Managers are supposed to focus on the bottom line, but new research suggests that kind of focus that may end up costing companies in the long run.
Managers can get a heightened sense of their own power when they are pushed to zero in on bottom-line issues such as headcount, budget control and worker bonuses, according to a recent experiment from New York University's Stern School of Business and Cornell University's Johnson School of Management.
"As resources become more finite, then there is a pecking order of who gets more. That gets everyone more focused on power," says Steven Blader, associate professor of management and organizations at NYU.
Managers who feel more powerful are more likely to treat workers unfairly and have less concern about fairness when making decisions, the research finds.
Still, researchers found another kind of manager does focus more on fairness, managers who cared more about how others perceive them.
And a manager seen as being more fair is more likely to have an engaged workforce that delivers better bottom-line results, Blader says.
"The takeaway from this is that companies need to get their managers more focused on what their colleagues and subordinates think about them," he says.
While some companies use a 360-degree feedback process that ranks manager performance on feedback from customers, colleagues and staff, managers need to make sure they're also focused on treating workers fairly even as their company wants them to get bottom-line results, Blader says.
Unfortunately, the sluggish economy may make such a task even more difficult.
Bosses are encouraged more than ever to focus on keeping staff lean and to limit compensation, which can lead to an elevated sense of their own power as they weigh in on pay raises or bonuses.
But when companies are struggling to be competitive, they need to focus most on innovation and collaboration in the workplace. If employees think that management isn't treating them fairly and is focused only on the bottom line, they are less likely to be engaged, offer creative ideas or collaborate with team members all critical elements of success in a tight economy, he says.
Blader says he became interested in conducting these experiments based on his previous work looking at what engages and retains workers. He contends that companies can't hold onto talent only with incentives or compensation, and a company populated with power-grabbing managers may indeed sink the ship.
"We're not trying to create a popularity contest. Employees understand that managers have to make tough choices, but they're looking for someone who is thoughtful and deliberative and deals with issues head on," he says. "They want someone who is fair and willing to explain their decisions."
One interesting development: the newest generation of bosses may have the greatest chance of changing the workplace.
Through social networking like Facebook and Twitter, young managers are more status conscious and aware of employee opinions. They may solicit feedback and ideas from workers through such channels and are used to working collaboratively to reach decisions.
They also may use such networks to share their decision-making process, which can lead to workers feeling that they are being treated fairly.
While no managers want to believe they have become power-hungry ogres, how can they know if they've crossed the line? If a formal 360-degree feedback process isn't in place, Blader says a manager should try to solicit feedback from employees.
"Pay attention to even subtle signs from workers," he says. "Look at their reactions when you ask them how you're doing. Recognize that they're probably apprehensive of giving you feedback, so just try to be a little more attentive to how people are reacting to you."
Anita Bruzzese can be reached c/o Gannett ContentOne, 7950 Jones Branch Drive, McLean, VA 22107.