A Key Indicator To Determine A Companies Future

Many investors considering an investment in private or public companies often pore over financial statements and industry data hoping to glean some idea as to how a company will perform over the coming years. Does it have financial strength, management depth and what condition is the industry in. These are no doubt critical facts to know. However, a key indicator for long term investors and the least considered is how rank and file employees of the company are treated. Does the company have a culture of inclusiveness? Is it committed to growing and nurturing people? This intangible indicator which requires effort to determine makes an enormous difference in predicting whether a company will prosper or stagnate. In the turnaround world many executives place priority of cost cuts over eliminating a culture of pettiness and politics. However, in my opinion, no long term success is possible without every employee moving in the same direction. When I begin a turnaround effort or buy a company creating an inclusive culture is at the top of the list.

So what does an investor look for to determine if a company is building up its people? Below are a number of indicators that a workforce is operating in a healthy manner:

1. Are employees Loaded up with responsibility and authority
2. Are the departments and individuals within the departments communicating like crazy
3. Does every employee recognize that their work has a meaningful impact on the companies health
4. Are people allowed to shine in the spotlight
5. Is belittling, ridiculing or yelling at someone taboo and never tolerated
6. Is every person regularly asked for their advice
7. Are employees given all the good and bad news so they are aware of the companies present status

Human beings all want to be appreciated, respected and recognized. Its managements job to see that these three needs are being met. If they are great ideas and opportunities will always be coming as people always give back what they receive.