Triangle consultant and coach Grace Ueng shares research from Oxford and Harvard that shows a meaningful correlation between workplace wellbeing and firm performance as measured by firm value, return on assets, gross profitability, and stock price.

Do you think workplace wellness has a high priority on your CEO’s agenda? If not, share this column with your CEO.

Editor’s Note: Grace Ueng is the founder of Savvy Growth, a noted leadership coaching and management consulting firm, and an expert on wellbeing and performance science. Grace writes a regular column on happiness & leadership for WRAL TechWire.

In last week’s column, we saw the gap in perceptions between the C-suite and employees on what is being done to ensure workplace wellness. While the C-suite believes they are taking solid measures, their employees do not necessarily agree.

The Hawthorne Effect

The natural question for the C-suite to ask is “do investments in employee wellbeing pay off?”

This has been a question of interest dating back nearly a century with the well-known experiments on worker wellbeing and productivity at the Hawthorne plant of the Western Electric Company. The positive effects of improving working conditions such as softer lighting led to interest by large companies to promote employee wellbeing as a matter of good business.

Since then, there have been numerous academic studies showing a significant correlation between job satisfaction and job performance. Research analyzing Gallup data from 230 organizations across 49 industries in 73 countries found satisfaction to be positively and significantly associated with customer satisfaction, employee productivity, and profitability, and negatively associated with staff turnover.

However, it was not until recently, that data was analyzed from direct measurements of employee wellbeing versus proxies for wellbeing (i.e. company rankings, ratings, and reviews) and correlating to contemporaneous and longitudinal data on firm performance.

Oxford’s Wellbeing Centre’s 2023 Working Paper

Jan-Emmanuel De Neve and George Ward from the University of Oxford and Micah Kaats from Harvard joined forces to study the correlation between employee happiness and firm performance by leveraging data from Indeed, a major jobs website.

When I attended the inaugural symposium hosted by the Harvard Kennedy School’s Leadership and Happiness Lab last spring, Penn’s Marty Seligman, widely known as the father of positive psychology, was smiling ear to ear with the announcement that this research had just been published, alerting us all to read it.

Marty Seligman (photo credit: University of Pennsylvania)

Since 2019, Indeed has been collecting self-reported data on employee wellbeing. The researchers looked at data on answers to these questions:

  1. I am happy at work most of the time.
  2. My work has a clear sense of purpose.
  3. Overall, I am completely satisfied with my job.
  4. I feel stressed at work most of the time.

Happiness is correlated to firm value, ROA, gross profits

I analyzed their research (see working paper) based on large-scale data from 1,600 listed US companies and share my key takeaways:

  • There exist strong correlational relationships between average levels of company happiness and firm value (Q ratio: market value of company/replacement cost of its assets), return on assets (ROA), and gross profits.
  • From answers to the 4 questions, stress was found to be less significantly correlated negatively to performance than either happiness, satisfaction, or purpose were positively correlated.  A certain amount of stress is helpful, whereas chronic stress is not.

Impact on Stock Price?

De Neve, Kaats, and Ward created lists of “Top 100: Highest Wellbeing Places to Work” by year and mapped them against their stock to create an equally weighted portfolio of each year’s 100 happiest companies in terms of their wellbeing scores.

In comparing the “happy” portfolio of stocks over the time periods measured against the indices for overall market performance, the portfolio of stocks from the highest wellbeing places to work was found to outperform the index.

They found that investing $1,000 in January 2021 would leave an investor with around $1,300 by the start of March 2023 in the happy portfolio, compared with roughly $1,100 had they invested instead in the S&P 500.


A literature survey shows that there are six possible reasons for the strong link between wellbeing and performance:

  1. Productivity – those who feel purpose in their work, produce more.  A well-known study of fundraising callers showed those who read stories about how their efforts benefited scholarship recipients subsequently doubled the amount of money they raised in the following month relative to controls.
  2. Social relationships – see Do you have a best friend at work?
  3. Creativity – UNC’s Barbara Fredrickson has shown in her research that happier people have greater mental flexibility and broader awareness, promoting the ability to make sparse connections and generate original ideas.
  4. Health – happier people are healthier and have less absenteeism.
  5. Recruitment – a job offering meaning attracts potential hires, often more than compensation.
  6. Retention – high levels of job satisfaction predict lower rates of turnover.

Leadership implications

After taking into account these caveats:

  1. These analyses are correlational, not causal.
  2. Crowd-sourced data is not necessarily representative and not monitored data collection.
  3. The research included only U.S. data.

This firm-level analysis suggests there may be strong business-related reasons to invest in employee wellbeing as they generally predict higher firm valuations, higher return on assets, higher gross profits, and better stock market performance.

Across industries, over time, wellbeing is proving to be an increasingly important predictor of company performance.

The C-suite seeking to transform the ways they work should put high on their agenda: monitor and determine how best to invest in workplace wellbeing.

About Grace Ueng

Grace is CEO of Savvy Growth, a management and marketing consultancy founded in 2003.  Her great passion is to help leaders and the companies they run to achieve their fullest potential through conducting strategic reviews, marketing audits and coaching.

A marketing strategist, Grace held leadership roles in marketing, business development and product management at five high-growth technology ventures that successfully exited through acquisition or IPO. A TED speaker, her work has been covered in The Wall Street Journal, The Daily Beast, and Inc.

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