Who's Happy, Who's Not
Jon is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I recently came across a very interesting article talking about the worst companies to work for based on employee polls. The poll was conducted through a website called glassdoor.com and polled employees on things like how satisfied they are with their job and, very noteworthy, how satisfied they were with their CEO.
Employee satisfaction can be a very important metric in exploring a possible investment in a company. A happy employee is generally a productive employee. A productive employee generally makes a productive business. A productive business is generally a profitable business. And finally, a profitable business generally makes a happy investor.
Google (NASDAQ: GOOG) is notorious for keeping their employees happy and productive by allowing them to work on pet projects. These pet projects are part of Google's attempt to have creative employees be creative and improve what Google offers to its users. Many projects have led to more people using Google products.
A Surprise
I was very shocked to see that, of the top 10 companies to work for according to glassdoor.com, only three were publicly traded companies. Those three companies were Facebook (3), Google (5), and Apple (10). The other 7 companies were private. That signals to me that many times, in a publicly traded company, investors take priority. That is good to a certain point, but when management completely forgets the hundreds of employees that actually make the company run, then priorities have gotten out of whack.
Don’t Work Here
Hertz (NYSE: HTZ) was considered 4th to last in the worst companies to work for. Profits are up from last year, which in and of itself is good news. But an employee quote has me a bit concerned: “Upper management has little field experience and lots of MBA’s that tell you the impossible is possible…” I have personally worked for a company like that before. I was in Georgia, and my company got bought out. I started receiving phone calls from Nebraska with pencil pushers telling me how to do my job, even though they had no idea what I was doing. When out of touch management tells you the “impossible is possible,” it creates a who-cares work environment. If employees stop caring, that spells big trouble. Invest with caution.
Dillards (NYSE: DDS) was rated second to last in companies to work for. This stock price is currently flying high, up over 40% this last year. The percentage that has me concerned is the 22% employee approval rating of CEO William Dillard II. I believe this is noteworthy, because the man at the helm isn’t inspiring the best out of his employees. If many employees feel like he is not the best man for the job, what kind of performance can we expect out of them to make Dillards an even better company?
Dish Network (NASDAQ: DISH) was rated the worst company to work for by employees. According to glassdoor.com, the employees feel overworked and are unhappy with a lack of flexibility. It should come as no surprise therefore that Dish Network is notoriously weak in the customer service department. This isn’t surprising because CEO Joseph Clayton doesn’t take customer service calls. His overworked employees do. If they already feel overworked and under-appreciated, don’t expect glowing performances. This stock may also be flying high, but dissatisfied employees and bad customer service are enough to make me steer clear for now.
Happy People
Rackspace Hosting Inc. (NYSE: RAX) made a very impressive twelfth place in employee satisfaction. This is a fast growing company in the new cloud computer service arena. For the last five quarters, the company has been growing by double digits, and the most recent quarter saw a 29% revenue gain. They did show some signs of slowing down in their forward statements, and for a stock with a P/E ratio of 81 that is a little troublesome. I wouldn’t bet the house on Rackspace, but maybe the kitchen sink. They are growing fast and have happy employees. That could mean a good investment for the future.
Conclusion
Employee satisfaction certainly isn’t the crystal ball in determining which way a stock price is going to go, but it’s certainly not irrelevant either. If you are thinking about investing in any of these companies, I would recommend keeping this factor on the table before you make your decision.
thequast has no positions in the stocks mentioned above. The Motley Fool owns shares of Google and Hertz Global Holdings. Motley Fool newsletter services recommend Google and Rackspace Hosting. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
