employees clapping while in meeting
While no company can survive without profits, the consequences can be damaging over time if profits are the only priority. — Getty Images/filadendron

Every small business owner must focus on the bottom line, maybe even obsess over it. But the most successful businesses, and those that last, do much more than that, research shows, and it helps them avoid unintended pitfalls.

In a study of 21 businesses known for their successful cultures, researchers spent time on site studying the operations and interviewing employees. They found each of the companies, all of which were on “best places to work” lists, put employees first. Among the common tactics:

  • Empower employees to think and act like owners.
  • Help them pursue passions, through special programs or extra time off.
  • Accept failure as necessary for growth.

“Almost all of the corporate founders and CEOs we spoke with told us that they built their companies with people in mind,” writes Michael O’Malley, managing director at the consulting firm Pearl Meyer and co-author of the analysis, published in the Harvard Business Review. “To them, a healthy culture is as important as a healthy balance sheet.”

No company survives without profits, of course. But if the bottom line or some other performance becomes the only priority, the consequences can be damaging over time, with the stage set for everything from internal resistance to lying and other behavior that can end up damaging the bottom line.

An intense focus on any single goal — from profits to finishing a certain project on time — can be productive, no doubt, providing the focus necessary to get a job done, says Rebecca Greenbaum, a professor of human resource management at Rutgers University who studies leadership and ethics. But hyperfocus on one goal can cause some employees to become so obsessed with the appearance of supporting it that they lose sight of other important goals and values, like treating customers and fellow employees with respect, her research team has shown.

“In short bursts, that can be fine, because it makes us more productive,” Greenbaum said in a phone interview. “But if it’s the overall mentality, it can be very dysfunctional.”

You forget other things when winning is the only thing that matters. You forget other things when money is the only thing that matters.

Rebecca Greenbaum, a professor of human resource management, Rutgers University

Problems might begin with an employee presenting some good-looking data or news and avoiding the bad. Or breaking a company rule to make themselves or their supervisor look good. “Maybe it’s a rule that’s good to follow because it provides fairness to all parties involved,” Greenbaum said. “But in reality, if you break that rule, the harm is not clearly evident.” Or maybe an employee pretends to have met with a customer, thinking, “Everybody does it, so who am I really hurting here?” Past research by others has shown this type of behavior can be a slippery slope that ends up resulting in much worse things, she said.

Other studies have found employees resent excessive focus on the bottom line and may react with a bit of sabotage. “Employees reciprocate by withholding the very thing the supervisor desires—performance—in order to maintain balance in the exchange relationship,” according to research last year in the journal Human Relations.

Employees will justify immoral behavior because it doesn’t apply to a given situation, and you actually end up believing that what you’re doing is morally justified, Greenbaum said. It’s not unlike what can happen in sports or politics. “One outcome becomes so, soimportant that you disregard other things,” Greenbaum says. “You forget other things when winning is the only thing that matters. You forget other things when money is the only thing that matters.”

A clear goal and sharp focus can bring employees together, of course. But too much focus can make employees feel unsafe, afraid of being shunned and unwilling to speak up, Greenbaum and colleagues concluded in a study earlier this year in the Journal of Organizational Behavior.

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Published August 17, 2020