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Companies with happier employees outperform their peers

October 5, 2020, 9:49 PM UTC
mikroman6—Getty Images

Corporate America is changing.

Look no further than the Business Roundtable’s redefined statement of purpose for corporations. Instead of putting shareholders’ interest alone first, its members have agreed to prioritize the interest of various stakeholders, such as employees.

So how does doubling down on employees affect the bottom line? Pretty well, according to our research.

Fortune teamed up with Thrive Global, SAP SuccessFactors, and Qualtrics to build the Thrive XM Index*, a ranking of companies with the best employee wellbeing. To create the index, we surveyed a sample of more than 20,000 full-time U.S. employees from over 900 companies. We asked them about everything: work-life balance, career advancement, mental health, company policies.

From this massive survey, Thrive Global researchers used a scoring algorithm to generate the score for companies. Then they looked at the highest-ranked companies on the index to see if their better employee experiences translated into better financial results. 

The top-ranked Thrive XM Index companies—even when factoring in industry—saw their stock gains outperform those of their peers. What’s more, the top 10% of Thrive XM Index companies saw their return on equity climb 27.2% in the second quarter of 2020.

The same goes for profits: Among the top 10% of Thrive XM Index companies, EBITDA climbed 24.8% in the second quarter. The group’s S&P 500 Index peers saw EBITDA climb 20.5% during the same period.

Maybe stakeholder capitalism is good for shareholders after all?

*Methodology: Thrive Global, SAP SuccessFactors, Qualtrics and Fortune teamed up to build the Thrive XM Index. To create the Thrive XM Index, the group surveyed a sample of more than 20,000 full-time U.S. employees from over 900 distinct companies across the country, asking than 100 questions describing the influence their organization has/had on critical life experiences and moments that matter—both in and outside of the workplace—as well as the impact working for their company has on their holistic wellbeing. 

All employee experience data was collected between August and November 2019. Thrive XM Index scores were calculated only for those companies incorporated in the U.S. and eligible for the Fortune 500. We required enough responses in each participating company to reach a 95% statistical Confidence Level and 5% Margin of Error or better.

For a full methodology go here


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