By Jim Wong, CPA | May 5, 2014


What if creating a work environment that fostered happy, healthy employees did more than just make you and your employees feel good? What if it actually helped your bottom line?

A recent article at CFO.com suggests it just may.

The stock–market returns at publicly held companies on Fortune’s annual 100 Best Companies to Work For list found that over a span of 17 years, from 1997 to 2013, companies that made the list fared better than the S&P 500 Index—significantly so. The average annual returns for the companies on the Best–to–Work–For list returned an average of 11.8 percent, while the S&P returned 6 percent. And, the companies on the list for a long time fared even better. Only 13 public companies have been on the list every year since the beginning. Their cumulative return added up to 495 percent, compared to 156 percent for the S&P.

Whether and how employee health impacts your bottom line is an open question. The thinking that employee health might be tied to, at the very least, employee productivity, likely has a hand in encouraging employers to offer workplace wellness programs. A study by the RAND corporation and the Labor Department found that approximately half of employers that have 50 employees or more offer the programs. Unfortunately, recent research suggests that the wellness programs may be a mixed bag. The programs that helped people manage their chronic illnesses were far more financially beneficial than “so–called lifestyle management offerings, which aim to reduce health risks through programs focusing on weight loss or stress management,” according to the New York Times. The lifestyle management programs didn’t result in any savings at all.

Of course, the benefits of employee health and wellness go far beyond the financial. Many companies are tackling employee health, whether or not there’s clear evidence of a direct financial benefit to the company. There may be a more indirect benefit though: taking good care of your employees can improve their attitudes about you, and studies do show that positive employee attitudes drive improved customer loyalty, sales, and employee retention.

So, what can you do to improve the happiness and health of your employees—especially considering that those lifestyle management programs might not be all that effective?

Richard Guha, who runs the consulting firm Max Brand Equity, told CFO.com that he recommends companies actively target the Best–to–Work–For lists, if not for the potential stock value growth, then for the improvements in recruiting, turnover, and “standing in your community.” He further recommends starting with a survey of your employees to find out where you stand—which might be a good idea—even if the Best–to–Work–For list seem a long way off. Guha also suggests that you use an outside firm to conduct your survey and not your own HR department. That way, you’re more apt to get open and honest results.


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