Why Investors Should Take a Broad Look at Wellness in Seeking Returns

By Cesar Carvalho, Co-Founder & CEO, Gympass

The wellness industry is getting more attention than ever from investors, and for good reason. It’s now predicted to reach $7 trillion by 2025, Fidelity reports. This presents shareholders with all sorts of opportunities to track growing lists of stocks that can promise returns.

But to really tap into the wellness industry, investors need to take a broader look. When you think “wellness,” don’t just think of companies that make health their prime focus. Think about the wellness activities of any company you may want to invest in, and what they’re doing to support their employees’ physical and mental health.

In a column for the Harvard Law School Forum on Corporate Governance, three analysts declare workplace wellness and employee mental health “an emerging investor priority.” It has become a matter “of external interest,” they write. Even matters of emotional wellness “are now valued by shareholders, as well as other stakeholders, who are recognizing how these issues affect personal and professional lives, productivity, morale, recruitment, retention, and ultimately influence a business’s ability to generate long-term sustainable value as it prioritizes employees.”

The State of Work-Life Wellness report published by my company, Gympass, shows the link between employee wellness and financial success more clearly than ever. Among the findings: Employees who exercise regularly are 15% more likely to have better job performance, and those who eat healthy are 25% more likely.

More than three quarters of workers (77%) say they would consider leaving a company that does not focus on well-being. In the era of the Great Resignation, this presents a major problem — and a major opportunity. The job market continues to be strong, and businesses are still having trouble hiring. They need every competitive advantage they can get in order to woo top talent.

Executives must join in a culture of wellness too. I learned this from experience. After finding myself working extremely long hours, not spending enough time with my family, stressed out and unhealthy, I made changes — including going to gyms, taking up meditation, and playing tennis. As a result, I got better reviews as a leader and a better top-down ability to drive results for the company.

There is a direct line between the overall wellness of staff and the success of a business. Savvy investors are learning this. So what should investors do when picking a business to buy shares in?

Get data

AllianceBernstein says investors “need to develop research tools to evaluate wellness as a business differentiator that can provide important insight on a company’s outlook.” Two complementary approaches can help, the firm says. The first involves “big data techniques” to “dig deeper into employee sentiment, helping to confirm and support qualitative assessments.”

What kind of data do you need as an investor? To get a sense of the wellness efforts at any company, look for results of anonymous internal surveys in which employees are able to share their levels of stress; exhaustion; burnout; engagement; work-life integration, and more. These surveys should gather their thoughts on whether corporate programs are helping, hurting, or having no effect. Also take a close look at how turnover rates are changing. A successful wellness program improves employee retention.

The second approach, according to AllianceBernstein, is “engagement with management” to get “answers to tough questions about whether a company is providing employees” the conditions needed for success. Through earnings calls, conversations with executives, messages to investor relations representatives, and social media posts, ask what the company is doing to help boost employee wellness in all forms.

Review the full package

An effective corporate wellness program is made up of numerous elements, including physical health, mental health and financial wellness, which the U.S. Chamber of Commerce calls a “business imperative.”

Explore how many employees are using each aspect of the wellness program. Look for utilization gaps in different markets or offices to see whether some parts of the company have more work to do than others. Ask executives what steps they are taking to fill those gaps.

A study published in the Journal of Occupational and Environmental Medicine focused on companies with a demonstrated record of pursuing a culture of health, safety and well being. It found that the fund with these stocks outperformed the overall market. A similar previous study found that over 14 years, companies that invested in the health and well-being of their employees “appreciated by 325% compared with the market average appreciation of 105%.”

With employee burnout and stress levels very high, businesses have a responsibility to confront this well-being crisis at work head-on and offer solutions and resources to improve it. Those that take action will be best equipped to face the future — and to deliver lasting returns.

Cesar Carvalho is co-founder and CEO of Gympass.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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