Does Innovation or Engaged Workplaces Help Create Stock Alpha?
An analysis of the top Fortune magazine 2025 10 most innovative companies and 10 best public companies to work for (excluding Nvidia’s outsize returns) hints that engaged workplaces are a greater source of future equity value creation than inovation alone, but more analysis needs to be done.Fortune 100 Best Companies to Work For
The Fortune Most Innovative Companies
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An analysis of stock prices of the top 10 companies in Fortune magazine’s lists of the 100 Most Innovative Companies and 100 Best Places to Work gives the edge to the best places to work. Six of the top 10 best places to work exceeded the returns of the S&P 500 over five years; together they topped it by 193% to 133%. On the other hand, five of the most innovative companies beat the S&P 500 but together fell short at only a 120% total return. Neither list is based on share price performance.
Note, an analysis of all 100 public companies in each list would be useful to draw a more decisive conclusion, as the top 10 list does not include a complete cross section of the economy and reflects Covid-related distortions.
Fortune 100 Best Companies to Work For
To produce the 2025 Fortune 100 Best Companies to Work For List, Fortune works with people analytics firm Great Place To Work®, which has surveyed employees worldwide for about 30 years. Here are the top 11 public companies with Nvidia, which was replaced by a next in line public company. Five-year returns: 193%, versus 133% for the S&P 500
To select companies, Great Places to Work uses its proprietary trust index to measure the core of what they believe to create great workplaces—"key behaviors that drive trust in management, connection with colleagues, and loyalty to the company.” Employees share confidential quantitative and qualitative feedback about their organization’s culture through 60 statements rated on a five-point scale and by answering two open-ended questions.
Employees evaluate whether their “leaders are accessible, communicate honestly and clearly, and if their actions match their words. They tell whether they feel respected as individuals, if they receive training benefits, appreciation, support for their well-being and opportunities to contribute. They tell whether they believe their company is fair related to pay, profits, promotions, recognition, favoritism and opportunities. They tell if they are proud of their work, their team, and their company and if they feel they make a difference, and their work is meaningful. And they tell whether they enjoy the people they work with, feel cared for and can be themselves.”
Note that a study conducted by Professor Alex Edmans of the London Business School published in 2016 found that the Great Places to Work public companies outperformed the stock market by nearly 3% a year over 28 years.
The Fortune Most Innovative Companies
The selection of the top 100 companies entails the “evaluation of a company’s products and services, covering aspects such as attractiveness and design to usability and uniqueness. The total score that could be achieved in this dimension was derived from an analysis of a company’s intellectual property (IP) portfolio and the opinion of experts and (potential) customers."
Five year returns: 120%, versus 133% for the S&P 500The evaluation also looks at process innovation, from sourcing and production to marketing, sales, and support. “Given that there is an internal and external view on this dimension, the opinion of employees, experts, and (potential) customers were factored in.”
The study also takes into account “culture measures (determining) to what extent a company fosters the spirit of entrepreneurship and creativity internally and allows implementation of ideas. In line with this, the opinion of employees was at the center, but external experts were also included, such as recruiters and HR (human resources) experts.
Each dimension accounts for a third of the score.
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