I’ve always been curious about whether a small business owner can be successful by projecting on to his or her employees the importance of the bottom line. Now we have an answer.
A research study co-authored by Rutgers School of Management and Labor Relations Professor Rebecca Greenbaum reveals that while a tunnel vision-like focus on the bottom line can lead to dysfunction and unethical conduct in the workplace, it also sometimes pays off.
The researchers conducted a global survey of more than 400 workers and their clients across a wide range of industries to understand what happens when top management adopts a “bottom-line mentality,” in which the narrow focus on a single goal—typically profits—outweighs all other organizational values. The findings reveal that some employees do break the rules in a bottom-line environment, but others actually sharpen their focus on work and deliver superior customer service.
“This is risky business because it could go either way,” Greenbaum said. “A leader’s exclusive focus on the bottom line may inspire employees to improve their performance, or propel them to lie to customers to close a sale. The ‘bottom-line’ is advanced in both cases, but with very different implications for the organization’s long-term success. Unethical conduct typically is not sustainable.”
Greenbaum cites the example of former Wells Fargo CEO John Stumpf, whose “eight is great” mantra encouraged employees to sell at least eight products to each customer. Driven by sales targets and lucrative bonuses, more than 5,300 employees opened accounts without customers’ permission. The employees were terminated and Stumpf retired amid the scandal.
“The bottom-line mentality is not limited to the corporate world,” Greenbaum said. “A New Jersey hospital made headlines this month for needlessly keeping patients on life support in order to hit bottom-line survival rate targets. In the college admissions scandal, celebrity parents committed fraud to get their kids into elite schools. And sports franchises have signed dysfunctional ‘star’ players for the sake of winning more games. Adopting a bottom-line mentality to get what you want often comes at the expense of ethics.”