Business Group Blog

The Case for Well-being as Profit Center

Evidence for the positive impact of employee well-being is growing. Attendees at Workforce Strategy: The Future of Work, Life and Health heard Alex Edmans, Ph.D., Professor of Finance at London Business School, describe his research on the role of well-being in business performance. Dr. Edmans has shown that the ‘100 Best Companies to Work for in America’ beat their peers in the stock market by 2.3% - 3.8% per year from 1984 – 2011. That’s 89% - 184% compounded, a significant value differential. This is a robust (and under-reported) longitudinal finding from a respected authority in corporate finance.

In addition, Optum Health, in partnership with Yale Center for Customer Insights, recently released a white paper with new research that could further persuade C-Suite audiences to invest in well-being in the short term. The study took 29 winners of the Koop award (as a proxy for companies who invest in employee health and wellness) and matched each with a control company of the same size, in terms of employees and revenues, in the same industry category. Just one year post-award, winners had a significantly higher share price growth than non-winners. While the average share price across the matched control companies was $39, the average share price growth of the award winners was more than $4 higher per share one year after the award.

The Business Group’s Best Employers: Excellence in Health and Well-being recognition process develops the business case for well-being in yet another way. Companies are asked to identify metrics that matter in their own organizations and industry sectors, and to begin to connect their well-being strategy and related initiatives to drive those metrics.

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