Companies with ‘Culture of Health’ Outperform Others
Those with strong health, wellness, and safety programs bested S&P 500 average rate of return in investment simulations
Companies that build a culture of health by focusing on the well-being and safety of their workforce may yield greater value for their investors, according to a study published in the September issue of the Journal of Occupational and Environmental Medicine (JOEM), official publication of the American College of Occupational and Environmental Medicine (ACOEM).
The stock market performance of companies that had received ACOEM’s Corporate Health Achievement Award (CHAA), which annually recognizes the healthiest and safest companies in North America, was conducted at HealthNEXT LLC and analyzed by lead authors Raymond Fabius, MD, and R. Dixon Thayer, and colleagues. Companies that receive the award must be engaged in demonstrable and robust efforts to reduce health and safety risks among their employees.
Tracking an initial theoretical investment of $10,000 in publicly traded CHAA-recipients from the mid 1990s to 2012, researchers found that these award-winning CHAA companies outperformed the S&P 500. Four investment scenarios were created, using a combination of simulations and past market-performance to create investor portfolios for comparison. While the margin of return varied, CHAA recipients outperformed the market in each of the four scenarios.
In the highest-performing scenario, CHAA companies had an annualized return of 5.23% vs. −0.06% for the S&P 500. In the lowest-performing scenario, CHAA companies had an annualized return of 6.03% vs. 2.92% for the S&P 500.
“Our results strongly support the view that focusing on health and safety of a workforce is good business,” said the study authors. “Engaging in a comprehensive effort to promote wellness, reduce the health risks of a workforce, and mitigate the complications of chronic illness within these populations can produce remarkable impacts on health care costs, productivity and performance.”
The authors acknowledge that the study focuses on the performance of a small collection of companies on the stock market for a limited number of years, and that more research is needed before a strong causal relationship can be established between health and safety programs and market results. But they conclude that the study adds new evidence-based data to a growing body of literature indicating that “healthy workforces provide a competitive financial advantage in the marketplace.”
“Although correlation is not the same as causation, results consistently and significantly suggest that companies focusing on the health and safety of their workforce are yielding greater value for their investors,” the authors write.
ACOEM’s Corporate Health Achievement Award was created in 1996 as a part of ACOEM’s global efforts to promote better health, wellness, and safety in the workplace. Since 1996, 29 companies have been recognized for their achievements after undergoing a rigorous evaluation by health experts that included on-site visits and extensive program documentation. Winning companies demonstrate that they have made considerable investment into the health, safety, and wellness of their workforces. Today, the CHAA is one of the key programs in ACOEM’s comprehensive Healthy Workforce Now initiative, which provides tools, resources and research to help employers implement create a true culture of health for their employees. •
Citation – Fabius R, Thayer RD, Konicki DL, et al. 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.” J Occup Environ Med. 2013;55(9):993-1000.
Abstract – Objective: To test the hypothesis that comprehensive efforts to reduce a workforce’s health and safety risks can be associated with a company’s stock market performance. Methods: Stock market performance of Corporate Health Achievement Award winners was tracked under four different scenarios using simulation and past market performance. Results: A portfolio of companies recognized as award winning for their approach to the health and safety of their workforce outperformed the market. Evidence seems to support that building cultures of health and safety provides a competitive advantage in the marketplace. This research may have also identified an association between companies that focus on health and safety and companies that manage other aspects of their business equally well. Conclusions: Companies that build a culture of health by focusing on the well-being and safety of their workforce yield greater value for their investors.
About the Journal of Occupational and Environmental Medicine — The Journal of Occupational and Environmental Medicine (www.joem.org) is the official publication of the American College of Occupational and Environmental Medicine. Edited to serve as a guide for physicians, nurses, and researchers, the clinically oriented research articles are an excellent source for new ideas, concepts, techniques, and procedures that can be readily applied in the industrial or commercial employment setting.
About ACOEM — The American College of Occupational and Environmental Medicine (ACOEM) represents nearly 4,500 physicians specializing in occupational and environmental medicine. Founded in 1916, ACOEM is the largest medical society in the United States dedicated to promoting the health of workers through preventive medicine, clinical care, disability management, research, and education. For more information, visit www.acoem.org.
About HealthNEXT – Headquartered in Philadelphia, HealthNEXT, is a leading developer of workforce population health strategies. The company has developed a Six Sigma approach to population health that breaks each constituent component of the employee health care experience into a series of data points that can be tracked over time. By proactively analyzing and systematically improving performance against these benchmark data points, HealthNEXT, helps companies improve the health of their workforce and bend their health care costs curve. For more information, visit http://healthnext.com.
About the Corporate Health Achievement Award – Established by ACOEM in 1996, the purpose of the Corporate Health Achievement Award (CHAA) is to foster awareness of quality health, safety, and environmental programs; identify model programs and outstanding practices with measurable results; and encourage organizational self-assessment and continuous improvement. For more information, visit www.chaa.org.