As a manager but not an owner, what actually happens is that I keep the same salary but the expectations are lower. I'm comfortable with that.
The only way to get a meaningful raise is to change jobs every few years anyway. That's pretty common knowledge.
If people are fired or bullied out of an organization by others, but I'm friends with them, then I have a bigger network that can help me get employment at another organization. I look at every friendly coworker that leaves as a probe sent out into the world to see what might be better elsewhere.
It's far more valuable for me to maintain a positive relationship with my coworkers than it is to provide negative feedback. Pick your battles. Who cares if one of your workers isn't very efficient?
There's so much incentive to expand my network of people that would love to work with me or for me, and so little incentive to crack down on employees to try and get them to perform better.