Where Does Well-Being Fit Into A Sustainable Future? 


Keywords: Investment risk, market sentiment, culture, sustainable organisations


Author: Dr Anna-Rosa le Roux

Updated: 16 October 2023, Worklife Digital


Being bought by Google, Cisco or IBM is an exit that each investor dreams about at some point. But what happens when the sustainability audit deflates your sales price? The argument: You have been making money, but have not developed the resilience to sustain profitability. That after the takeover, much of your people capital will evaporate.

Whether you are the CEO, member of an investor committee or sitting in the C-suite pondering your organisation or portfolio’s investment decisions, the market has more than likely bombarded you with trends around the sustainability of the human capital and how this poses an operational risk or opportunity to your organisation. 

From an employee’s side, a shift in expectations around the employee value proposition wants organisations to invest in growth, work life balance and purposeful work, benefiting customers and a broader social interest. 

But how do we measure the impact of workplaces with a favourable culture on their financial performance?

Who said that a great place to work was also indicative of a great company to invest in?

Companies that treats employees well, has performed better than their counterparts in the market

To test the idea, I refer to a Fortune study that was done in 2018. They created a hypothetical basket of stocks (called best companies index) that comprised each year’s Fortune 100 Best Companies to Work For, for the period between 1998 and 2018. This best companies stock price increase was compared against the FTSE Russell 3000 index. They wanted to compare the return for every $1000 dollar invested in the best companies index and the Russell 3000 index respectively.

In the figure below, it is clear that the best companies index returned more than 2 times that of the Russell 3000 index over a period of 20 years.

NOTE: We are emphasising that the goal was sustainable growth for the long term and recognise that investment returns, such as paying out shareholder dividends could influence stock market value in the short term. Our aim is to argue the case for long term sustainable value. 

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Source: Fortune Magazine, February 27, 2018. 


The best companies index’s performance trend held up throughout the pandemic. In fact, in 2022, it increased its outperformance by 16.5%, returning 37.4% compared to 20.9% for the FTSE Russell 3000 index. The cumulative return of the best companies index since 1998 is a staggering 3.23.

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Source: Greatplacetowork.com, 2021. 

Behind the numbers

The Great Place to Work determines the 100 Best US Companies to Work For using quantitative and qualitative feedback about the organisation’s culture. 6 dimensions: Trust, respect, credibility, fairness, pride and camaraderie defines a great employee experience. Responses across demographic groups and roles within the organisation, measures the consistency of the employee experience. Each company also answers essay questions to provide further insight about people's practices (More about the methodology here: https://fortune.com/franchise-list-page/best-companies-2022-methodology/)

In 2020, key trends that inspired employee engagement was firstly that employees trusted their leaders and secondly, if they felt that their work positively impacts the greater good, (Michael Bush, CEO of the Great Place to Work).

The Great Place to Work also produces a World’s Best Workplace report where the world’s best workplace cultures are honoured. The 2022 Best Workplaces invested in well-being, flexibility and equity to set them apart from their peers, as employees re-evaluate their lives and what they want from a job.

The future is more human

Whether CEOs put their people first to drive productivity or to build resilience to help manage change and uncertainty - people are a core part of investing for sustainable growth.

In our consulting experience, worst performing organisations:

Organisations that flourish share some of the following characteristics:

Build PEOPLE-centred organisations for sustainable profit

If high performing workplaces where people thrive is your goal, where do you start?

How do you figure out where you are in the process and what do you need to do to link people interventions to a sustainable bottom line?

Do a sustainability audit. A sustainability audit is underpinned by:

Managing employee engagement AND wellbeing, together creates a high performance employee environment with less burnout and stress. Although engaged employees contribute more to bottom line performance, engagement on its own, is not sustainable without a well thought through wellbeing component. 

Research from Gallup shows that if employees are engaged, but not thriving (read wellbeing), compared to those that are thriving, they are 61% more likely to experience burnout and 48% more likely to report daily stress, (Gallup 2023).

If employees strongly agree that employers care for their wellbeing, they are 69% less likely to actively search for a new job, 71% less likely to report experiencing a lot of burnout, 36% more likely to be thriving in their overall lives and 5 times more likely to strongly advocate their company as a great place to work, as they trust the leadership of the organisation, (Gallup 2023). You notice the key here: Wellbeing

Well-designed and research-informed wellbeing initiatives and strategies provide organisational resilience and remove risk from organisations.

Employers who care for their overall wellbeing benefit from higher productivity and profitability, lower turnover and safety incidents. 

During the Covid pandemic, the Great Place to Work index measured the highest overall employee experience scores, due to great leadership at all levels in organisations.

Michael Bush, CEO of the Great Place to Work, said: “The ability to perform work from home is not the common denominator among this year’s (2020) 100 Best Companies, instead they shared a widespread faith in leaders committed to making things better for people – all people.” 

The top performer in the 2022 World’s Best Workplace was DHL. They scored high in diversity and inclusion, values and culture and good pay and benefits. They invest in their staff, work clothing, wellness programs, working conditions and building careers. DHL cares about their people and it shows on the bottom line.

Company stock price is of course not only driven by elements measured in the Great Place to Work Surveys, such as culture, leadership, engagement or wellbeing, but it offers a strong argument to address these strategically, as a critical part of an organisation’s sustainable investment strategy. How many top technology companies went under? Xerox? SCO? Nortel Networks? Winchip? What was missing in these companies and why did their technology not save them?

Similar studies used comparative methodologies and reported that the top 20 best places to work for (Glassdoor rankings) returned 2.1 times the S&P 500 gains over a period of 13 years (2019 to 2021) for every $1000 invested, with the best returns posted in 2009 (3.6 times the S&P 500) and at worst (2011), it returned 1.2 times the S&P 500 (Source: https://seekingalpha.com/article/4479505-top-stocks-not-to-miss-from-glassdoors-2022-rankings).

(Note: Glassdoor is a website where current and former employees anonymously review companies and their management along 9 attributes, as well as satisfaction with their CEO and whether they would recommend the organisation to a friend)

What type of investor are you? 

We cannot link an organisation’s stock market value only to its culture and employee engagement, but the performance of the 100 Best Index, compared to the rest of the market, positions people and culture centrally to the core strategy of the organisation.

Both employee experience, as well as investor sentiment relies heavily on employer branding and company culture. Investing in people and culture has the potential to boost company stock performance significantly. 

Is the purpose of a company to make money at all cost? Sustainability is also an overused and under defined word.  Even the best technology is not safe without human custodianship. Who keeps watch of your valuables when you are remote and cannot see what is happening? The evidence is mounting that healthy companies that treat their profit motive sustainably, are like responsible citizens, they build healthy communities. 


WorkLife Digital is a global mental-wellbeing consultancy driven by the mission to improve the sustainability of businesses. Our psychological wellbeing tool, Worklife Quotient (WL-Q), is modelled on cutting-edge scientific research and provides organisation-wide measurement and intelligence on the mental wellbeing levels and psychological resilience of staff. WL-Q also assesses the impact of organisational practices (i.e. people and culture, leadership styles, organisational purpose and values, social impact) that have a direct influence on staff wellbeing and provides strategic recommendations on addressing risks and promoting strengths.

For more information, get in touch at lisa@worklife.digital

Follow us on LinkedIn if you want to know more about current and upcoming mental wellbeing updates and regulations.


REFERENCES

Fortune. Methodology for 100 Best Companies to Work For (2022). URL; https://fortune.com/franchise-list-page/best-companies-2022-methodology/

Great place to work. World’s Best Workplaces. URL: https://www.greatplacetowork.com/worlds-best-workplaces

Harter, J. Percent Who Feel Employer Cares About Their Wellbeing Plummets. Workplace Magazine: March 18, 2022. URL: https://www.gallup.com/workplace/390776/percent-feel-employer-cares-wellbeing-plummets.aspx

Harter, J. Thriving Employees Create a Thriving Business. Workplace Magazine: June 26, 2020. URL: https://www.gallup.com/workplace/313067/employees-aren-thriving-business-struggling.aspx

Kitterman, T & Great Place to Work. The World’s Best Workplaces invest in well-being, flexibility, and equity. October 13, 2022. URL: https://fortune.com/2022/10/13/worlds-best-workplaces-2022-dhl-express-us-flexibility/

Seeking Alpha. Top Stocks Not To Miss From Glassdoor's 2022 Rankings. January 13, 2022. URL: https://seekingalpha.com/article/4479505-top-stocks-not-to-miss-from-glassdoors-2022-rankings

Yoshimoto, C & Frauenheim, E. The Best Companies to Work For Are Beating the Market. February 27, 2018. URL: https://fortune.com/2018/02/27/the-best-companies-to-work-for-are-beating-the-market/