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Why passion for an organisation is integral to success

November 16, 2016
Management

  ​Soccer fans show how emotional ties affect financial management 

Imagine if all your customers were as passionate as fans of a major-league soccer team? How wonderful it would be if they chanted and sang about your brand, if they proudly wore your colours and did everything in their power to ensure the success of your business. 

How powerful it would be if they showed a personal interest in the management of the company and the staffing of your business teams, bought into your brand (both literally and figuratively) and helped you attract the best talent from around the world. 

It's a lovely fantasy, but it may not make life as simple as you think, says Jane Baxter, an associate professor in the school of accounting at UNSW Business School. In fact, increasing levels of passion for a business, product, brand or team can make things very complicated. 

Consider a recent derby match between two Stockholm soccer clubs. As the home team headed towards its 15th successive defeat against their local rivals, fans in a section of the stadium began to riot. 

Flag sticks were thrown like spears on to the field. Pyrotechnic devices were set off and soon a full-scale fight broke out between fans and security staff. In a video of the event it appears as if an entire corner of the stadium was set alight. 

When the trouble died down, the home team's highly capped goalkeeper admitted he would never dare take his children to a Stockholm derby match. Enormous passion, pent-up emotion and great expectation is a dangerous cocktail, he believed. According to Baxter's research, he was correct. 

Baxter and her colleagues – Martin Carlsson-Wall, Kalle Kraus and Wai Fong Chua – used a Swedish soccer club as an in-depth case study to figure out how the passions and actions of many come together to influence the decisions of a few. They were looking into the way the emotions of fans influenced financial decisions made by the club. 

Passionate interests

"You can't put a fence around accounting and say that it's a purely unemotional, highly rational process. It's not," Baxter says. "Emotion deeply penetrates and can't be disentangled from the actual practice of financial management. 

"Financial management is tied to what we might call the 'passionate interest'. What's really interesting is that while plenty of work has been done on the reactions of individuals within organisations to various events, and how that can produce emotional outpourings that affect stress, anxiety, tension, anger [and] happiness, what happens outside organisations is important, as well." 

According to Accounting, financial managing and attachments in affective nets: The case of a Swedish football club, the paper co-authored by Baxter, organisations are nets of "affective attachment". 

Affect is defined as "less about individual feelings or emotive responses to situations, and more about the human capacity and potential for action and thought where individuals are always part of larger relational complexes".

‘You can't put a fence around accounting and say that it's a purely unemotional, highly rational process. It's not’

– JANE BAXTER






Affect, the researchers say, is a form of energy that produces effects. It is relational, embodied, circulates and can be shared. And it absolutely influences financial decisions within organisations. 

"Stakeholders are also connected to an organisation through this emotional resource management network with the sponsors, the fans, [and] the governing bodies of the sport," says Baxter. "They're all held together by a network of what we call 'affective attachments' or 'passionate interests'." 

Weight of their will

Probably more than most businesses, passion in the world of elite soccer is a key contributor to financial success. Fans create the spectacle and the passion. They draw in sponsors and attract players. But at the same time, as was demonstrated during the recent Stockholm derby, the actions of fans can be highly problematic for management. 

"Business success is partly about the spectacle that the fans create and the fans realise this," Baxter says. "As a result of this, they've got incredible power and leverage over the club." 

How does it all connect with financial management? Baxter and her colleagues came to realise that the fans engineered many of the club's decisions and processes because of the sheer weight of their will and interests. 

From the way stadiums are designed or serviced to the appearance of a new uniform to the employment or sacking of a coach, decisions both major and minor are made with the fans in mind. Management decisions are heavily influenced by their perceptions of what the fans want. 

In the Swedish football arena there is an added complication. Elite clubs are required to operate as 'sports modified limited liability' companies, meaning at least 51% of shares must be owned by the club's members. This form of social ownership gives fans even greater control in terms of voting rights and removes some of the decision-making powers from wealthy owners. 

It's a situation not dissimilar to that of listed entities where activist shareholder groups are becoming increasingly successful at influencing the business in which they hold an interest. 

A strong management team can recognise and work with this. In 2013, for instance, the soccer club's CEO needed to introduce greater financial stability. 

If the club was to survive, to have the ability to buy great players and make it into the UEFA Champions League, they required a strong financial reserve. 

The CEO's plan included selling some very good players in order to bring in funds. Before he could do this, he had to sell the idea to the fans. After all, losing key players for the sake of money is never going to be a popular decision. 

The emotional hook for the fans was the idea of one day making it into the revered Champions League, and it worked. Fans began talking about the exciting new economic plan on social media. Players discussed it during post-match interviews and sponsors offered their support. 

The CEO achieved buy-in, even though the plan came with the potential short-term pain involved with selling talented players. 

‘If you want to have a successful, sustainable business you need to have affective attachments within your business and also with your key stakeholders’ 

– JANE BAXTER






Emotional expectations

"If you want to have a successful, sustainable business you need to have affective attachments within your business and also with your key stakeholders," Baxter says. 

"If you want a stable set of customers that you can retain, and also to acquire new customers, you need to build those affective bonds with your brand and with your products. It's central to every business and perhaps even more important in the non-profit sector. People often identify with charities at a highly affective level. 

"Considering commercial businesses, think about the way that some companies have engaged in behaviours that have really undercut their brand. Think about Shell Oil and the Brent Spar incident. 

"Think about supply chain problems that have been exposed in some well-known businesses. These issues really hit the customers at the affective level. It makes them wonder whether they want to do business with a company like that." 

Business is now a two-way street, Baxter says. The financial controllers are, in fact, not in complete control of how resources are allocated. At least some decisions will be informed by emotional expectations and shareholdings of stakeholders. 

"This notion of 'love' is integral to the way people talk about a lot of high-performing and highly innovative companies," she says. "Success is about people having a passion for an organisation. 

"Management must consciously build affective attachments. They need to think about how the business can build passion in its key stakeholders. That is very important. Once achieved, it must be managed very carefully because it can be dangerous in extreme situations. It can end quite badly if it's not managed well." 

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