Workplace Health Programs Linked to Improved Stock Performance

January 8, 2016 Shahnaz Radjy and Derek Yach

New research has just been published demonstrating that companies with best in class workplace health programs tend to outperform their peers in terms of stock performance. The key take-away is that investing in evidence-based employee health programs is a proxy for other highly effective business practices and great governance.

Three studies published by Ray Fabius, Ron Goetzel, Ron Loeppke, and other colleagues in the latest edition of the Journal of Occupational and Environmental Medicine (JOEM) found that companies investing in employee health out-performed their peers by an average of 7% to 16% per year.

Specifically, the studies used similar methodologies to look at companies who were

These companies’ performance were compared to the Standard and Poor (S&P) 500 over 14 years in the first two cases, and six years in the case of HERO results. In the case of Koop Award recipients, the difference over the 14 years was as much as a stock appreciation of 333% versus the S&P stock appreciation of 105%.

This builds on a first study by Fabius et al. in 2013, and paves the way for a forthcoming study of South African companies which implies these findings are of global relevance.

While these findings do not address causation, they do provide a correlation between health and financial performance, suggesting that investing in employee health and well-being is part of good business. Even the more conservative interpretations will conclude that investing in health is not a bad idea.

As mentioned in the JOEM editorial by Michael O’Donnell, at a time when healthcare costs are often part of the top 10 – and definitely part of the top 100 – issues CEOs care about, but investing in employee health may not be, these findings can hopefully shift the conversation and help corporate leaders value investing in prevention.

Additionally, an important call to action is for companies to start reporting on health. This will be a topic discussed at the World Economic Forum Annual Meeting in Davos later this month, and the focus of a report and we will soon be launching on the business case as well as proposing concrete metrics that could be used to put corporate reporting on health promotion and chronic disease prevention on the map.

 

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