New Study Links Engagement and Profitability

The Social Science Research Network website recently posted a research report by Alex Edmans, Lucius Li and Chendi Zhang entitled Employee Satisfaction, Labor Market Flexibility, and Stock Returns Around the World that examines the relationship between employee satisfaction and firm performance using lists of the “Best Companies to Work For” in 14 countries. Edmans, a visiting Professor at the London Business School and Professor at the Wharton School’s Institute of Finance and Accounting, has done extensive work promoting the link between engagement and financial performance. The authors note that “employee satisfaction is associated with superior long-run returns, valuation ratios, and profitability in countries with high labor market flexibility,” and that the results “are consistent with high employee satisfaction being a valuable tool for recruitment, retention, and motivation in flexible labor markets.” Read the full report >