For too long, companies have treated employee well-being as a secondary concern — perhaps an ethical nicety rather than a business imperative. But as economic trends and real-world data increasingly show, taking care of employees isn’t just the right thing to do — it’s also the smartest business decision a company can make.
The simple truth is this: When companies invest in their employees, they see tangible returns. From increased productivity and innovation to higher retention and stronger financial performance, prioritizing employee well-being pays off.
A wealth of research backs this up. Studies have found that organizations with highly engaged employees see a 21% increase in profitability. Those known for strong workplace cultures experience stock price growth averaging 12% per year—more than double the broader market. Happy employees are 31% more productive and 37% better at sales. Firms that emphasize well-being report a 20% boost in innovation, and those adopting flexible work models see up to 13% gains in productivity.
Retention strategies further highlight the economic value of investing in employees. Companies like Costco have demonstrated that higher wages and better benefits reduce turnover significantly, saving millions in recruitment and training costs. Similarly, organizations in the top quartile for employee engagement experience a 41% reduction in absenteeism and a 59% decrease in turnover.
Beyond financials, a new global reality is emerging: the employer-employee relationship is being redefined. Workers expect more from their companies, and in a competitive talent market, businesses that don’t step up will lose out. Employees today aren’t just looking for a paycheck; they seek purpose, support, and a workplace where they feel valued.
At HiBob, we see this not as an obligation but as an opportunity to lead. We recently took a step that reflects our values in action: granting stock options to our people who did exceptional volunteering activities in their countries. These grants include 47 employees who served in Israel’s military reserves for over 30 days during the Swords of Iron War.
These employees stepped away from their jobs and families to serve their country, and when they returned, we wanted them to know that their sacrifices were recognized—not just with words, but with meaningful action. In total, we granted 1,800 stock options per eligible employee, with the longest-serving individual having spent 265 days in reserve duty.
This decision wasn’t just about doing the right thing. It was about acknowledging that our company’s strength is directly tied to the dedication and well-being of our employees. We believe that when employees feel valued and supported, they bring their best selves to work—and the entire company benefits as a result.
There is, of course, a second aspect which I would perhaps not be writing about if I were an entrepreneur anywhere but Israel: As citizens of a country in the grip of a major military convulsion, facing genuine existential dangers, the universal principles discussed above are redoubled.
Indeed, for all the superlatives I might bestow on Israel’s resilience people, it can be shocking how much the system here asks of our young defenders, and how little we give in return. I’m hoping our move will serve as an example to other companies, and indeed to the decision-makers in the government. We need not be this ungrateful to people who in some cases are serving – incredibly – hundreds of reserve days per year.
A holistic approach to employee well-being
This is a good moment for all of us to take a step back. Business leaders everywhere should rethink their commitments to employees. There is a new compact emerging between businesses and their workers, and the most successful companies will be those that embrace it. Companies must go beyond standard benefits packages and embrace a more holistic approach to employee well-being. That means:
Fair Compensation and Wealth Sharing – Employees are not just labor; they are stakeholders in a company’s success. More companies should consider stock options, profit-sharing, and other incentives that ensure workers benefit from their company’s growth.
Flexibility and Work-Life Balance – The pandemic accelerated the demand for remote and hybrid work, and companies that embrace flexibility see improved productivity, lower turnover, and higher employee satisfaction. Rigid work environments no longer make sense.
Support in Times of Crisis – Whether it’s a military conflict, a health emergency, or a personal hardship, employees need to know that their company has their back. This includes paid leave policies, mental health support, and clear frameworks for helping workers navigate challenges.
Growth and Development Opportunities – Companies that invest in employee learning and career advancement see higher engagement and retention. Providing education benefits, mentorship programs, and internal mobility pathways ensures long-term success for both the company and its workforce.
A Culture of Respect and Inclusion – Diversity and inclusion aren’t just buzzwords; they’re essential for business success. Studies show that diverse teams make better decisions 87% of the time and are more innovative and profitable than homogeneous ones. Companies that foster inclusive cultures attract top talent and drive better business outcomes.
The companies that thrive in the coming decades will be those that understand this shift and embrace the new compact with their employees – “Putting people first is the way to put business first.”
Ronni Zehavi is the co-founder and CEO of HiBob, an HR tech firm dedicated to improving the labor experience and fostering workplace culture.