Wednesday, February 25, 2009, AM | Leave Comment
Every year, Fortune magazine publishes “100 best companies to work for”. The latest such issue was in January 2009. Some economists and behavioral scientists, for example, Alex Edmans of Wharton business school, suggest that choosing to invest in a portfolio comprising companies that have happy employees is likely to bring rewards.
Mr Edmans suggests that such investors enjoy gains beyond what can be explained by the risks they take.
He gives example that in the 10 years – between 1999 and 2008 – the Fortune portfolio has provided a 4.1% annual return above that of the broader CRSP index.
CRSP – Center for Research in Security Prices – includes all shares traded on Nasdaq, the New York Stock Exchange and American Stock Exchange.
I read in the Economist, a news magazine and other similar articles – the same article appears in CFO monthly magazine – that suggest that other variables – such as good management, have to be taken into account as well.
The last argument seems to be redundant in the sense that without good management in place, it is hard to imagine that workers at our level would be happy workers (and I don’t mean the C-level executives who are always happy in any case because of their big bonuses and other perks.)
If workers at my level – the lower than middle managers – are happy working in a company, the products and services they produce would be of a superior quality. They would attain bigger market share, customers would be happy and satisfied with the products and services and the stock prices would be on an upward curve over the long run.
But it is not just that workers in some companies – such as Detroit auto makers – are given more money and then the senior managers sit on their butts thinking that everything is well and dandy. They must follow through to implement and instill some good work ethics in their workers.
Moral of the story
The senior management must implement a policy of work ethics and instill in their employees the ethics, the good behavior, ways of feedback to the management, being honest in their work and such other high quality standards.
Those standards used to be almost instinctive – that’s the way our forefathers were raised. Even as recently as the days when our fathers were workers in factories, the quality of goods and services were superior to most others in the world.
This can come about through proper education, formal and otherwise, as well as through good practical training of those products and services. The companies must have created an environment where such high quality standards breed.
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