Employee satisfaction beats the market

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Across multiple studies in the United States and global markets, companies with higher employee satisfaction have been shown to deliver superior long-term returns, indicating that worker morale carries hefty financial weight.

Most recently, Glassdoor reported this month that the publicly traded companies on its Best Places to Work list outperformed the S&P 500 from Jan. 2009 to Oct. 31, 2025. Over that period, the S&P 500 index grew by an average of 12.6% per year, while a portfolio balanced across Glassdoor’s list of companies with the happiest employees grew by an average of 17.4% annually.

A $1,000 investment in Jan. 2009 would have gained $6,573 in value (excluding dividends) in the S&P 500 through Oct. 2025. That same investment split evenly across each year’s best places to work would have grown $14,227, according to Glassdoor’s lead researcher, Chris Martin.

“The most interesting part of the Glassdoor findings isn't even necessarily that happy employees outperform the market, but more the length of time over which the advantage holds,” said Eric Speer, CEO of Club Systems, a consultant and software provider to gyms and fitness centers. “Sustained outperformance over 16 years points to a repeatable business advantage rather than a 'feel good spike' driven by short-term morale initiatives. That's because satisfied employees tend to behave like long-term owners rather than short-term renters. 

“They make decisions with the future in mind because they expect to still be there. That shows up in how carefully resources are used, how thoughtfully customers are treated, and how willing people are to invest effort into improvements that will not pay off immediately. Financial markets reward that kind of patience far more than short bursts of cost cutting.”

Another underappreciated factor is how employee satisfaction affects adaptability, Speer said.

“Organizations with high trust can change direction faster because people are less defensive,” he said. “When strategy shifts, employees do not assume the worst. They engage. That reduces the cost and disruption of change, which is critical in volatile markets. Over time, companies that adapt with less internal resistance simply perform better.”

You’ll find similar research and similar conclusions from places with high labor market flexibility like we see in the U.S. and United Kingdom, as opposed to regulated labor markets that mandate certain minimum employee conditions. Where employers have choices, the ones creating cultures of satisfaction and happiness consistently outperform those that do not.

A University of Oxford and Harvard University study found that investment in the top 100 U.S. workplaces ranked by employee wellbeing would have returned 20% more than the S&P 500 or Dow Jones over the course of their two-year study between 2021 and 2023.

A 2025 study from the Pacific-Basin Finance Journal found the same correlation in the Korean market.

“The Glassdoor data puts numbers around something many leaders have sensed but struggled to prove,” said Chris Gray, CEO of Brandwoven, a full-service agency specializing in helping companies sell products on large ecommerce marketplaces, such as Amazon $AMZN, Walmart $WMT, and Target $TGT. “Employee satisfaction shows up on the balance sheet because it changes how organizations function day to day. 

“When people feel respected and listened to, decision making speeds up, waste drops and execution improves. Those effects are quiet, but they compound over time, which is exactly what long term financial performance reflects.”

What often gets missed in this conversation is that satisfied employees do not simply work harder, they work cleaner, Gray said. 

“Teams with high trust spend less time second guessing, covering themselves, or navigating internal politics,” he said. “That reduces friction across everything from product development to customer service. Fewer handoffs break down, fewer projects stall, and fewer customers fall through the cracks. Those efficiencies rarely appear in isolation on a spreadsheet, but collectively they shift margins.

“The Glassdoor figures also challenge the idea that culture investments are soft or optional. A portfolio outperforming the S&P by that margin over more than a decade suggests something structural is happening. Companies that consistently rank as good places to work tend to retain institutional knowledge. They lose fewer experienced people mid project and spend less replacing them. Recruitment costs drop, onboarding time shrinks, and teams spend more time producing value rather than resetting after turnover.”

Gordon Cummins $CMI, a long-time corporate advisor and CEO of Cudio, a firm that helps businesses scale by supporting them through the migration and implementation of technology solutions, said the benefits of investing in your people show up quickly if you’re measuring “the right things.”

“When you invest in people and culture, the first place you see it is in the P&L and working capital,” Cummins said. “Lower voluntary turnover cuts backfill hiring, onboarding, agency fees, and overtime cover, while better manager quality reduces rework, scrap, warranty claims, and retail chargebacks. Safer, more engaged teams lift picking accuracy and on‑time delivery, which trims expedite fees, penalties, and the buffer stock you carry to absorb mistakes. Cleaner processes and fewer stock errors shrink write‑offs and cycle counts, improve cash conversion, and free capacity for higher‑margin work without adding headcount.”

You’ll see results within one to three quarters, he said.

“You can see lower attrition, fewer quality escapes, improved safety, and a drop in unplanned overtime and expedite costs,” Cummins said. ”As processes stabilize, fulfillment accuracy and first‑time‑right rates improve, which begins to lower inventory buffers and cost per order in the same window. The bigger moves in gross margin, customer lifetime value, and innovation throughput usually materialize over 12 to 24 months as service reliability compounds and teams have more bandwidth to improve.”