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Good conditions at work pay off – even in the share price

Photo of Mårten Westberg,Heads of the European Institute of Behavioural Analysis (Eiba) Photo: Åsa Tällgard
Mårten Westberg claims to have the world’s simplest investment strategy. “It’s based on checking the working environment,” he says.

The 61-year-old Swede is not a qualified economist or analyst, but has made a living for many years from trading shares on the basis of working environment surveys from potential investment objects. 

He says that many people have both rejected and been very sceptical about his method. “But it’s totally logical, of course.  

“A good working environment means satisfied employees, and they mean profitable growth. My results are the proof – I’ve outperformed the stock market every year.”

Asking the good questions

It was not given that Westberg, who now heads the European Institute of Behavioural Analysis (Eiba), would get involved in share trading.

In his youth, he took a master’s in communication at the University of Wisconsin and was introduced to a discipline which fascinated him and shaped his career.

“The research they did there yielded figures with significance far beyond the area under study,” he explains. “Quantitatively oriented, it sought to ask the right questions.”

After his return to Sweden, this way of thinking continued to shape Westberg. He got a job, and was then asked to complete an employee survey which frustrated him.

“It involved 109 questions, virtually all of which I considered to be meaningless. I also discovered that the survey results weren’t being handled systematically by management.”

He decided to do something about this, and carried out a regression analysis of the subject said to be of the greatest concern to his employer – reducing sickness absence.

“It transpired that only seven of the 109 questions dealt with this problem,” he recalls. “In other words, almost 95 per cent of the survey wasn’t directed at what the company maintained was the key issue. That was meaningless.”

It’s totally logical. A good working environment means satisfied employees, and they mean profitable growth.

Own company

In the mid-1990s, Westberg established his own Interactive Survey company with the aim of improving and simplifying processes related to employee studies.

Starting from the seven questions about sickness absence at his former employer, he initiated an investigation at Swedish financial group Nordea.

“Beginning with a company which has offices from north to south in Sweden was perfect,” he observes. “Such a big geographical range made it possible to explore trends which were obviously unrelated to where a workplace was located.”

The results were clear: the level of satisfied personnel – and thereby content customers – related directly to profitability. Respect was the most important factor.

Those employees who felt respected and listened to were the most satisfied and had the lowest sickness absence. And these were the people who generated the most profits for Nordea.

Impact on pricing

Based on his findings from this survey, Westberg decided to test whether respect and a positive working environment also had an impact on share prices.

He began to study working environment surveys at a number of firms, and then to relate the findings these provided directly to the stock market pricing of the companies concerned.

A pattern began to emerge – enterprises demonstrating a clear price rise were those which had strengthened their business through a good working environment.

“And my strategy was thereby served up to me – invest in the working environment,” says Westberg. “I needed 28 years of analysis to establish this, but it was worth the effort.”

Although the relationship between positive conditions at work and share prices has given him a wide scope in his own career, he calls attention to something even more important.

“My findings can help to give managers better arguments for making a commitment to a good working environment.”

Photo of Mårten Westberg,Heads of the European Institute of Behavioural Analysis (Eiba)
Mårten Westberg’s conclusion is short and sweet: invest in the working environment. “My findings can help to give managers better arguments for making a commitment to a good working environment. Photo: Åsa Tällgard

Heavenly equation

Westberg calls it the priest’s dilemma – the fact that sinners do not go to church. “To persuade them to attend, sermons usually focus on doom and gloom,” he notes.

“The same applies to the working environment. Efforts in this area at many companies are confined to avoiding harm, discontent and – in the worst case – work-related fatalities.

“By showing that a positive commitment to such measures also improves profitability, however, you can quite simply incorporate heaven itself in this equation.

“The priest won’t get hold of the sinners, either, without taking some new action.”

Westberg has ceased his share trading. The introduction of the general data protection regulation (GDPR) means results from working environment surveys are no longer as accessible as before.

He confines himself today to being a “working environment missionary”, as he puts it. And he has a clear word of advice for chief executives.

“If you believe that profitability is important and that your share price is important – listen carefully to your workforce.” 

Norwegian gold

Pål Molander, former head of Stami, has often highlighted many of the same factors cited by Mårten Westberg when addressing Norwegian industry. 
In a speech at the Safety Forum’s annual conference in 2021, he referred to figures which show that Norwegian employers make demands on employees above the EU average while managing to preserve a high level of personnel autonomy. Employee participation and respect are core values. 

Molander calls this combination “Norway’s gold”, because it contributes to growth, stability and good occupational health. 
Poor working environments cost Norway NOK 75 billion every year, according to a 2018 analysis by Oslo Economics for the Ministry of Labour and Social Inclusion.