18 May Can Workplace Wellness Signal Superior Stock Performance?
The following is a guest post by Jessica Grossmeier and Emma Wheeler.
New study shows correlation between investment in corporate wellness programs and company stock performance.
Do healthy employees deliver a healthy bottom line for corporate America? This question has been hotly debated over the years, but a new study from HERO (the Health Enhancement Research Organization) demonstrates a distinct correlation between comprehensive, best practice wellness programs and corporate stock performance. In short, the study found that companies that scored highly on the HERO Scorecard for Employee Health and Well-Being Best Practices in Collaboration with Mercer® —signaling investment in best practice programs—outperformed the Standard & Poor’s (S&P) 500 Index over the course of six years.
Findings at a Glance
Findings indicate that companies who share the common practice of investing in workplace health and well-being (HWB) represent superior investments in the marketplace. More specifically, researchers found that HERO Scorecard high-scoring companies outperformed the S&P 500 in the following areas:
- Appreciated 235% compared to 159% for the S&P 500
- Outperformed the S&P 500 in 16 out of 24 quarters across six years
- Produced a comparable dividend yield of 1.97% compared to a 1.95% yield for the S&P 500
“Will this study put an end to questions about how much of a return on investment to expect from corporate wellness? Probably not. But what this study does tell us is that there is a compelling correlation between companies that deliver strong financial returns and those that have documented, best practice wellness programs,” said Paul Terry, Ph.D., president and CEO of HERO. “This knowledge can benefit business leaders looking for a competitive edge, and investors looking for a sound investment.”
Understanding that the study is correlational and causal, what might the mechanism be for such a link to occur? Better employee health is clearly linked to higher levels of employee productivity and performance, and emerging evidence shows healthier employees are also more engaged with their work and have lower turnover rates. These outcomes in combination might contribute to company financial performance. However, there are many factors that contribute to stock performance that were not analyzed in this study. It may be the case that investment in health and well-being is a proxy for companies that engage in other best practices to achieve their competitive advantage.
Application for Employers
So given the study design limitations, what conclusions may we draw from this research?
- If you are interested in emulating high performing companies, invest in the health and well-being of your workforce.
- If you are looking for guidance on best practice HWB programs, check out the HERO Scorecard, which has been correlated with health care cost trends and company stock performance.
- If you are looking to expand the value proposition for investment in workplace HWB, add this and other recently published studies from the January 2016 issue of JOEM to the underlying evidence supporting your business case.
The HERO Scorecard is a free, online tool that allows companies of all sizes and from any industry to complete a self-assessment of their employee wellness program. Upon completion, companies receive an individual score and a comparison of their program based on industry, company size and geography.
HERO’s vice president of research, Dr. Jessica Grossmeier, is a workplace health promotion thought leader with nearly 25 years of experience advancing individual and population health. Serving the industry for the past 15 years as an outcomes researcher, Dr. Grossmeier has executed research studies on the health and financial outcomes of wellness programs sponsored by numerous large, national employers. Dr. Grossmeier has published dozens of articles in peer-reviewed professional and industry journals and presented at more than 30 national industry events.
Emma Wheeler is HERO’s communications manager, providing support to staff in and outside of the office. In her role, she oversees scheduling and assists with planning events such as the annual HERO Forum. In addition, Emma works with a number of HERO committees, provides editing support for journal articles, assists with research in a variety of topic areas and manages office projects and day-today operations of the organization.