MENU

Should company culture be on your investing strategy list?

We know it’s all beanbags and free doughnuts at Google while Twitter employees are so busy having rooftop soirees and going to yoga classes it’s a miracle they get anything done.

Company investment in its “culture” is a buzzword being overused right now, and a quick glance at most of the financial reports handed down during the recent reporting season will see pages dedicated to how each company is pouring money into ensuring its workplace “culture” is supportive, diverse and flexible enough.

But is it all just a big waste of money?

Or is a dedication to workplace culture one of those key ingredients we should be keeping an eye on as investors to determine the long-term success of a company?

I think both can apply, depending on whether an organisation gets the formula right.

Too much yoga and doughnuts will surely hurt productivity, but then too little focus on family-friendly practices will too – and all of these impact the bottom line.

One thing is for sure, focusing on company culture at the exclusion of other fundamentals is a recipe for disaster, but there are some big-name S&P/ASX 200 companies who seem to be getting the balance right.

BHP Billiton Limited (ASX: BHP)

BHP has a large number of FIFO workers who require flexibility with scheduling to ensure they can balance high-stress jobs with family life, and BHP has implemented a number of culture-related practices over the years to increase performance.

At a company like BHP, the end product is all tweaking operational discipline to improve the business and lower costs, and this has meant ensuring its ground-level staff have the morale and energy to keep on keeping on.

Last year the Financial Review covered a story on the head of BHP’s Western Australian iron ore operations (WAIO) and how a management-led “productivity push” came down to a “significant shift in culture” which included tickets to the football and “healthy tension” among staff who input ideas into how operations could be improved.

In this instance, drilling down to cultural change seems to have worked well to streamline systems and processes and overcome specific problems at the project.

Wesfarmers Ltd (ASX: WES)

Front and centre on Wesfarmers Ltd website is the company’s recognition of its staff diversity and its dedication to “maximising the flexibility of workplace arrangements” for the betterment of employees.

Wesfarmers made the news in 2017 after Coles received attention for staff bargaining for a new enterprise agreement, which was finalised in February this year to ensure above-award pay rates for all staff, superannuation fund choice and move to permanence for contract workers with regular hours.

With more than 200,000 staff, many of them customer-facing, an investment in the happiness of its people is a smart move for Wesfarmers, and there is no doubt cost pressures come into play with turnover rates when a company is juggling this many people.

Telstra Corporation Ltd (ASX: TLS)

To maintain its presence in more than 20 countries, Telstra has to manage a huge workforce, and its corporate strategy is heavily focused on empowering its staff to better manage its portfolio and serve its customers.

But with the announcement of up to 8000 job cuts over the next three years, the company has taken drastic action to stay on top of an increasingly competitive telecommunications space, with its future focus on an agile workforce capable of dealing with rapid change in the sector.

But although the job cuts seemed hefty – fewer wage costs are certainly not going to hurt its balance sheet from an investor’s perspective.

Foolish Takeaway

While weighing up how a company’s culture impacts its bottom line is one thing to consider when you’re devising long-term stock-picking strategies to make you money, don’t forget to scour the fundamentals, weigh up how recession-proof the company is and keep an eye on emerging trends you can jump on the bandwagon of before they take off.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Atlassian.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor Carin Pickworth owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Wesfarmers Limited. 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. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!