The People Resource in Valuation of Stocks (Part 2)
The People Resource in Valuation of Stocks (Part 1)
Time Lags Between Values of Stocks and Key Human Resource Practices
Factors such as employee turnover have not conventionally been used to value stocks. Hence, critical shortages in certain skill sets have begun to affect continued business performance. Diversified and large corporations, with decades of success behind them, may be the most vulnerable, because it is easy for them to overlook the key factors of success in the market place of today.
The US and UK automobile industries can be cited as instances of corporate sickness becoming evident long after decays in systems of managing people. Small investors, and others who depend on advisors to deploy their savings, must develop habits of questioning how companies view their human resources, and exiting from stocks of corporations that do not value their employees.
Who does not like to badger executives about perquisites, bonuses, and other such delicate matters? No matter how few the stocks we own in a giant corporation may be, we use every occasion to berate normally powerful and isolated executives about how they feather their nests! Well, the wheel may have come full circle, and it could be time to change tracks, and make sure instead that every skilled and experienced employee is paid well in competitive terms.
A Human Resources Approach to Appreciation of Stocks
How do professional managers rate human resources? We know that accountants can tell us about the best (and worst) stocks because they understand financial statements so well. Ditto for the marketing guys and their brand jargon! Should we now exchange confidences with people in Personnel to know which way our stocks are headed? Better still, should we vote for the best in this field to head companies in which we have stakes? They say that executives from all functions have to manage people to be successful, but how about giving the reins to the real Gurus who nurse and steer the thoroughbreds we love to cheer?
Investors with minor holdings of stocks cannot determine whom all runs companies, but no opportunity to interact with the rank and file should be missed. Some companies love to invite their investors to visit their manufacturing sites and social responsibility projects: perhaps we should now ask instead to see job evaluations, recruitment procedures, training programs, and appraisal systems!