Could safer employees yield happier investors?
According to new research, published in the September Journal of Occupational and Environmental Medicine, companies with exemplary health and safety programs also excel on the stock market.
In the study, titled “The Link Between Workforce Health and Safety and the Health of the Bottom Line: Tracking Market Performance of Companies That Nurture a ‘Culture of Health’”, researchers tracked several companies that have won the American College of Occupational and Environmental Medicine (ACOEM) Corporate Health Achievement Award. This award acknowledges innovative health and safety programs that produce measurable results, such as dramatic reductions in workplace injuries, as well as continuous improvement and a culture of safety.
The researchers from HealthNEXT – a company that develops “workforce population health strategies” – tracked a model $10,000 investment and found that, from 1997 to 2012, the award-winning companies consistently outperformed the S&P 500, Standard and Poor’s stock market index, which is based on the market capitalizations of 500 large companies with publicly traded stock.
While the value of the award-winners’ stock increased an average of 97 percent, the S&P index yielded a cumulative return of -0.77 percent.
This may be one of the first times that the correlation between a healthy workplace and a healthy investment has been quantified, but it has repeatedly been acknowledged over the years.
In 2005, ACOEM President Timothy Key said of recipient DaimlerChrysler Corporation: “One thing that is abundantly clear … is that employee health and the bottom line are more intertwined than ever before. The idea that healthy workers and corporate profitability go hand in hand is, thankfully, becoming part of mainstream thinking – and the result has huge implications for the future quality of our work environments.”
David Michaels, head of the Occupational Safety and Health Administration, has also supported this connection. According to a Bloomberg article, in January Michaels said he has seen “many employers recognize that managing for safety is useful not only to prevent injuries and fatalities, but in fact leads to a more profitable company.”
The cause for this connection, however, is not so clear. The HealthNEXT researchers pointed to the obvious link between reduced health risks and reduced health costs, and referenced other studies that have shown high illness and disability rates mean a greater loss of productivity, which is never good for the bottom line. They also postulated that the link could simply be a highly efficient management style, which allows a company to excel in many areas – not to mention, maintaining the extensive documentation that’s required to apply for the ACOEM award.
Many winners, such as 2012 recipient Johnson & Johnson, have been previously recognized for their best practices in workplace health as well as other initiatives such as sustainability.