In a famous scene from Fawlty Towers, the classic 1970s BBC comedy, Basil Fawlty (played by John Cleese) argues with his wife, Sybil. In a moment of desperation, he says: “Can’t we get you on Mastermind1, Sybil? Next contestant: Sybil Fawlty from Torquay. Special subject – the bleedin’ obvious.”

This quote aptly describes how, since the introduction of the triple bottom line into business language, one of the most obvious so-called non-financial factors has largely been disregarded by stakeholders, including investors, namely employee health. Research provides evidence that companies with healthy workforces appear to have a competitive edge in the stock market. A study published in the February 2016 issue of the Journal of Occupational and Environmental Medicine (JOEM)2 compared the performance of ten of the healthiest companies in South Africa to the market at large3. Nine different investment scenarios were tested and, in all nine scenarios, the healthy companies outperformed the FTSE/JSE All Share Index (ALSI).


The South African research follows on from a similar study that was completed in the United States (US) by Ray Fabius and colleagues.

The Fabius study tracked the performance of a group of US companies that had won awards for their health and safety programmes. Between 1999 and 2012, theoretical investments into these companies outperformed the S&P 500 Index’s average return.

The arithmetic average annual excess return ranged from 3.03% to 5.27%, based on four of the 'portfolios' that were considered. It is no surprise that the study concludes that companies engaging in efforts to promote workforce wellbeing and safety yield greater value to investors, as a result of reduced healthcare costs, increased productivity and improved financial performance4.

The South African research methodology also involved the creation of hypothetical investment portfolios. The list of healthy companies was based on Discovery’s Healthy Companies Index, and included Cadiz Holdings Limited, Cargo Carriers Limited, Discovery Holdings Limited, Ellies (Pty) Limited, Group Five Construction, JSE Limited, Mediclinic International, Mr Price Group Limited, Sasfin Bank Limited and Tongaat Hulett Limited. An initial theoretical investment of R100 000 was made into various portfolios, simulated over a chosen period and benchmarked against the ALSI. By way of example, Portfolio 2 covered the 10-year period from 1 January 2005 to 31 December 2014, with rebalancing performed annually, and at the time of new healthy company listings. An initial investment of R100 000 grew to R774 211 during this period, equivalent to a total return of 674.21%. Over this same period, the equivalent ALSI investment grew to R532 303, which translates into a total return of 432.30%. The annualised return over the 10-year period was 22.71% for Portfolio 2 and 18.20% for the ALSI.


More research will be conducted in the future to explore and refine our understanding of the link between health and financial performance. Accurate data will be required for this task, and there is a need to relook the ways in which companies measure and report on health. Traditionally, this has been dealt with under the heading of 'occupational health and safety' in the sustainability report, but there is growing consensus that it is necessary to look beyond metrics like 'days lost due to injury or illness'. In October 2014, a working group of health experts and corporate leaders were convened by the Vitality Institute to apply their minds to the following vision: “By 2020, workforce health metrics will be an integral indicator of overall organisational performance within the broader corporate accountability framework.


These metrics will be core to existing corporate social responsibility, sustainability and integrated reporting, and critical for consideration by all shareholders and potential investors.” The employee health and well-being metrics identified by the working group fall into three equally weighted categories:

  • Governance based on leadership style, which sets the tone for corporate culture.
  • Management, reflective of the culture through programmes, policies and practices.
  • Evidence of success, looking to specific metrics measuring the impact of the aforementioned policies and practices on health risks and outcomes.

Two scorecards were developed: a core scorecard and a comprehensive scorecard5. The core scorecard includes 10 high-level questions that reflect the longer comprehensive list of metrics contained in the comprehensive scorecard6. The highlevel questions are intended as indicators to be shared with top leadership groups such as the C-Suite and the Board of Directors, and also to be included in the integrated report. They may also serve as conversation starters with potential investors or shareholders who are interested in the health of employees as a company asset or material risk.

Although the questions are designed to be answered on a Yes/No/Not Applicable basis, the intent is for the emergent qualitative information to provide a fuller picture of how these questions reflect the health and well-being of employees and, therefore, of the company.

To some extent the business case, both for companies to invest in healthy employees and for investors to invest in healthy companies, is “bleedin’ obvious”. Healthy employees are more productive, spend more time at the workplace than unhealthy employees, and are less likely to retire early due to ill health.

For example, between 2002 and 2008, Johnson & Johnson experienced a return of US$2.71 for every dollar spent on employee wellness programmes7. Apart from the business case, it could be argued that employers have a duty of care from a moral perspective – another compelling reason to invest in the health of employees. Responsible investors will understand and support both the business case and the moral case, and benefit from both.


1 Mastermind is a popular BBC quiz show that originated in the 1970s. Contestants are tested on a specialist subject of their own choice as well as on general knowledge.
2 The official journal of the American College of Occupational and Environmental Medicine.
3 Conradie, C., Smit, E. & Malan, D. 2016. Corporate health and wellness and the financial bottom line: evidence from South Africa. Journal of Occupational and Environmental Medicine, Vol. 58, No. 2, pp 45 – 53, February 2016.
4 Fabius, R., Thayer, R.D., Konicki, D.L., et al. 2013. The link between workforce health and safety and the health of the bottom line: Tracking market performance of companies that nurture a “culture of health.” Journal of Occupational and Environmental Medicine, 55(9), 993-1000.
5 The scorecards are available at for download.
6 Malan, D., Radjy, S., Pronk, N. & Yach, D. 2016. Reporting on Health – a Roadmap for Investors, Companies and Reporting Platforms. New York, Vitality Institute.
7 Berry, L., Mirabito, A., Baun, W. What’s the Hard Return on Employee Wellness Programs? Harvard Business Review. 2010, 104 – 112.


Dr Daniel Malan
Director of the Centre for Corporate Governance in Africa and Senior Lecturer in Business Ethics and Corporate Governance, University of Stellenbosch Business School


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