June 24, 2004 -- Happy employees may make a difference when it comes to the success of a company, a new study has found, but most managers don't know that.

Of 50 managers surveyed, 90 percent said they did not see a connection between employee relations and a better bottom line. It was the first phase of a four-part study being conducted by Cornell University and Gevity Institute, a research group that is a division of Gevity, which handles human resource functions for small and mid-sized businesses. The study aims to show a symbiotic relationship between staff management and financial performance.

"Most of the people who start a business are very talented business-wise or are experts in some technical field," said David Sikora, director of the Gevity Institute. "They have very little knowledge of how to deal with managing people."

Because of the possibly dramatic effect even one employee can have on a small business, increasing staff in some cases by 100 percent, Cornell and Gevity expect their findings will have more of an impact on this group, in particular.

"The effect of an employee-related policy, be it good or bad, on the financial side of a small business is felt very quickly as compared to a large corporation," said Sikora. "Employee relations might be the make-or-break factor in some businesses."

In the next phase of the study, Cornell researchers will survey 2,500 businesses to find out how happy employees are and why. These findings will be measured against the companies' financial performance. Cornell and Gevity expect to report results in about six months.