Studies Link Healthy Work-Forces to Positive Stock Market Performance

Companies with healthy work-forces appear to have a competitive edge in the stock market, revealed a study, that compared the stock market performance of ten of the healthiest companies in South Africa to the market at large. Nine different investment scenarios were tested and, in all nine scenarios, the healthy companies outperformed the Johannesburg Stock Exchange All Share Index. The study is published in the Journal of Occupational and Environmental Medicine (JOEM).

The new research comes on the heels of a trio of studies published in the January 2016 issue of JOEM that examine the stock prices of U.S. companies with high-performing employee health and well-being programs. All three studies found companies with best-in-class workplace health programs outperformed the Standard & Poor's index by 7% to 16% per year.

‘Companies with healthy work-forces appear to have a competitive edge in the stock market. This finding adds to a growing mountain of evidence that workforce health is an important factor in the financial health of a corporation.’

Daniel Malan, a lecturer at the University of Stellenbosch Business School, a consultant to Discovery Limited, and an author of the South African study, said, "Taken together, these four studies add to the growing mountain of evidence that workforce health is an important factor in the financial health of a corporation. Now that the connection has been made, employers can see that the decision to invest in the health of their employees is a decision associated with a healthy bottom line. Not only do employees benefit, but stockholders benefit as well."

Authors on all four studies are members of the Vitality Health Metrics Working Group, a group of health experts and corporate leaders that is calling for the voluntary public reporting of aggregated workforce health metrics. The group released a report during the World Economic Forum last month that provides a roadmap for corporations to include workforce health metrics in existing reporting platforms such as 10-K forms and annual reports.

Derek Yach, chief health officer of Vitality and chair of the Health Metrics Working Group, said, "In order for corporations to achieve sustained success, they must focus on the day-to-day issues that are critical to progress, such as the health of their most valuable asset - their employees. When workforce health metrics are publicly reported, improving the health of employees will become a priority for CEOs and boards of directors. When workforce health is a priority, it will improve."

A limitation of the research is the possibility of reverse causation, meaning financially successful companies can afford to spend money on programs that improve the health of their work-forces. Also, the authors recommend the studies be reproduced with a larger sample size and a longer period under analysis.

This research was supported by a grant from Vitality, which is supported by Discovery Limited. The research was conducted independently without any interference from Vitality or Discovery and the authors declare no conflict of interest.

Source: Eurekalert