This is a new paper by Alex Edmans, assistant professor of finance at Wharton, in which he affirms the positive link between employee job satisfaction and firm performance among the public companies of the 100 Best. You can download this paper here.
As Edmans writes "This paper analyzes the relationship between job satisfaction and firm value. The dependent variable is firm value, rather than job performance, to take into account the cost of increasing job satisfaction.
To address reverse causality, I measure firm value by examining future stock returns, and control for numerous variables that may be jointly correlated with both job satisfaction and stock returns. Companies listed in the "100 Best Companies to Work For in America" generated 2.4-3.7%/year higher stock returns than their peers from 1984--2009. These results are robust to controlling for risk, firm characteristics, and industry performance, and the removal of outliers. They have three main implications. First, consistent with human relations theories, job satisfaction is positively correlated with firm value and need not represent managerial slack. Second, corporate social responsibility can improve stock returns. Third, the stock market does not fully value intangible assets, and so it may be necessary to shield the manager from short-term stock prices to encourage long-run growth."
Amy Lyman is co-founder of the Great Place to Work® and researcher/writer. Her current focus is on the key contributions of Trustworthy Leaders to the creation and support of successful groups and organizations.