The Best Companies to Work for 2013
There is an organization named Glassdoor that offers information on jobs and career in a unique way. As they describe themselves, Glassdoor "offers the world an inside look at jobs and companies. What sets us apart is our "employee generated content" – anonymous salaries, company reviews, interview questions, and more – all posted by employees, job seekers, and sometimes the companies themselves."
Think about it...Who knows the companies better than the employees who actually work there? While other surveys rely on companies to self-nominate themselves, Glassdoor's results probably can be trusted given that most of the data is from employees. The organization has been conducting this survey for five years and publishes a list of the top 50 places to work each year.
So what does a job information site have to do with Investing, especially SRI ? Well, a lot. Several studies on the performance of socially responsible investments indicate that while SRI is not guaranteed to beat the market, firms which specialize in the "S" of ESG as a whole outperform the market. Further, like the saying "Charity begins at home", we believe if a company can't take care of its own people, it certainly won't be able to help others!
The ranking of the top companies list is quantified by taking an average of all surveyed respondents' ratings after they answered an 18-question survey. The survey asks employees if they trust their CEO, work-life balance, company culture, job mobility and compensation. The table below is from another of Glassdoor's surveys, this particular one is on Employee Confidence. It is shown here to demonstrate factors that are behind the rankings.
Facebook ("FB") was the Number 1 rated company two years counting with an overall company rating of 4.7 out of 5.0. In an interesting twist, employees got to "like" Facebook's CEO in the survey. In fact, a huge 99% of employees said they trust Mr. Zuckerberg, up 14% from the previous year. In receiving the award, Lori Goler, Facebook’s vice president of people and recruiting stated, "We strive to make Facebook a place where everyone is able to have an impact doing what they love. Receiving this award is a testament to the culture of builders we’ve worked hard to create.”
What's even more fascinating is that the survey occurred during the time of Facebook's failed initial public offering (many employees receive stock-based compensation so you would think they were disappointed). The chart below is FB's share price during the survey period (Nov'11 to Nov'12) when its shares hit their all-time low of $17.55. They are now trading well over twice that price!
Is Facebook really a socially responsible company?
Using the common definition of ESG, the flat answer is "No." However, we expect the company will be on a strong uptrend in its ESG efforts given that other top-rated surveyed companies (i.e, Bain & Co., Boston Consulting Group, Gartner, REI, Trader Joe's, etc) usually rank highly in ESG. Remember, Facebook is a young company. Only recently, has it begun to aggressively monetizing its 1.1Bn customer base. Despite this $-focus, its fearless leader has already jumped to number 2 ranking on the Philanthropy 50, behind only Warren Buffet. CSRHub, which aggregates ESG ratings from several sources, rates Facebook "53" (higher the better) which is equal to the average rating of its universe. Facebook rated particularly weak in Governance, probably due to Zuckerberg's control of the company via "supershares" and multiple-hat role (CEO, Chairman) at the company.
Overall, we believe using the Best Companies to Work For list is a good investment criteria. This list should be used along with other investment criteria such as stock screening and fundamental analysis. While Facebook is certainly no Starbuck's it appears to be a company that will increasingly focus its efforts on increasing value to all stakeholders including socially responsible investors.
Disclosure: The author has held investment positions in Facebook and Starbuck's and may purchase and/or increase these investment positions.