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6 Reasons Greed Might be Bad for Business

If you are an MBA student, chances are you have seen the 1987 Oliver Stone movie, “Wall Street.” Even if you have not seen the film, you almost certainly are familiar with its signature line of dialogue, delivered by Michael Douglas in a performance that won him an Academy Award for Best Actor.

“The point is, ladies and gentlemen, that greed, for lack of a better word, is good.”

This open declaration of economic war on altruism by Douglas’ infamously avaricious Wall Street financier, Gordon Gekko, became an epitaph for the high-octane 1980s. In the business world, Gekko’s words became gospel, and rightfully so – to an extent.

Gekko’s point echoed the political economic theories of 18th century Scotsman Adam Smith. Smith’s treatise, “The Wealth of Nations,” put forth the concept that rational self-interest and fair competition produce economic prosperity. Meanwhile, a benevolent “invisible hand” guides business leaders toward a path of decency and civic responsibility.

It is easy to buy into the idea that profit is the only marker of success in business and should be pursued at the expense of everything else. While profit is undeniably important, it is just one of several factors that must be considered, and a blind pursuit of profit can harm a company in the long run.

The movie mogul Gekko’s idea of “greed” was this: that the pursuit of private vice by self-appointed masters of the economy redounds to the public benefit. This concept has been championed over the years by the Objectivism acolytes of author Ayn Rand, who went so far as to condemn the notion that “greed” is an undesirable characteristic in business and society as a whole.

That said, Western civilization’s abhorrence for greed enjoys a long tradition in literature, business, politics and religion. According to author and University of Chicago business professor John Paul Rollert, the acceptance of publicly asserted commercial self-interest is a relatively recent phenomenon.

Writing in the Atlantic in 2014, Rollert said, “St. Thomas Aquinas, who ranked greed among the seven deadly sins, warned that trade which aimed at no other purpose than expanding one’s wealth was ‘justly reprehensible,’ for ‘it serves the desire for profit, which knows no limit.’”

A lot has changed since Aquinas’ 13th century heyday.

Why Greed is Not Always Good

It is telling that the word greed is now seen in some business circles as an aspiration of modern capitalism. For better or worse, certain companies have operated by pursuing profit above all other concerns, even if doing so compromises ethics or carries grave consequences. (See: Business Ethics in the 21st Century.)

This is not to say that business leaders should shy away from profit, or that self-interest is always antithetical to the whole. Rather, the key word here is greed. It implies something more than wanting to succeed; it implies wanting to succeed no matter the cost.

In corporate capitalism, the “greedy” are those who make reckless decisions without concern for how the consequences of those decisions affect other people, all in the name of making money. While films like “Wall Street” might paint the picture that this cutthroat, no-holds-barred approach is largely positive, the truth is that unbridled greed, as it is understood by modern society, can be detrimental to a healthy business environment and might inhibit the long-term growth of a company.

Here are six considerations about greed that warrant a closer look:

  • Money replaces values and ethics: Pursuing profit above all else is a competitive and, ultimately, a selfish effort. As such, it tends to impinge your value system and jeopardize the ability to empathize with employees, competitors and, most potentially damaging, the customer base. While everyone certainly wants to succeed in business, there are ways to do so without alienating key stakeholders and tarnishing your reputation and brand in the process.
  • Failure to mentor and teach: One important consideration in business is the degree to which an operational leader helps future generations learn and succeed. After all, your short-term success leading a company means very little if it fails as soon as you pass the torch. Greedy business owners generally do very little to help anyone else move forward, hurting the business in the long run.
  • Too many clients, not enough capacity: Greedy managers generally stack the client list to achieve the highest returns possible. Unfortunately, this will eventually exhaust even the most skilled workforce and diminish the quality of production. This damages your company’s reputation and reduces the likelihood of repeat business in the future.
  • Loss of focus on employee morale: For a business to operate well, each employee must care about and be invested in its success. But when leaders demonstrate that the company’s philosophy is grounded in greed, it adversely affects attitudes and reduces company morale. Jaded, disgruntled employees produce less, ultimately harming all aspects of your business – including profitability.
  • Poor personnel choices: An over-focus on the bottom line tends to narrow your view of other areas of the business. It is easy for greedy managers to ignore the flaws of uncooperative – or even abusive – personnel if all attention is focused on profit. This can lead to damaging interactions or other disruptive behaviors that affect both how the business performs and how employees view each other. If such activity undermines trust, the business is doomed.
  • When income means more than improvement: This last point is important. To succeed in the long term, a company must innovate and adjust to market conditions and rising competitors. If managers focus only on the straight line to profit, they might overlook opportunities for growth and improvement. This will hamstring the company as it attempts to move forward into new areas.

Too often, managers harm the long-term viability and potential success of a company by focusing solely on short-term gains. To do well – not only now but also in the future – business leaders must be able to shift some attention away from the bottom line and ensure they are taking care of workers, customers and the broader community in which they operate.

An online MBA from Jacksonville University’s Davis College of Business can provide insight into the constant balance between profit motive and the vision to sustain a successful company well into the future. Future business leaders owe it to themselves, business partners, employees and customers to understand why, in many cases, greed is not always the best approach.

 

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