Working Paper Series 2304 - Workplace Wellbeing and Firm Performance - Jan-Emmanuel De Neve, Micah

His efforts eventually gave birth to the “human relations movement” and led to the first scientific experiments on worker wellbeing and productivity at the Hawthorne plant of the Western Electric Company in the 1930s (Muldoon, 2012). [...] As a result, even with the inclusion of control variables, it can be difficult to isolate the strength and significance of specific causal pathways from evaluative, affective, and eudemonic wellbeing to financial return.3 Using more direct measurements of wellbeing can help paint a more nuanced and complete picture of the relationship between employee wellbeing and firm performance. [...] To investigate the relationship between wellbeing and performance at the firm level, we begin by presenting the results of pooled cross-section regression analyses, such that: Yjt = βSWBjt +X ′ jt + δjt + θt + ϵjt, (1) where Yjt is the performance of company j in year t and SWBjt is the mean level of employee subjective wellbeing for company j in year t. [...] To be concrete, we take the top 100 firms from the 2020 “Highest Wellbeing Places to Work” list, invest in an equally-weighted portfolio of those companies on the first trading day of 2021, and keep the holding until the final day of the trading year. [...] Despite the vast size of the wellbeing data accumulated by Indeed, we are forced to remove much of the broader sample for the purposes of this investigation.