You landed that job you wanted at that unicorn, it went public, the stock traded up and now the options you once worried might end up worthless are worth more than all your other assets combined. You’re living the dream! Right?!? Whether that scenario is your dream or not, I’m guessing it’s not that surprising to learn that all employees — including management — just don’t like working at a company as much after it goes public.

Here’s a summary of research recently featured on the Columbia Blue Sky blog:

Employees become significantly less satisfied with their employers after an initial public offering (IPO).

Using 3.7 million employee reviews from Glassdoor between 2008 and 2022, we document that employee satisfaction drops measurably after companies go public. While employees at private firms typically rate their companies favorably, the ratings decline after an IPO and remain lower for years . . .

The drop occurs specifically after companies file their S-1 registration statements and enter the public markets, suggesting that the IPO process itself, rather than underlying company characteristics, drives the change.

Multiple aspects of the workplace experience are impacted, including, sadly, perceptions of senior management and (surprisingly?) work-life balance. But not all employees experience satisfaction declines equally. The research shows three trends:

First, the effect is concentrated among employees who were with the company before it went public.

Second, employees in management and compliance roles experience particularly large [roughly 2.5 times larger] drops in satisfaction.

Third, smaller companies and those audited by Big Four accounting firms see larger satisfaction declines. Smaller firms face proportionally higher regulatory costs relative to their resources, while Big Four auditors typically impose more rigorous compliance standards, amplifying the burden on employees.

And then there are these company-specific factors:

We find that [Emerging Growth Companies] experience only about half the satisfaction decline of traditional IPO firms, with the difference concentrated precisely in areas where regulatory burden was reduced. This evidence strongly supports regulatory costs as a driver of post-IPO satisfaction declines.

[N]ot all companies suffer equally from the IPO transition. Firms in industries with strong Environmental, Social, and Governance (ESG) reputations, particularly those with robust social practices, experience significantly smaller satisfaction declines. Companies in industries with low social reputation risk see drops only about half as large as the typical effect.

I know money can’t buy happiness, but I did actually do a text search in the paper for “options” and “equity” to see if it addressed whether the satisfaction trends are impacted by whether and how much the stock traded up. It doesn’t.

But it does at one point note the opposite — that is, “increases in employee satisfaction predict improvements in future operational performance and future stock returns.” So, in all seriousness, this impact on satisfaction sure seems like something companies should be considering and trying to manage. I’m not sure adding to that already 20+ page IPO checklist is the solution to the IPO-too-much-compliance-work-death-of-fun effect, but, IDK, maybe that intimidating checklist should also include human capital management and corporate culture.

– Meredith Ervine