What’s Culture Worth? Stock Performance of Glassdoor’s Best Places to Work 2009 to 2019

May 1, 2020

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Glassdoor’s annual Employees’ Choice Award for the Best Places to Work has grown into a celebrated institution. Since its launch 12 years ago, the award has recognized a diverse set of more than 250 U.S. employers as Best Places to Work. Throughout the past decade, one of the most commonly asked questions about those recognized as Best Places to Work is whether they are high-performing companies. That is, do companies with high employee satisfaction on Glassdoor outperform their peers financially?

This study updates our original 2015 analysis of the real-world stock market performance of companies named to Glassdoor’s Best Places to Work list. We examine the full history of publicly-traded companies named to the annual award from 2009 through 2019 and explore the link between company rank in the annual award and subsequent stock performance. 

Key Findings:

  • We find a simple investment strategy of buying an equally weighted portfolio of each year’s U.S. large BPTW winners outperforms the S&P 500 index in nine of the 11 years we examined. On average, stocks of BPTW winners earned 20.3 percent per year between 2009 and 2019, compared to 12.9 percent for the S&P 500. 
  • Over time, the compounded gap in stock performance between BPTW winners and the overall stock market is substantial. A hypothetical investment of $1,000 in each new class of BPTW winners beginning in 2009 would have grown to $6,529 by 2019, a total investment return of 553 percent. By contrast, $1,000 invested in the S&P 500 index for the same period would have grown to $3,580, a total return of 258 percent — an outperformance by BPTW winners of 295 percentage points compared to the S&P 500 index. 
  • Three industry sectors lead in terms of stock performance among BPTW companies: Retail (40.5 percent average annual return in the year after award recognition); professional and business services (28.3 percent); and information technology (24.7 percent). The lowest stock returns among award winners were found in more traditional sectors of the economy: Construction, repair and maintenance (-1.4 percent); oil, gas, energy and utilities (3.9 percent); and insurance (4.4 percent).
  • Among companies, Whole Foods (now a subsidiary of Amazon) saw the highest annual returns earned by any BPTW winner in the year after an award recognition. It earned an annual return of 191 percent in 2009. Other BPTW winners with above-average stock returns include Nordstrom (+182 percent in 2009), and Orbitz Worldwide (now a subsidiary of Expedia) (+164 percent in 2013). 
  • Among the 134 publicly-traded BPTW winners we examined, the NASDAQ-listed companies collectively saw higher returns compared to the other major U.S. exchange. The 81 listed on the New York Stock Exchange (NYSE) earned an average annual stock return of 16.9 percent from 2009 to 2019. By contrast, BPTW winners traded on the NASDAQ exchange averaged 24.9 percent — nearly twice the average return of the S&P 500 index during that period. 
  • Does rank on the annual BPTW list matter to stock performance? We find a positive — although very weak — association between company rank on the yearly award and subsequent stock market performance. On average, rising 10 places in the BPTW ranking is associated with a 1.7 percentage point rise in annual stock returns in the subsequent year.
  • Consistent with the growing academic literature that finds a link between employee culture and business performance, we find that stocks of publicly-traded winners of Glassdoor’s Best Places to Work award historically outperformed the U.S. stock market in most years.

For more information, download “What’s Culture Worth? Stock Performance of Glassdoor’s Best Places to Work 2009 to 2019”.