A recent article in the Harvard Business News by Alex Edmans, Finance Professor at London Business School, looks at the links between employee satisfaction and long term value.
The results clearly confirm what we believe and know at IPT – employee satisfaction delivers increased long term value.
The full article can be accessed via the link at the bottom of this post but here are the key messages: –
- Employee satisfaction was measured by the ‘Great Place to Work Institute’ whose measurement is independent, thorough and respected by managers and employees alike
- Employee satisfaction was correlated with stock market performance over 28 years
- Firms with high employee satisfaction outperform their peers by 2.3-3.8% pa
- Results suggest that it is employee satisfaction which causes good performance, rather than good performance allowing firms to invest in employee satisfaction
- The message to managers is that companies that treat their workers better do better
- Investors are advised to look for companies with high employee satisfaction because it delivers long term value and the market as a whole does not recognise this
- Managers that focus too hard on short term results (and many do) at the expense of employee satisfaction, sacrifice long term value for their business and their investors
Here’s the link to the article
IPT’s view – Don’t sacrifice long term value for short term gain. Invest in building a healthy motivated organisation and make sure your returns are better by 2.3 – 3.8% pa
Want to know how? Just drop us a line.