality in leadership – the notion that leaders benefit from creating some kind of goal, vision, or purpose that helps them animate and motivate others.

In the process of researching that article, I came across another concept that seemed highly related to directionality – bottom-line mentality (BLM). BLM seemed like it could function as a leader’s goal, or higher-order purpose that they infuse into a company. Despite BLM’s relevance to directionality and leadership, I omitted it from the last piece so as not to make a long article painfully longer. Now I’d like to return to it here.

In this article, I’d like to introduce the concept of BLM and explore it's various implications for leaders. I’ll define what it is, summarize what outcomes it produces, and explain how BLM’s narrowness of focus on a single goal may be more problematic than its profit motive. I’ll also provide some practical suggestions for how leaders can use an awareness of BLM to their benefit.

I also want to add that most of my thinking on this topic has been distilled from an excellent article on this topic by Rebecca Greenbaum, Mary Mawritz, and Nazifa Zaman – and I thank them for their work and inspiration on this. 

What is BLM?

BLM involves one-dimensional thinking that revolves around securing bottom-line outcomes to the neglect of competing priorities. It entails a sole focus on creating financial benefit for the organization, to the exclusion of all other considerations.

BLM also involves devaluing ethical or people considerations, externalizing them away and rendering them someone else’s responsibility, with mindsets like ‘it’s all a game,’ ‘it’s not my job’ or ‘it doesn’t matter who gets hurt along the way.’

Because only one outcome matters to those with a BLM, it often leads to zero-sum or win-lose thinking. A feeling emerges that there is a finite amount of ‘winning’ that can be secured, and therefore any given individual doesn’t want to be on the losing side. As you might expect, and as I’ll outline later, this mindset can lead to dysfunctional team dynamics amongst coworkers (e.g., hiding information from colleagues to impede their success). BLM can also lead to unethical behaviour in an effort to ‘win’ at all costs.

Another characteristic of BLM is that it involves a short-term mindset. The narrowness of thinking involved in BLM extends to disregarding the long-term implications of decisions/actions.

You may notice that BLM conflicts with a common practice among organizations to measure their performance and value creation in multiple ways (i.e., including non-financial).

BLM also stands in contrast to notions of organizational purpose and corporate social responsibility, which both involve establishing broad interdependent links with society at large, and a focus on moral and ethical action.

Is it a mindset? Is it a culture? It’s both!

You may be wondering if BLM is something that a person or leader can adopt, or whether it represents a cultural orientation for an organization.

In fact, it can be both. BLM has been defined as an individual mindset that compels a person to organize their goals and priorities according to the primacy of a financial objective. BLM can also manifest at the group-level; top management teams can display consensus in holding BLMs, and organizations can also define their principles and values in this manner.

Trickle down BLM

Data also supports that BLM can trickle down from leaders to employees, most likely through a role modeling process. It’s well established that employees refer to leaders to detect cues on standards for behaviour and cultural norms, and researchers show this pattern persists in the transfer of BLMs from leader to follower.

What happens when leaders adopt a BLM?

Research findings suggest that when leaders adopt a BLM it might improve performance among team members, but regardless it exerts a clear negative impact on team dynamics, psychological well-being, and ethical behaviour.

Related to performance, some studies have found that a leader’s BLM generates higher employee performance, including more commitment, effort, and helping behaviours. However, these findings are inconsistent, and stand in contrast to others that show nonexistent effects, or undesirable performance outcomes like reduced employee innovation, or dysfunctional decision making.

In contrast, when examining team dynamics, psychological well-being, and ethical impacts, the findings are robust.

In terms of team dynamics, higher leader BLM led to the following:

1. Social undermining;
2. Knowledge hiding among employees;
3. Negative reciprocity (i.e., one party provides a lack of support or mistreatment, which is then reciprocated by the other party);
4. Lower psychology safety;
5. Perceptions of lack of fairness;
6. Increased silence at work;
7. Increased territoriality (i.e., employees protecting their own resources);
8. Increased focus by leaders on their personal goals, and less on goals that would help employees meet broader organizational objectives;
9. Decreased belief among leaders that they’re required to enact servant leader behaviours;
10. Decreased perceptions of servant leadership behaviours among employees.

Higher levels of leader BLM also predicted the following psychological impacts:

1. Increased feelings of work-family conflict;
2. Increased feelings of work-family conflict by the spouse of the employee working under the leader with high BLM;
3. Increased emotional exhaustion;
4. Reduced self-regulation skills;
5. Increased feelings of employee meaninglessness;
6. Increased feelings of dehumanization.

Higher levels of leader BLM also predicted the following ethics-related outcomes:

1. Employee moral disengagement;
2. Unethical conduct;
3. Increased cynicism about the organization, which led to employee cheating.

But is BLM all that (morally) bad?

Ok, the downstream impacts of BLM aren’t pretty, but is it wrong to have a BLM? This was a question I kept asking myself as I was reviewing the BLM research.

After all, some organizations exist primarily to make money – that’s their right. Many roles within organizations also exist to generate bottom-line results (I’m thinking of many in sales, though also some general manager positions). And often senior executives receive performance evaluations and compensation heavily weighted towards their ability to generate profit.

Furthermore, some people are highly motivated to make money – it matters to them, they enjoy it, or they find the ‘game’ of capitalism intrinsically fascinating. These types of people may seek out like-minded companies to work for, or shape their own firms around these values. What’s wrong with that?

In addition, in some cases, BLM does increase performance. This seems intuitive, because BLM creates clarity about the goal, and how progress will be measured. Perhaps it helps employees prioritize their activities, and disregard any ‘noise’ that doesn’t propel them to their goal. Perhaps BLM focuses the mind like nothing else?

It could be that the key question is not to ask whether BLM is morally good or bad, in and of itself. People are free to pursue wealth, in fact that’s desirable. Rather the key question may be ‘what do we think about the fact that BLM provokes unethical behaviour, and maladaptive team and relational dynamics?’ Do we care about these downstream impacts, and if so, how much?

One interesting thing about BLM is that it doesn’t involve the direct mistreatment of employees by leaders – it’s not inherently immoral as a leadership or behavioural style. It’s not interpersonally ‘gross’ like many other forms of destructive leadership. YET, it fosters unethical behaviour in others, which might erode organizational cohesion in subtle but still injurious ways. While these downstream effects seem ‘squishy’ and don’t appear like a flashing neon sign on the balance sheet or P&L statement, undoubtedly they introduce risks (i.e., legal and executional) into a business.

Narrowness is the real problem

So if a focus on the bottom-line is not the problem with BLM, what is the problem?

The negative follow-on effects of BLM may derive more from the narrowness of the focus, not from the preoccupation with financial gain per se. BLM is unique in part because it involves a sole focus on a single goal, to the total exclusion of all else.

And in fact, narrowness could apply to domains other than ‘the bottom-line’ or the financial health of the organization. For example, a person could have a BLM for prestige/power, whereby they seek elevated status to the exclusion of relational or ethical considerations. Someone may hold a BLM for ‘winning at any cost,’ even if it involves cheating, or inflicting financial or reputational self-harm. Yet another type of BLM could relate to projecting competence, to the point where fabricating details about their skills seems acceptable.

A BLM could also involve overfocusing on one functional area of a business (e.g., sales, manufacturing/engineering, safety) to the total exclusion of all others. If you focus too much on sales, you may ignore safety. And if you focus too much on safety, you may ignore sales.

The suggestion here is that narrow hyper-focusing on a single goal introduces tradeoffs that may be maladaptive to the organization. It may also lead to disregarding important data that could benefit many organizational objectives.

But isn’t hyper-focusing on a goal good?

We usually think focusing on what we want, and increasing the specificity of our goals is desirable. In fact, goal setting theory clearly states that high quality goals need to be specific to be effective.

If specific (and difficult) goals produce the best performance outcomes, why does research show such a massive negative impact of BLM on employees and team functioning?

I’m guessing that BLM creates a pressure to perform on a single metric, which can be unforgiving (i.e., ‘I need to succeed otherwise I’m a failure or a loser’), in a context that might be ruthlessly competitive and perhaps dehumanizing (i.e., ‘you don’t matter as a person, all that matters is whether or not you achieve this goal’).

Goldilocks BLM

Interestingly, some research (though only a single study) found that ‘moderate’ amounts of a leader BLM (not too much, but not too little) has the greatest positive effect on employee performance.

If this trend is valid, it would converge with a considerable body of work showing moderation in leadership contributes to effectiveness.

Is BLM a useful tactic for simplifying complexity?

I can imagine a leader in the heat of a debate on a multifaceted issue, and in the face of time pressures, feeling the need to ‘just focus on the thing that a) matters most AND b) can be measured.’

It could be that when wrestling with the complexity of their work, leaders adopt a BLM as a simple, mental short-cut that helps them ‘cut through’ extraneous data points while addressing what they believe is the core issue. This approach is certainly rational and reasonable.

One caution to this method, however, might be that leaders sometimes overweight the importance of quantifiable and measurable phenomena. (It’s interesting to note that BLM’s positive potential consequence – i.e., improved financial performance - is highly measurable and visible; yet many of BLM’s negative consequences – i.e., team, ethical, and psychological dysfunction - are difficult to measure, and perhaps easy to miss or even discount.)

This reminds me of an adage coined by Henry Mintzberg, former management professor at McGill University, who suggested that business leaders often revere ‘hard’ data (i.e., quantified information, usually in the form of statistics), without recognizing their ‘soft’ underbelly. What he meant was that while hard data can be attractive because they conveys certainty, there can be more subjectivity embedded in objective and numerical measurements than it appears.

 In particular, he pointed out several limits of hard data:

1. There can be considerable judgment, or even distortion involved when assembling hard numbers.
2. Hard data don’t explain why; you often need soft data (informal opinions, hearsay, gossip) for that.
3. Hard data are often aggregated from several sources and therefore lose their nuance.
4. Hard data take time to gather and formalize, yet soft data may be more real-time and relevant in the moment.

I’m not discounting the importance of the bottom line. It’s critical to most organizations, no one can question that. My point is that some of its allure may arise from its perceived objectivity. But there may be many other phenomena in organizations that aren’t as easily measured or quantified, which may ALSO exert significant influence on a firm’s performance.

Rather than being seduced by the simplicity of attending to factors that contribute to financial results only, leaders may benefit from asking what other phenomena exist which can’t be quantified, measured, or ‘seen’ as easily, and which may nonetheless be valuable to consider.

Practical suggestions for leaders

If you are going to focus on a single, narrow goal like the bottom-line, recognize the tradeoffs, including a possible erosion of team functioning, psychological well-being, and ethical standards (and perhaps take steps to mitigate those downsides).

Also, if you adopt a BLM, this may cause you to disregard many other types of important data that could be valuable, on the basis that they don’t appear relevant to the ‘bottom-line.’ In this case, you will need to work harder as a leader to examine what perspectives, data, and variables you may be discounting, which may nonetheless be relevant to your success.

If possible, consider diversifying your goals across many areas of performance – e.g., financial, processes, learning and development, customers, team functioning, psychological well-being, ethical practice, sustainability, etc. – to moderate pressure related to achieving any one goal, and to preserve team dynamics.

This is a little speculative on my part, and maybe I’m grossly overgeneralizing, but I wonder if many organizations experience two subcultures related to BLM. I wonder if at senior levels of organizations, where most executive performance and compensation is tied to clear financial outcomes, a BLM may be more common. Yet at lower levels of the company, it could be that employees care more about the experience and quality of their work life, including many areas unrelated to bottom-line performance. If true, leaders (especially VPs who sit in the middle of the matrix) should be prepared to straddle these two subcultures, represent the interests of both, and serve as the communication conduit between them.

Final thoughts on BLM and purpose

Finally, I first encountered the notion of BLM as I was researching organizational purpose, and I’d like to conclude by ‘returning to the beginning.’

To me BLM represents an interesting mirror image of purpose.

BLM contains a narrow focus on a single goal; purpose involves pursuing many goals.

BLM involves pursuing benefit for the organization only; purpose involves achieving mutual benefit for both the company and the broader society.

BLM contains a sole focus on creating financial benefit; purpose involves creating many non-financial benefits.

BLM externalizes any moral/ethical concerns (‘this isn’t our responsibility, it’s someone else’s problem’); purpose integrates morals/ethics into the organizational environment while elevating their importance.

BLM only values people to the extent they contribute to the goal; purpose suggests all people, internal and external to the organization, possess inherent value.

In the end, it seems that BLM represents a kind of purpose, though one radically different than how many organizations think about this term today.

Conclusion

I hope these ideas encourage you to think more deeply about the directionality you bring to others as a leader, in particular how a leader's BLM can impact others.

As always I would welcome your feedback on anything you read, and I would love to learn from your perspective.

To share you thoughts you can leave a comment at the end of the article, or if you prefer you can also email me your feedback at tjackson@jacksonleadership.com.

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Tim Jackson Ph.D. is the President of Jackson Leadership, Inc. and a leadership assessment and coaching expert with 17 years of experience. He has assessed and coached leaders across a variety of sectors including agriculture, chemicals, consumer products, finance, logistics, manufacturing, media, not-for-profit, pharmaceuticals, healthcare, and utilities and power generation, including multiple private-equity-owned businesses. He's also worked with leaders across numerous functional areas, including sales, marketing, supply chain, finance, information technology, operations, sustainability, charitable, general management, health and safety, quality control, and across hierarchical levels from individual contributors to CEOs. In addition Tim has worked with leaders across several geographical regions, including Canada, the US, Western Europe, and China. He has published his ideas on leadership in both popular media, and peer-reviewed journals. Tim has a Ph.D. in organizational psychology, and is based in Toronto.

Email: tjackson@jacksonleadership.com

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