Employee Satisfaction Linked to Stock Market Performance

Low Satisfaction Scores Decrease Profits

It is no surprise that great companies are also profitable, and that they attract and keep top talent but does the opposite hold true and does that mean that companies with unhappy employees work for companies that are not as profitable?
In a recent Glassdoor research report Dr. Andrew Chamberlain explores whether satisfied employees impact stock performance. In his research he compares the financial performance of companies with satisfied—and less satisfied—employees and the correlation between stock returns and employee satisfaction. The Glassdoor Research report is called “Does Company Culture Pay Off?” and it is fascinating for employee engagement-driven gurus like us, to learn that the answer appears to be ‘yes’.
Chamberlain examined the portfolios of 30 companies with the lowest employee satisfaction scores and found that they under-performed the stock market as well. He also found that there is a meaningful link between employee satisfaction and stock market performance among publicly held companies.

Chamberlain admits it is hard to know the exact causes behind this relationship but suggests three possible causes:
1. Fast-growing companies are flush with cash and have an easy time attracting and keeping happy employees.
2. Unprofitable companies may be quick to cut workplace amenities, causing employee morale to plummet.
3. Fostering a satisfied workforce per se leads to higher productivity and profits.

The upshot Chamberlain says, is that ‘Employee satisfaction is a strong predictor of long-term company performance’.

At Insightlink our purpose is to help give you the full picture and let you hear how your employees feel about their experience at your organization, so you know what you are doing well and what is wrong, so you can take action. For more information about our job satisfaction and employee engagement surveys please visit us at www.insightlink.com.

Original article here: http://www.glassdoor.com/blog/company-culture-pay/