Morale & Stock Price/ 2

In their study of 2004 stock market performance:

The stock prices of 14 high morale companies increased an average of 16%, while those of
other companies in the same industries increased by an average of only 6% a margin of
more 2 to 1 (267%).

The stock prices of 14 medium and low-morale companies increased by only 11.7%, while
those of others in their same industries climbed by an average of 19.8% a difference of
more than 1 to 1 (170%).

High morale companies are those where more than 70% of employees expressed overall
satisfaction with their jobs in Sirotas employee attitude surveys, while medium and low morale
companies had overall employee satisfaction levels of 70% or lower.

Why is high employee morale so strongly related to stock prices? The book reports an analysis of
survey research of more than 30 years, covering millions of employees at all levels and in all
industries.

Morale is a direct consequence of being treated well by a company, and employees return the gift
of good treatment with higher productivity and work quality, lower turnover (which reduces
recruiting and training costs), a decrease in workers shirking their duties, and a superior pool of job
applicants. These gains translate directly into higher company profitability, said Dr. David Sirota,
the books lead author.

High-morale companies provide the three main things that matter most to employees:
Fair treatment
A sense of achievement in their work and pride in their employer
Good, productive relationships with fellow employees

High-morale companies reasonably satisfy all three goals, said Sirota. Employees who work for
companies where just one of these three factors is missing are three times less enthusiastic than
workers at companies where all elements are present, and are correspondingly less productive.

Satisfied employees lead to satisfied customers, which results in higher sales. Satisfied customers
and higher sales, in turn, result in more satisfied employees who can enjoy the sense of achievement
and the material benefits that come from working for a successful company. Its a virtuous circle
the best of all worlds, said Sirota.

About The Books Authors

The lead author, David Sirota, Ph.D., an industrial psychologist, has been engaged in behavioral
science research and its applications in organizations for over 40 years. Since founding
Sirota Survey Intelligence in 1972, he has established an international reputation for improving the
performance of individual executives, senior management teams, and total organizations.

Co-author Louis A. Mischkind is Senior Vice President of Sirota Survey Intelligence, and has been
engaged in organizational effectiveness research and applications for over 35 years.

Co-author Michael Irwin Meltzer is Chief Operating Officer of Sirota Survey Intelligence, having
joined the firm in 2001 on a full-time basis, after representing the company as its legal counsel for
more 20 years.