I recently spoke with Observer about the impact motivated employees can have on a company’s value. We discussed some of the background laboratory and industry research, looking in the data for signals that predict returns in the stock market, and what our findings mean for very large companies. We wrapped up with some thoughts about whether working from home is helping employees in the long-term.

Behavioral Economist Dan Ariely Is Attempting to Unlock the Hidden Investment Value of Motivated Employees

From the interview:

Observer: Let’s start with discussing how you came to found Irrational Capital

Ariely began by explaining the trajectory of his career, which began with testing motivation in laboratory settings, then working directly with companies to design systems to better motivate their employees.

“And the third stage, which is the stage we’re talking about now is saying, what about all the other companies out there? It started from an academic question of, could I find signals that could predict excess return in the stock to the stock market. The first exercise was to go and get data. So I spent years trying to collect data and my data has some private data and some public data. It’s a mix of the two but essentially you can think of it as a combination of satisfaction surveys and what’s on LinkedIn and what’s on Glassdoor and, and so on, 

And then the question from all of this data, is what would predict returns from the stock market? What would not? And I didn’t start it like a black box approach because I already had the academic knowledge of what seems to be working from other studies and from my own studies. So for example, do companies that pay higher salaries have higher returns? The answer is no. But it turns out that the perception of fairness of salary matters a lot. So the absolute level of salary doesn’t matter so much. The relative salary matters a lot.”

Read the original article on the Observer website here.