Employee wellness best practice is linked to corporate financial performance

StayWell Blog

By StayWell Chief Health Officer David Anderson, Ph.D.

History has shown time and again that there are no guarantees when it comes to winning in the stock market. However, a recent study demonstrated a clear correlation between public companies’ long-term financial performance and their investments in wellness best practices. I had the privilege of co-authoring this study, which was sponsored by HERO and published in the January issue of the Journal of Occupational and Environmental Medicine (JOEM). Findings from this study may help business leaders working to improve their business performance, and will also interest investors looking for new indicators to increase the returns on their stock portfolios.

The study, titled “Linking Workplace Health Promotion Best Practices and Organizational Financial Performance,” compared the stock performance of a portfolio of publicly traded companies that earned top scores on the HERO Employee Health and Well-Being Best Practice Scorecard in Collaboration with Mercer® versus the S&P 500 over a six-year period. I encourage you to visit HERO for full details, but here are a few highlights. Our research team followed the stock performance of 45 publicly traded companies that scored in the top quartile on the HERO Scorecard from 2009 through 2014 and found that this portfolio of companies significantly outperformed the S&P 500 by:

  • Appreciating by 235 percent compared to 159 percent for the S&P 500,
  • Outperforming the S&P 500 in 16 out of 24 (67 percent) quarters, and
  • Producing a comparable dividend yield of 1.97 percent versus 1.95 percent yield for the S&P 500.

Two other studies— one conducted by The Health Project, focused on winners of the prestigious C. Everett Koop Award and one by the American College of Occupational and Environmental Medicine (ACOEM) that focused on winners of the Corporate Health Achievement Award — were also published in the January issue of JOEM. Both also reported superior stock performance, particularly the Koop Award winners outperforming the market 325% to 105% during a 14-year study period.

As I consider these findings and StayWell’s research on the outcomes of workplace wellness programs, there are several key takeaways for employers, business leaders and investors:

  • Companies that take a best-practice approach to investing in employee wellness programs generally have high standards in their operational structure and strong corporate leadership.
  • In addition to providing data for continuous quality improvement, validated wellness scorecards and award programs may provide useful signals to investors and the business community that an organization has invested wisely in creating a healthy, high-performing workforce.
  • In the financial markets, where superior long-term investment returns are the ultimate measure of performance, a “well company portfolio” may be an attractive option.

This new research suggests that the financial return on wellness programs may extend far beyond traditional ROI measures to the bottom-line outcomes that matter most to both business leaders and the stock market. Here are some links to learn more about research on wellness program outcomes, the HERO Scorecard, and wellness best practices.