I took a director-level position in a new company that had just gotten funded by a private equity firm. All the interviews went really well, since the company was focused on growth and increasing top-line revenue. But after I joined, the exact opposite happened.
The company decided to prioritize bottom-line revenue instead. The leaders grew obsessed with profit to the point that, instead of flourishing, we started to decline. We made cuts instead of investments. We focused on numbers instead of new ideas.
I'm OK with cutting the budget to be profitable, but this company also let go of our best talent because these people were "too expensive." It turns out when you drain the company of its best resources, it starts to decline rapidly.
That's not just my experience. A new study from Baylor University says focusing on the bottom line gets poorer financial results than investing in your team. Here's what you can do about that.
What is bottom-line mentality and do you have it?
Managers with a bottom-line mentality (BLM) focus on profits to the exclusion of other important organizational metrics such as ethics and employee well-being. When you focus on the bottom-line figure of profit without considering your top-line gross sales figure, your employee satisfaction, and your general growth, you have BLM.
Many young leaders think bottom-line revenue is all that matters, but many seasoned executives I've spoken to say you should focus on the top line first. You can make a profit later.
Do you suffer from BLM? Baylor's study suggests one way to know is to check your team's satisfaction and productivity. Your employees don't have to love you like family, but they should find their work fun, positive, collaborative, and creative. When those factors line up, employees will work hard and smart to deliver the bottom-line results that keep you in business.
Are your team members withholding their best performance?
Baylor's researchers found that employees gave their best performance to managers they liked. Those same employees also said they valued a give-and-take relationship with their supervisors and worked harder because of it. The researchers found a clear positive correlation between top performance and supervisor respect.
But they dug deeper and discovered that when a supervisor has BLM but employees don't, the problems grow. As soon as your focus shifts to the bottom line and away from other metrics, your company will start to wither.
It's like I've said before: Empathy is the quickest path to success. You've probably said that too. But talking about empathy is a lot easier than actually practicing it in the workplace. If you want to make money, however, you'll need to make that transition.
Build a culture people want to work in. Hire employees who are committed to personal growth. Help your team leaders reimagine their role as employee coaches instead of profit churners. It'll pay off.
Even if both your team and your managers have BLM, you're still losing money
Baylor's most surprising finding was that when both supervisor and employee BLM are high, you still get negative results. "No degree of supervisor BLM seems to be particularly beneficial," the researchers wrote. Their findings contradict the conventional wisdom that says if you think alike, you'll get better results. In fact, if your team's thoughts are misdirected, it doesn't matter how in sync they are. They're still unproductive.
Too much bottom-line focus builds up your ego, and a built-up ego doesn't produce the results you want. To avoid BLM, have your managers focus on how their peers and subordinates view them, not on how much money they've made or saved for the company over the years. Your team leaders can find out how they're viewed through a formal blind survey or just by watching for visual cues.
I've been an employee, a team leader, and an entrepreneur. I know how tempting it is to lock in on profitability as the single metric of success. But I also know the positive impact a culture of strong manager-employee relationships can have on that bottom line. It's worth making the shift.