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.
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.
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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.