**Preamble:** Every year Fortune publishes the top 100 companies to work for in the world. The results are based on an anonymous survey conducted on over half a million employees.
I wanted to check whether companies where people are the happiest to work produced better returns for their shareholders when compared to the market. My hypothesis is based on two assumptions
a. An employee would create his/her best possible output when they truly love the place they work
b. Companies with excellent culture would create a feedback loop to attract top talent by word of mouth and referrals.
I feel that both of these factors would contribute to the company innovating over their competitors and creating outsized investor returns.
**Data:** There are a lot of players that create the best companies to work for list. I chose Fortune as they are the most established company and have been doing this over the past 20 years. Their survey sample size is also very high (more than 5,00,000 anonymous responders), which would give us a fair representation and minimize the chances of false positives.
For this analysis, I took companies present in the best places to work for list in the last 10 years (2012-2021). But, not all the companies on the list are public and listed. So, the current analysis will only focus on the companies whose shares are listed.
All the data used in the analysis is shared in a Google sheet at the end.
**Analysis Methodology:** Every year Fortune publishes its result on the 2nd week of February. I have considered two different ways to invest in the best companies to work
a. You invest in the company as soon as the list comes out and hold for 1 year and then sell and repeat this every year
b. You invest in the company and hold (This is based on the assumption that company culture does not change year over year and once the company makes it into a list, it’s a good long-term investment)
Returns from the above strategies are then compared to the S&P 500 returns  over the same period.
The companies in the best places to work consistently beat S&P500 in stock returns. There is a noticeable difference in return as you move up the list with the best place to work (Rank-1) beating the market comfortably by 9.5% every year! .
The difference in returns becomes more noticeable if you buy and hold the company for the long term. Here we can see a steady increase in returns as you move up the ranking ladder with the top company returning a whopping 131.5% more than the index over the last 10 years. This also validates our assumption that companies having great cultures create superior investor returns over the long term.
Now that it’s out of the way, we can dive deeper into the data and find out which stocks made the best returns and how your returns would have faired over the years.
The best long-term return among the top companies to work for was generated by Adobe! The stock has returned 1762% over the last 10 years. As expected, tech companies have generated the most amount of returns with Microsoft, Google, and Adobe all present multiple times.
For our final analysis, we can check if the returns were consistent throughout the years or was it just a few years that are contributing to the overall positive results.
I think this graph shows one of the most important takeaways from this analysis. As we can see best companies to work for have beaten SPY by a considerable margin in 8 out of the 10 years (80%) of our analysis timeframe. Even in the years that our strategy did not beat the market, the difference between the returns was negligible.
No matter how you slice it, the above analysis shows that companies that are exceptional places to work create exceptional returns to their shareholders.
I think this ties in nicely with our initial hypothesis that companies having great culture will have happy employees that create the best possible results and also would attract top talent. Both of these in turn would lead to market-beating shareholder returns.
Now you know what to do when the next year’s results come out!
Google Sheet containing the data and my analysis: [here](https://docs.google.com/spreadsheets/d/1NF48A0p6L4V_79XkJVdOCT_jAdP1vKlC3ix5e44xXXM/edit?usp=sharing)
 I have considered the benchmark as S&P500 as the Best Companies to Work for list contains companies across industries and I think that S&P500 is a fairer representation of the overall list.
 6 out of the last 10 years, the top company to work for was Google.
*As always, please note that I am not a financial advisor.* Hope you enjoyed this week’s analysis.