Happy staff often lead to satisfied shareholders, study finds

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Happy employees tend to be satisfied shareholders, according to a pioneering study new study That shows the clearest link yet between employee well-being and financial performance at publicly traded US companies.

The analysis, by academics Jan-Emmanuel De Neve and George Ward of Oxford University, and Micah Kaats of Harvard University, suggests that companies with higher profitability and higher stock market performance tend to have staff who reports greater happiness, purpose and work. satisfaction and less stress.

The findings, published as a working paper this month, support the business case for investors to make the case and company executives to focus more on staff well-being, a connection that has long been widely discussed but hard to pin down. prove.

“This is the most comprehensive study to date linking employee well-being to financial and stock market performance,” said De Neve, professor of economics and behavioral sciences at Oxford’s Saïd Business School.

He stressed that the study doesn’t prove causation, but goes further than previous work by pointing to the power of reported employee well-being to predict higher earnings and stock prices.

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Diana Han, director of health and wellness for consumer goods group Unilever, said the study “adds to a growing body of research demonstrating the competitive advantages of a healthy, healthy workforce: if we take care of our people, they will take care of themselves.” of the business. ”

Staff wellness advocates have long sought to make a business case to promote it, and since the start of the Covid-19 pandemic, there has been a proliferation of wellness programs designed to retain employees and keep them motivated. However, the evidence of its effectiveness in people and the broader implications for business operations remain limited.

Previous studies have struggled to demonstrate with statistical significance the value of specific interventions or the link between well-being and corporate performance. Research often focused on limited samples of self-selected employees, or on businesses and wellness programs that were difficult to replicate and test at scale.

The work of De Neve and her co-authors is based on 15 million well-being surveys taken by employees of 1,636 publicly traded companies on the Indeed hiring website. The site combines survey results on job happiness, purpose, job satisfaction, and stress into a well-being index rating. The company’s performance was measured using the return on assets and the market value as a multiple of the replacement value of the assets.

The analysis showed that the well-being index not only correlates with gains in company performance, but is also predictive: investing $1,000 in companies with higher staff well-being scores in January 2021 would have generated a return of approximately $1,300 in early March 2023, compared to a return of approximately $1,100 from the S&P 500 stock index.

[A] The possible interpretation of this result is that employee well-being may be especially important to business success in consumer-oriented industries.

The authors found that company happiness scores are especially predictive of performance in the service sector and said that one “possible interpretation of this result is that employee well-being may be especially important to business success in service-oriented industries.” to the consumer”.

The study found that the connection between lower employee stress and better company performance was weaker than the links with employee happiness, satisfaction and purpose. The authors argued that this may be because stress can have both positive and negative effects on trading results.

Other organizations have tried to explore the business case for wellness. S&P Global, the rating agency, recently launched a Corporate Sustainability Assessment as part of its environmental, social and governance assessment, which takes into account job satisfaction, happiness, stress and purpose at work.

De Neve’s research builds on numerous previous studies that have sought to calculate both the costs of ill-health and the connection between well-being and corporate performance.

Data collected from employees and employers for the year Britain’s healthiest workforce The project backed by Vitality, the health insurer, has shown a link between poor physical and mental health and self-reported levels of absenteeism and unproductive “presenteeism.” It highlights the importance of factors including inadequate duration and quality of sleep, financial insecurity, and insufficient flexibility or autonomy at work.

TO separate study published by De Neve this month on almost 1,800 staff working in 11 call centers across the UK for BT, the telecommunications company, showed that staff were most effective at turning calls into sales when they were in a better mood. He used better weather as an indicator of well-being.

De Neve and her co-authors argued that increased well-being could lead to better productivity, relationships, creativity, health, recruitment, and retention.

He said: “Membership is probably the best predictor of well-being in the workplace. People want to be treated as human beings. [and] have friends at work Those kinds of social capital measures [are] fundamental to what makes people happy at work, and therefore stay, more than the paycheck attached to the job.”