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Emplo loyee E Eng ngageme ment nt: : Wha hat Is Is It It R Really W lly Worth? h?
Andrew Chamberlain, Ph.D. Chief Economist
#Glassdoor
#Glassdoor
What do these 5 companies have in common?
Emplo loyee E Eng ngageme ment nt: : Wha hat Is Is It It R - - PowerPoint PPT Presentation
Emplo loyee E Eng ngageme ment nt: : Wha hat Is Is It It R - - PowerPoint PPT Presentation
Emplo loyee E Eng ngageme ment nt: : Wha hat Is Is It It R Really W lly Worth? h? Andrew Chamberlain, Ph.D. Chief Economist #Glassdoor What do these 5 companies have in common? #Glassdoor 3 Management is focused on consumers
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“Management is focused on consumers and employees to the detriment of shareholders. To me, why would I want to buy a stock like that?”
- Jeff Tryka, analyst at Delafield Hambrecht
#Glassdoor
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Is boosting employee satisfaction worth the investment?
#Glassdoor
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Today, I want to leave you with one big idea.
#Glassdoor
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Employee satisfaction is causally linked to financial profitability.
#Glassdoor
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- 1. Why should we believe crowd-sourced data on
employee satisfaction?
- 2. What does research say about employee
satisfaction and financial performance?
- 3. What are key drivers of employee satisfaction? (It’s
not what you think.)
Key questions
#Glassdoor
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Why should we believe crowd-sourced data on employee satisfaction?
#Glassdoor
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How much does this ox weigh?
#Glassdoor
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#Glassdoor
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What weighing cows teaches us about data
- Together we know a lot.
- Errors tend to cancel out in aggregate.
- Economists call it the “central limit theorem.”
- Crowd sourced platforms provide powerful insights.
#Glassdoor
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“Wisdom of crowds” in Glassdoor data
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“Wisdom of crowds” in Glassdoor data
#Glassdoor
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“Wisdom of crowds” in Glassdoor data
#Glassdoor
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How does employee satisfaction impact financial performance of companies?
#Glassdoor
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Let’s look at the research
#Glassdoor
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34M
registered users
10M
reviews
445K
companies
190
countries
Glassdoor knows a lot about employee satisfaction
Glassdoor internal data, Sept 2015
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Problem: How can we untangle causality between employee satisfaction and financial performance?
#Glassdoor
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Solution: We use econometrics.
#Glassdoor
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Study Number One
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Source: Huang, Minjie et al. (2015). “Family Firms, Employee Satisfaction, and Corporate Performance,” Journal of Corporate Finance, Vol. 34, pp. 108-127. Link: http://www.sciencedirect.com/science/article/pii/S0929119915000929
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Findings
Employee satisfaction has a causal and statistically significant effect on company value.
#Glassdoor
Source: Journal of Corporate Finance, 2015
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Findings
Is this big enough to matter? Boosting employee satisfaction by one star raises the market value of a company by (0.141 / 1.790) = 7.9% And this has a causal interpretation, not just a correlation.
#Glassdoor
Source: Journal of Corporate Finance, 2015
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Study Number Two
- Glassdoor’s “Best Places to Work” list
(from crowd-sourced reviews).
- Compares stock performance of highly
rated companies to the S&P 500.
- And of poorly rated companies as a
control group.
- Looks for upward jumps in stock
prices following “Best Places to Work” announcement.
#Glassdoor
Source: Chamberlain, Andrew (2015). “Does Company Culture Pay Off? Analyzing Stock Performance
- f ‘Best Places to Work’ Companies,” Glassdoor Economic Research working paper.
Link: https://research-content.glassdoor.com/app/uploads/sites/2/2015/05/GD_Report_1.pdf
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Findings
Glassdoor’s “Best Places to Work” list
- utperformed
the S&P by 115.6%
#Glassdoor
Source: Glassdoor Economic Research, 2015
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Findings
Companies with dissatisfied employees dramatically underperform the stock market.
#Glassdoor
Source: Glassdoor Economic Research, 2015
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Findings
Event study: Stock markets are already pricing signals
- f employee
satisfaction into stock returns.
Winner Announcement
#Glassdoor
Source: Glassdoor Economic Research, 2015
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Study Number Three
#Glassdoor
Source: Edmans, Alex (2011). “Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices,” Journal of Financial Economics, Vol. 101, Issue 3, pp. 621-640. Link: http://www.sciencedirect.com/science/article/pii/S0304405X11000869
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Findings
Companies with satisfied employees generate significant excess stock returns. (0.29% per month or 3.5% annual boost in stock returns)
#Glassdoor
Source: Journal of Financial Economics, 2011
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What are the key drivers
- f employee satisfaction?
#Glassdoor
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Factors driving employee satisfaction
- We used Glassdoor data
to ask, “Does money buy happiness?”
- 221,000 users that
contributed both a company review and salary report.
- We identified which factors
most affect workplace satisfaction.
#Glassdoor
Source: Glassdoor Economic Research, 2015
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Findings: Salary is not the main driver of satisfaction
#Glassdoor
Source: Glassdoor Economic Research, 2015
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Culture, opportunities and leadership matter most
#Glassdoor
Source: Glassdoor Economic Research, 2015
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Lessons for leaders
Compensation matters. But other factors are far more important for employee satisfaction.
#Glassdoor
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What have we learned today?
#Glassdoor
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Don’t dismiss crowd-sourced data on employee satisfaction
#Glassdoor
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Research clearly shows satisfied employees drive financial returns.
#Glassdoor
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Good culture & values matter more than pay for employee satisfaction.
#Glassdoor
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Thank you!
#Glassdoor
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Questions ns? P Ple lease r reach o h out. .
andrew.chamberlain@glassdoor.com @adchamberlain
Andrew Chamberlain, Ph.D. Chief Economist
glassdoor.com/research
#Glassdoor