The 100 Best

What does "kinder-gentler" mean relative to market performance?

Abstract

This market evaluation of the firm provides feedback or signals to the organisation regarding its decisions thereby encouraging particular actions or discouraging them. One important set of signals has to do with the Human Resource (HR) dimension. The purpose of this investigation is to consider market performance of organisations which have made the decision to create the organisational environment which places them in the Fortune 100 Best companies list. Our results differ from the general impression that one takes away form the previously reported literature where the 100 Best companies seem to be dominate performers. When compared to the Market the 100 Best do not seem to outperform the Market viewed through the Sharpe and Treynor indices. Regarding the differences in risk and return as measured by the CAP-M model there was no evidence of negative HR effects when the organisation was not on the list compared to when it was on the list. While this is a mollification of the enthusiastic support for the idea that the HR signals derived form being in the 100 Best club are synonymous with vastly superior performance, our results convey an important message. What these market results suggest is that organisations which have devoted recourses to enhance the work environment and have been rewarded for their efforts by being included on the prestigious Fortune 100 Best list did not experience a relative competitive disadvantage when compare to those companies who devoted the same recourse to other ends like increases in advertising etc.. So, on-net the 100 Best organisations are no better or no worse off than their peers and they have a superior work environment for their employees. The bottom line is then: Invest in a kinder-gentler work environment it can only help.