Study: Employee satisfaction drives long-term value of companies

It’s always nice when science confirms that doing the right thing makes business sense too. As HR departments know taking good care of your employees is expensive. But a study shows that a good HR policy pays. A data analysis done over a period of 28 years demonstrates that firms with high employee satisfaction outperform their peers by 2.3 percent to 3.8 percent per year in long-run stock returns—89 percent to 184 percent cumulative—even after controlling for other factors that drive returns. Moreover, the results suggest that it’s employee satisfaction that causes good performance, rather than good performance allowing a firm to invest in employee satisfaction.

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Study: Employee satisfaction drives long-term value of companies

It’s always nice when science confirms that doing the right thing makes business sense too. As HR departments know taking good care of your employees is expensive. But a study shows that a good HR policy pays. A data analysis done over a period of 28 years demonstrates that firms with high employee satisfaction outperform their peers by 2.3 percent to 3.8 percent per year in long-run stock returns—89 percent to 184 percent cumulative—even after controlling for other factors that drive returns. Moreover, the results suggest that it’s employee satisfaction that causes good performance, rather than good performance allowing a firm to invest in employee satisfaction.

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