Making work lucrative

It is a known fact that employee satisfaction enhances retention and motivational level of the workforce. But who knew it could even result in higher stock returns? Researchers Alex Edmans, Lucius Li and Chendi Zhang studied companies selected from a list of “100 best companies to work for” in 14 countries and applied two measures — employment protection legislation index and country-level labour market flexibility. They found that in flexible labour markets such as the US, where firms face fewer hiring and firing restrictions, employees perform better ensuring a sustainable competitive advantage, which benefits the firm’s value. On the other hand, in countries with regulated labour markets, the expenditure on employee satisfaction results in diminishing marginal returns.

Title : Employee Satisfaction, Labour Market Flexibility, and Sock Returns Around The World

Source : Social Science Research Network