Employee satisfaction → Company Financial Performance

Just came across this article exploring the relationship between employee satisfaction and long-run stock performance. Yes, this is a topic that's been done to death, but from my perspective relatively little hard evidence is available to prove the satisfaction → company performance link.

Here's the abstract for a few key points:

This paper analyzes the relationship between employee satisfaction and long-run stock performance. An annually rebalanced portfolio of Fortune magazine's "Best Companies to Work For in America" earned 14% per year from 1998-2005, over double the market return, and a four-factor alpha of 0.64%. The portfolio also outperformed industry- and characteristics-matched benchmarks. Returns continue to be significant when extending the sample back to 1984, before the list was published in Fortune. These findings have three main implications. First, employee satisfaction is positively correlated with shareholder returns and need not represent excessive non-pecuniary compensation. Second, the stock market does not fully value intangibles, even when independently verified by a publicly available survey. This suggests that intangible investment generally may not be incorporated into short-term prices, underpinning managerial myopia theories. Third, certain socially responsible investing ("SRI") screens may improve investment returns.

In addition, here's a white paper that discusses this article, which also includes some references to other studies along the same vein.