The research applies to both manual and office workers
Researchers found that workers' job satisfaction has more of an impact on profits than research and development, technology, strategy or emphasis on quality.
"The more satisfied workers are with their jobs, the better the company is likely to perform in terms of profitability and particularly productivity," says the report by the University of Sheffield and the London School of Economics.
The seven-year study of 5,000 42 medium-sized UK manufacturing firms looked at blue and white-collar workers.
And it discovered that the way people are managed and developed accounts for 19% of the variation in profitability between companies.
Research and development, by contrast, only accounts for 8% of the variation in profitability and 6% of the variation in productivity.
'Biggest assets are employees'
Emphasis on quality, new technology and competitive strategy barely rise above 1% in terms of their contribution to profits.
The study, however, acknowledges that many of the firms surveyed did not make a connection between good people management and business success, regarding people issues as a luxury.
The Institute of Personnel and Development, the world's largest professional institute for those involved in the management and development of people, commissioned the research.
Mike Emmott, IPD policy adviser and manager of the project, said: "Companies' biggest assets really are their employees, but managers have to mean it as well as say it.
"If you involve and look after your employees, they will deliver results."