By Stephen Lee
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 percent.
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 succeed financially.
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 business performance.
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 at firstname.lastname@example.org
To contact the editor responsible for this story: Jim Stimson at email@example.com
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.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)