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Surprise! The Happier Companies make more money.

In 2005, Investment Manager Jerome Dodson challenged the cosy consensus about what makes a great company to invest in. Now, eight years and 300 million dollars later, his peers know he was right.
The Parnassus Workplace Fund, which he established in April 2005, has been enormously, and enduringly successful. Since the fund’s inception it’s had a 9.6% annualised return. This compares to the S&P Index which has earned just 5.6% during the same period. And over the past five years -the height of the Great Recession- the Workplace Fund achieved an average annual return of an incredible 10.8%. The S&P Index for the same period was just 4%. His hunch? Create a fund that invests only in organisations where employees are really happy.
Every year at around this time, we (GPTW) announce our lists of the Best Workplaces in almost 50 countries worldwide, attracting a fair amount of media coverage and comment. We also highlight one of the key reasons why so many of the world’s leading brands are so committed to being Great Places to Work -it helps them to make more money!
But I find it a real challenge to get that message across, possibly because the media prefer to focus on the frills often found in these great workplaces rather than the skills which make them great workplaces to start with. I suppose that “Trust linked to Superior Annualised Returns” isn’t quite as compelling a headline as ‘Workers’ Paradise Found’ or “Oooooo Heaven is a Workplace on Earth”.
That’s why I was delighted to see an extended article in Fast Company Magazine about Jerome Dodson – a Harvard Business School graduate and founder of Parnassus Investments.
He has seen the Parnassus Workplace Fund grow from just $600,000 in 2005 to a $300 million fund in 2013. Rating agency Morningstar ranks the fund highest in shareholder return compared to 1,303 other peer funds.
Dodson was inspired by a 1998 meeting with Milton Moskowitz. (Milt, along with his associate Robert Levering, oversaw the production of the first “Best Companies To Work For” list ever published in Fortune magazine. Robert went on to co-found Great Place to Work).
Fast Company reports that, according to a 1997 article in the San Francisco Chronicle, many business leaders dismissed the earliest lists of “Best Places To Work” and derided them as being “a ’beauty contest’ that didn’t matter to anyone outside of corporate personnel departments.”
But Moskowitz, Great Place to Work, and now Dodson, have gone on to prove that the leaders at organizations which ensure employees feel valued, supported, developed, and rewarded are the most enlightened. They inspire a greatly expanded bottom line and set an example for all to follow in this 21st century.
You can read the full Fast Company article here The Proof is in the Profits: America’s Happiest Companies Make More Money.
Text by Bob Lee, Communications Director, EMEA Great Place to Work.

Save the date: Roma 4,5 giugno Prize Giving Ceremony (35 Italian Best Company and European 100) and European GPTW Conference on The Great Beauty of Culture Transformation

 

 

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