Sept. 23 --Companies that focus on worker wellness
and safety significantly outperform the stock market and yield greater value for
investors, new research strongly shows.
In the report, “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,' ” published in the September issue of the Journal
of Occupational and Environmental Medicine, a team of nine researchers tracked
the stock market performance of companies that had won the American College of
Occupational and Environmental Medicine's Corporate Health Achievement Award.
The award is given to “organizations with exemplary health, safety and
environmental programs,” according to the organization.
The researchers modeled four different scenarios
and found that, from 1999 to 2012, the award-winning companies' stock rose by an
average of 97.26 percent. The lowest return in the four scenarios was 75.69
percent and the highest was 140.58 percent.
During the same period, the
Standard and Poor's (an index based on the market capitalizations of 500 large
companies) actually lost money, yielding a cumulative return of -0.77
Some of the companies studied included Boeing, Caterpillar Inc.,
Daimler AG, Dow Chemical Co., GlaxoSmithKline, IBM, Johnson & Johnson,
Lockheed Martin and Union Pacific.
“The logic behind investing in
workplace health is straightforward,” wrote the authors, led by Raymond Fabius,
a pediatrician affiliated with health care research firm HealthNEXT. “A large
proportion of illness is preventable by reducing health risks. Health risks can
be improved through workplace health programs. Reductions of health risks can
lead to reductions in health costs. Worksite health programs produce a positive
return on investment and value on investment.”
Despite the strong correlation between the companies' safety and
health performance and their market performance, the study's authors stopped
short of making a direct causal connection. According to Fabius and his
co-authors, the findings may simply show that companies that are managed well
enough to excel in safety and health metrics are also managed well enough to
Nevertheless, wrote the authors, “The evidence seems
to be building that healthier workforces provide a competitive advantage in ways
that benefit their investors.”
The paper pointed to other research
suggesting that illness and disability reduce total work hours by some 8.6
percent, costing the U.S. economy $468 billion in 1996. The paper also cited
research finding that illnesses and disabilities cost companies more in lost
productivity than they do in medical and pharmaceutical expenses.
Worker safety and health advocates, including David
Michaels, head of the Occupational Safety and Health Administration, have long
argued that strong safety protections are not only good for workers but also for
In a January interview with Bloomberg BNA, Michaels
said he certainly has seen “many employers recognize that managing for safety is
useful not only to prevent injuries and fatalities, but in fact leads to a more
profitable company. And I believe that's being embraced much more widely” (43
OSHR 25, 1/10/13).
As an example, Michaels noted that Paul O'Neill,
former chief executive of aluminum producer Alcoa Inc. and former treasury
secretary under President George W. Bush, has embraced the philosophy.
“We see that that's effective, and I think it's putting to rest the canard
that employers save money by exposing workers to hazards,” Michaels said.
To contact the reporter on this story: Stephen Lee in Washington
To contact the editor
responsible for this story: Jim Stimson at firstname.lastname@example.org
An abstract of the
report, “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,' ” is available at http://journals.lww.com/joem/Abstract/2013/09000/The_Link_Between_Workforce_Health_and_Safety_and.1.aspx.