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Satisfied employees also make investors happy

Hamid Boustanifar , Associate Professor
Young Dae Kang , Chief Vice Chairman, Bank of Korea Labor Union - PhD in finance, EDHEC Business School

Hamid Boustanifar, Associate Professor at EDHEC, presents, in an article originally published in french in The Conversation, his work on the link between employee job satisfaction and company performance.

Reading time :
17 Nov 2022
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The volume of assets under management that incorporate an element of socially responsible investment (SRI) has grown exponentially over the past decade, now exceeding USD 35 trillion, or about 40% of all professionally managed assets.

These investments are driven by strategies that take into account at least one dimension related to environmental, social and governance (ESG) factors in portfolio selection. Whether these investment strategies outperform others remains a source of debate between academics and practitioners.

In our recent research, published in the Financial Analysts Journal, we focus on one aspect of corporate social responsibility: employee satisfaction. Using four decades of data, from 1984 to 2020, we find that a portfolio geared towards companies with the highest employee satisfaction outperforms an average portfolio by 2 to 2.7% per year.