A blog about reputation, marketing and employee morale.

More satisfied employees = more profits

Posted by Janet Smith on April 8, 2008

A few months ago I read this article (free registration required) on the website of the University of Pennsylvania’s Warton School, summarizing research conducted by Alex Edmans, a finance professor there. By analyzing stock returns and corporate employee satisfaction levels, Edmans found what he believes to be a definite correlation between a company’s financial success and the satisfaction level of its employees.


In the article, Edmans talks about the “increasing importance of employee satisfaction as a motivational tool. Pleasant working conditions can lead to employees identifying with the firm, and thus exerting more effort than the minimum required by the employment contract. Moreover, it can be a powerful method of retaining key employees.”

I’m speechless.

My sarcasm isn’t directed toward Mr. Edmans, though, and I mean no disrespect toward the esteemed researcher/author/professor. It’s just that I’m imagining some execs reading about this research and saying to themselves, “Well, finally, the proof I’ve been waiting for. Our bottom line will improve if employees are treated well and have decent working conditions. Let’s see…I’ll tell managers that effective immediately, they must bring donuts to their direct reports once a month.”

Cookies and mugs are a step in the right direction, but don’t begin to address what employees need to be satisfied and engaged. I’m always pleased when research spotlights the connection between employee satisfaction and engagement, and an organization’s success. But I’m overjoyed when I encounter those rare, special leaders who focus on making their employees feel connected and happy—simply because it’s the right thing to do.

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