This is a common issue that most business owners don’t realize how damaging what they do actually is to their own business.
I can think of at least two businesses I’ve worked for or with that definitely made things much worse for themselves by overworking employees. Of course every employer wants to get the most out of every employee, but it should still be a healthy environment that enables the employees to reach their full potential, not a place where they are miserable.
In the cases I can think of, the overworking was driven by fast growth. The business was growing quickly so they needed employees to handle the work. The cheapest employees are entry-level (either actually entry-level or at least entry-level for that industry in which case they may be fresh out of college). So the business hires a bunch of entry-level employees at lower wages than they would have to pay for more experienced workers. However, these employees need better leadership, more training, etc. In a business growing quickly that needs to hire the cheapest option, they usually haven’t invested in the best managers and can’t afford the time to properly train the employees. This leads to more errors, less efficiency, lower profitability, etc.
This quickly spirals to employees who are miserable (read my About Me page to see how one place I worked for had every single person in the accounting department quit in less than one year). When employees are miserable, one thing is going to happen. Every single employee who can find a better place to work will and you will be left with only the ones who can’t do any better than you (or at least are still too lazy to look for the better employer, but give them time, they’ll leave you too).
Things only get even worse for the remaining employees and it gets worse still.
Don’t get me wrong, you will hire people sooner or later who just won’t do well in the job. They will want a paycheck and a raise a year later because they still have a pulse. Don’t let them drag you down, cut them loose and move on. It’s not your fault really, there are always exceptions. From that point it’s just how you handle it that shows whether you succeeded or not (cutting bad employees is success and proper management). But if everyone you hire doesn’t want to work, the common denominator is you. Either you’re paying too little to begin with to even attract better employees or your management is demotivating them and/or pushing away the good ones. And even lazy employees will eventually be motivated to find an easier job elsewhere if your management is bad enough. And by management, it can be either your personality or management style or your actual managers if you aren’t the only manager in your organization.