Do employee wellbeing initiatives really impact a company’s bottom line? That’s the question I’ve been pondering of late. When I first came to the field of worksite health promotion over a decade ago, the focus of wellness programs was on reducing health risks, with the goal of reducing health care costs. So I went in search of the evidence that wellbeing initiatives impact the bottom line. Here’s what I found.
A recent study conducted by the University of Illinois at Champagne-Urbana claimed that “Wellness Programs Don’t Work” and demonstrated no medical cost savings. As I wrote here, the one-year time window for analysis was too short to impact medical spending.
A study published in the Journal of Occupational and Environmental Medicine in 2016 linked workplace health promotion best practices and financial performance. The study evaluated stock performance from publicly traded companies that received high scores on the HERO Scorecard. The HERO Scorecard has long been viewed as an effective measure of the implementation of evidence-based workplace health promotion practices. The stock values of the high-performers appreciated 235% as compared with the Standard & Poor (S&P) 500 portfolio appreciation of 159% over the six-year simulation period. The study authors concluded that ‘robust investment in workforce health and well-being appears to be one of multiple practices pursued by high-performing, well-managed companies.
A similar study, published in 2016, sought to determine if the stock performance of organizations that won the Corporate Health Achievement Award (CHAA) was superior to average index performance. The portfolio of award winners out-performed the S&P average on all tests.
In both of these studies, the data was from companies that excelled in implementing worksite health and safety programs. One could surmise that high-performing, well-managed companies care about their people. Therefore, they are more likely to have a positive work culture and more highly engaged workforce, which results in better overall company performance.
Do high-performing, well-managed companies outperform the market in general? Research reported by Glassdoor, showed that companies that were high rated by their employees outperformed the S&P 500 by 122%, compared with low rated companies that underperformed the S&P 500 by 29.5%. The Glassdoor Chief Economist cited a direct link between employee satisfaction and stock market performance.
A previous study showed that “companies ranked among the 100 best to work for in the United States produced annual stock returns two to three percentage points higher than peers that were not on the list”. Employee satisfaction has been shown the relationship between Employee satisfaction and superior long-run returns, current valuation ratios, future profitability, and earnings.
Do happy, healthy employees impact your bottom line? The research says yes.