SYNOPSIS
This study examines the role of employee satisfaction in mitigating the adverse economic impacts faced by Standard & Poor’s (S&P) 500 companies during challenging times. It hypothesizes that employee satisfaction serves as a strategic buffer through the mechanism of psychological resilience, enhancing firm performance under conditions of uncertainty and hardship. By analyzing a sample of these companies, the study finds that those with higher levels of preexisting employee satisfaction outperform others during difficult periods, such as the COVID-19 pandemic. The subdimensions of employee satisfaction also support the insurance-like effects on performance from short- and long-term perspectives. Despite previous studies addressing the link between employee satisfaction and firm performance, there remains a gap in understanding how employee satisfaction concretely benefits organizations in uncertain environments. This paper aims to bridge this gap and provides managers with insights on the importance of strategically investing in human capital as a key factor of sustainability.
JEL Classifications: G32; M12; M41.
