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Study: Doing the Right Thing Is Good for the Bottom Line

29. September 2015 07:51

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We tend to believe behind every great company, there's a great, role model-worthy leader. But that's not always the case. A company can still be successful and have leaders with little to no character. Leadership will ultimately be reflected in its bottom line, especially when measured against businesses that put people with high character in charge.

Take, for example, Fred Kiel's seven-year study of more than 100 CEOs, their companies, and 8,500 of their employees, as reported by the Harvard Business Review. Kiel found that leaders with strong character made up to five times the return on investment that leaders with weak character did.

What does Kiel mean by "strong character"? According to his interview with The Washington Post's guest writer Tom Fox, strong character is measured by what we usually deem to be "good" traits:

This is all heartening new for small-business owners that take the time to build relationships with their employees and keep the human element of their business at the forefront. This study shows a compassionate leader tends to see more economic gains, which can help the business stay in the black.

On Compassionate Leaders, Employee Loyalty, and Productivity

Of course, you can't build a company on good principles alone. It also takes business skills and vision. But you can hardly execute your goals without the support of your team behind you.

The best way to get that support is to build relationships with your employees. When you care about the lives and well being of your workforce, your team feels more invested in your business. That means you have an easier time retaining top talent and getting your employees to produce better work.

Consider what Gallup's "State of the American Workplace" survey found:

You can read more about employee engagement in our post "Why Small Businesses Shouldn't Hire 70% of Employees."

How to Consistently Display Strong Character in the Workplace

Displaying strong character isn't a one-off deal – it's something you must exhibit day in and day out. How can you make sure you're putting your principles into practice? Here are some ideas:

On a related note, find out how employee wellness programs can help you reap two times the ROI in "Study: Wellness Comes Back to Small Businesses Twofold."

Tags:

General | How to Grow Your Business | Small Business | Tips for All Small Businesses

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