Perform 4% Better than S&P – Engage Your Employees

Recognize This! – Companies that treat employees well outperform the S&P Index.

Creating a work environment in which employees choose to engage directly impacts the bottom line. Companies who treat employees well have returns at least 4% better than the S&P Index, year after year.

That’s a bold statement to make, yet the results are proven directly in the US Stock Market. Companies in the Parnassus Workforce Fund (as explained in this Fast Company article) include many of the “100 Best Companies To Work For” as well as others that “genuinely cared about their employees as people, not just hired hands.”

The results are indisputable In eight years, the fund has had a 9.63% annualized return (as compared to the S&P Index earnings of 5.58% in the same period). Moreover:

“Another compelling statistic buried in the Parnassus prospectus: Over the past five years–the height of the Great Recession–the average annual return on the Workplace Fund was an incredible 10.81%. The S&P Index for the same period was just 3.97%, a 6.84% difference. [James] Dodson, [founder of Parnassus Investments and portfolio manager of the Parnassus Workplace Fund], believes the wide gap in performance is easily explained: ‘I think what happens when you have a contented workplace, people are willing to put out more effort to improve operations during really difficult times. While I think every organization has their ups and downs, the downs are not as pronounced because everybody pulls together to try to get through the crisis. And, of course, this consistently more engaged performance inevitably reveals itself in the firm’s bottom line.’”

Employee engagement matters. Caring about employees as people and not just human resources makes a tremendous difference to organization success. What can you do?

  1. Give them something to believe in and strive for. Make your mission and values more than just a statement. Make them integral to what every employee does every day in their own, unique, job roles and functions.
  2. Recognize and reward them for significant accomplishments and behaviors. Help employees understand when and how they personally contribute to achieving the mission while living the values by recognizing and rewarding them for doing so – frequently and in a timely way.
  3. Empower them to be the caretakers of your culture. Show you trust employees by encouraging them to also recognize and reward peers and colleagues when they see others living the values and achieving the mission. The culture must be owned by all to be relevant and real to everyone.

Do you believe in the power of employee engagement to drive bottom-line results?

Derek Irvine

About Derek Irvine

The VP of Client Strategy and Consulting at Globoforce, Derek Irvine is one of the world’s foremost experts on employee recognition and engagement, helping business leaders set a higher vision and ambition for their organizations. As a renowned speaker and co-author of "The Power of Thanks" and "Winning with a Culture of Recognition," he teaches companies how to use recognition to proactively manage company culture. Derek holds a B.Comm and Masters of Business Studies from the Smurfit Graduate Business School at University College Dublin.

3 Responses

  1. […] series of blog posts may be an ongoing theme of “isn’t that obvious?” Yesterday, I shared results of the Parnassus Fund (consisting of companies that treat their employees well and with respect), which performs […]

  2. […] blog posts may be an ongoing theme of “isn’t that obvious?” Yesterday, I shared results of the Parnassus Fund (consisting of companies that treat their employees well and with respect), which performs […]

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