How leaders’ short-term thinking can doom the most promising workplaces

The relentless chase for immediate profits is pushing even the brightest workplaces to the brink. As companies scramble to meet quarterly targets, they often sacrifice employee well-being and long-term growth, inadvertently setting themselves up for failure. Inventium’s 2024 Future of Work research found that when profit overshadows people, the resulting short-term thinking can doom even the most promising organizations to a future of diminished returns and disengaged employees.

The pressure cooker environment

Economic uncertainty has placed immense pressure on organizations to perform, with executives pushing for rapid results to meet shareholder expectations. According to Gallup, Australians have the second-highest regional percentage of daily stress, with nearly one in three workers reporting symptoms of burnout. This intense environment creates a cycle where companies expect more from their employees, who, in turn, work harder but often see diminishing returns.

Christina Bridgeland, Human Resources director at Moët Hennessy, explains,

“In these times of uncertainty, there’s more pressure on all teams. Employees are working hard and trying to do everything they can, but results may not be coming through due to many different factors. It’s a cycle: companies are expecting more, employees are working harder, and it is having an impact on the work environment and mental health.”

“In these times of uncertainty, there’s more pressure on all teams. Employees are working hard and trying to do everything they can, but results may not be coming through due to many different factors. It’s a cycle: companies are expecting more, employees are working harder, and it is having an impact on the work environment and mental health.”

The scarcity mindset

The scarcity mindset, a concept explored by Princeton University’s Eldar Shafir and Harvard University’s Sendhil Mullainathan, describes how limited resources—whether time, money, or cognitive capacity—focus our attention on immediate concerns at the expense of broader, strategic thinking. This “tunneling” effect means leaders and employees become preoccupied with short-term goals, neglecting the bigger picture.

Organizations driven by scarcity mindsets prioritize immediate outputs over long-term planning and problem prevention. This approach can impair their ability to engage in systems thinking, which is crucial for identifying and addressing underlying issues that could affect future performance.

AI and automation have a human cost

As companies continue to invest in artificial intelligence and automation, the human cost of these advancements must be considered. While AI promises to increase efficiency and productivity, there is a real danger that an overemphasis on profit could lead to a mass exodus of employees.

Dom Price, work futurist at Atlassian, warns,

“If we go and use AI and all we do is go after profit and productivity, then we will see a mass exodus of people from the workforce. What does that mean for society? Let’s think about that before we hit the button because it’s a human deploying it. So let’s think about the human impact before the human hits the button, even though that human hitting the button might not be impacted themselves.”

“If we go and use AI and all we do is go after profit and productivity, then we will see a mass exodus of people from the workforce. What does that mean for society? Let’s think about that before we hit the button because it’s a human deploying it. So let’s think about the human impact before the human hits the button, even though that human hitting the button might not be impacted themselves.”

The challenge lies in finding a balance between leveraging technology to improve organizational performance and investing in developing non-replaceable human skills, such as critical thinking and creativity. These skills will be essential in a future where AI plays a dominant role in many industries.

Investing in non-replaceable skills

Despite the pressure to prioritize short-term gains, organizations must invest in developing skills that cannot be easily replaced by machines. According to Deloitte Access Economics, 86% of all occupations will be affected by AI, making it critical for companies to focus on building capabilities that complement technological advancements.

Building employee capability in generative AI, for instance, involves teaching employees when to leverage AI, how to write effective prompts, evaluate creative work, and check for bias. Fostering critical thinking skills is essential, as the ability to analyze, evaluate, and make decisions based on information sets people apart in an increasingly automated world.

Adopting a progressive focus

Research has shown that companies adopting a progressive focus—balancing defensive and offensive strategies—are more likely to outperform their rivals in the long term. Progressive organizations deploy selective defensive moves, such as improving operational efficiency rather than cutting jobs, and invest in offensive moves like R&D and marketing. These companies typically show the strongest performance in sales and EBITDA growth after a recession.

By maintaining a progressive focus, organizations can avoid the pitfalls of short-term thinking and build a more resilient, adaptable workforce.

Creating mental slack

To combat the tunneling effect, organizations must create “mental slack”—time and resources dedicated to long-term planning and problem-solving. This involves carving out time for teams to focus on upstream thinking, identifying potential issues before they become major problems, and systematically reducing harm caused by existing challenges.

Leaders must also take responsibility for minimizing the cognitive load on their teams. Without mental slack, employees cannot engage in the systems thinking necessary for sustainable success.

Short-term thinking driven by the relentless pursuit of profit can doom even the most brilliant workplaces. Organizations prioritizing immediate gains over long-term planning and employee well-being, risk creating a toxic work environment that stifles innovation and engagement.

To ensure sustainable success, companies must invest in non-replaceable skills, adopt a progressive focus, and create the mental slack necessary for long-term strategic thinking. Organizations can only thrive by balancing short-term performance with long-term resilience in the ever-evolving business landscape.