Investing in Fortune’s “Best Companies to Work For”

Recently I read a post on http://creativelypaid.wordpress.com and the author mentioned something that peaked my interest. The author wrote a post about how investing in a company is similar to voting with your stock and how you should invest in companies that make a positive impact on the world. There have been sources that indicate that the World’s Most Ethical Companies from 2009 have grown at a rate nearly double that of the S&P 500.

Being the curious person that I am, I decided to dig a little deeper and do some research myself. My first task was to identify companies that treat their employees great. Companies that treat their employees right tend to have happier employees, and this rubs off on their customers. One such company that I can think of off the top of my head is Starbucks. Starbucks gives employees great benefits, such as stock options, a pound of any Starbucks coffee a week (or other goodies), health insurance, and 401(k) plans for their employees. While these perks do cost Starbucks a pretty penny, the benefits are completely worth it. Studies have shown that Starbucks employees are actually friendlier than local coffee shop employees as illustrated below:

“It was clear that the baristas were on a first-name basis with many of the customers, were familiar with their regular orders, and knew significant personal information about them,” the study says.

Read more: http://www.businessinsider.com/starbucks-friendlier-than-local-shops-2013-8#ixzz2nJyGUcr7

With that being said, I got a listing of Fotune’s 500 Best Companies to Work For from 2005 and took the publicly traded companies from that list and looked at their total returns since December 31, 2005 through December 12, 2013. One thing I will note is that some of the companies that were on the list that were public are no longer public (mainly because they were purchased by other companies). Without further ado, here is a chart I compiled of returns:

Image

Company % Return
Xilinx 67.73
JM Smucker 128.94
Starbucks 150.25
Adobe Systems 45.49
CDW 22.75
Qualcomm 63.84
S&P 500 39.95
Dow Jones Industrial Average 44.61
Average return of Best Companies to Work For 79.83

As you can see, companies with happier employees tend to have better returns than those of the market by almost double! Think about next time you make your investment decisions!

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2 thoughts on “Investing in Fortune’s “Best Companies to Work For”

  1. Nice article, and I’m glad that an independent look at the concept is re-proven. I recently read a great article on The Guardian, written by David Simon, who created the show “The Wire”. He talks about how pure capitalism is destroying North America by dividing the classes. However, your article here offers hope to that future, that social responsibility can actually enhance profits. And thanks for the reference!

    http://www.theguardian.com/world/2013/dec/08/david-simon-capitalism-marx-two-americas-wire

  2. Very intriguing article you posted. I can’t say I disagree with Simon’s viewpoints on capitalism. We can only hope that companies continue to make an effort to be socially responsible. As investors we can make an impact by investing in these companies that have a positive impact on the world. But there will always be the question as to whether these companies are truly socially responsible or just greenwashing in an effort to make themself more attractive to the people.

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