Cognology
  • Products
    • 360 Degree Feedback
    • Competency Management
    • Compliance Training
    • Course Builder
    • Learning Management
    • Onboarding & Inductions
    • Performance Management
    • Profiles
    • Skills Management
    • Talent Management
  • Resources
    • Agile Performance Management
      • Balanced goals
      • How does performance management work?
      • How to write SMART goals and objectives
      • The Ultimate Guide To Agile Performance Management
      • What Remote Working Means for Performance Management, Plus 7 Other PM Trends
    • 360 Degree Feedback
      • What is 360 degree feedback?
      • How to run a 360 degree feedback process
      • 3 Easy Tips For Your 360 Feedback Questionnaire
    • Induction and Onboarding
      • Employee Onboarding Resources
      • Easy guide to a great Onboarding Process
      • Get the Onboarding Business Case Whitepaper
      • How To Switch From Face To Face New Hire Inductions To Online
      • Selecting an Onboarding System
      • Sample Orientation and Onboarding Program
      • Forms You Will Need For A New Employee In Australia
      • What Is Information Onboarding
    • Competencies & Skills
      • The Ultimate Guide To Competencies
      • What is a competency?
      • 7 reasons you should be using competencies
      • What is competency based assessment?
      • Competency Assessment Methods
      • Competency Assessment Template Form
      • Easy Guide to Competency Based Assessment Tools
      • Competency Management
      • What is skills audit?
      • How To Conduct a Skills Audit and Identify Skill Gaps
    • More about Performance Management
      • What is Performance Appraisal?
      • Performance Appraisal Template With Tips
      • What is performance management?
      • Social Performance Management Explained
      • What is talent management
    • Samples
      • SMART Goal Examples
      • Sample Goals and Objectives
      • Sample competencies
      • Sample competency review comments
      • Sample goal review comments
      • Sample development activities
      • Sample one-on-one check-in conversation notes
      • Sensitive items to avoid in feedback/comments
    • Learning & Coaching
      • A leaders guide to coaching
      • Coaching conversations
      • How to give feedback like a pro
      • How to conduct one on one meetings with team members
      • Seriously Good Learning and Development
    • More
      • Designing a Work-From-Home Policy: Where to Begin
      • How to Keep Employees Informed During a Crisis
      • How To Keep Staff Working From Home Productive
  • About
    • About Cognology
  • Ask Us Anything
  • Search
  • Menu Menu

Tag Archive for: share price

Does talent management drive share price performance?

February 2, 2015/in Talent Management/by Jon Windust

Why investors should care about talent management

Here at Cognology we love data that supports the importance of great people management. Today we’ve got some particularly interesting data from Glassdoor that all managers (and investors) should pay close attention to.
We’ve dug into Glassdoor data to understand the impact of employee happiness and satisfaction on share price performance.

If you’re not familiar with Glassdoor

Glassdoor is a website where employees and former employees anonymously review companies and their management. The data and reviews are then made publically available.
Here we’re using Commonwealth Bank as an example:

CBA Ratings and Trends chart

As you can see, it’s gives a quick feel for what it’s really like to work at the company on a number of measures.

But deeper than just employee happiness, Glassdoor is also a pretty good indicator of management capability. As we showed in our recent piece on Management Capability, Glassdoor ratings sit broadly in line with the Australian Institute of Management’s capability index.

What do these ratings say about Australia’s largest companies?

At an aggregate level, every company gets a rating out of five stars. We collected these Glassdoor ratings for the ASX100. You can see the results below:

Glassdoor ratings chart

Note that we’re only including companies with reviews on Glassdoor (which is why there’s 68 companies listed here instead of 100). Due to size or industry, some companies don’t have enough ratings to show data.

As you can see above, most companies tend to cluster somewhere between a rating of 3 and 4.

What’s particularly interesting here are the seven Australian companies that have scored ratings of 4 and above. As you can see from the chart, it’s quite rare to achieve a rating at this level. For comparison, some of the international companies with ratings above 4 include:

  • Bain and Company (4.7)
  • Facebook (4.5)
  • Google (4.4)
  • Boston Consulting Group (4.2)
  • Southwest Airlines (4.1)
  • Adobe (4.0)

What has this got to do with share price performance?

One of the big questions about Glassdoor is always “does the rating really mean anything?”. Anonymous reviews sound awfully like they could be gamed by a company that wanted a quick ratings boost. Or just as easily destroyed by a particularly bitter ex-employee.

So, in aggregate, do these ratings actually tell us anything meaningful about the companies listed?

Perhaps the most impartial way to look at overall corporate performance is the share price. There’s a lot of nuances that share market misses – but there’s no disagreement that it’s a very clear public indicator of performance that all stakeholders care about.

So how does aggregate share price performance look when we chart against Glassdoor ratings:

Glassdoor ratings chart

 

It’s clear that the past 12 months has seen outperformance by those companies with a glassdoor rating of 4 or above. Just to highlight, these companies with employee reviews averaging above 4 are:

  • CSR
  • Fortescue Metals
  • Toll Holdings
  • Wesfarmers
  • Seek
  • Ramsay Health
  • Orora

Whilst it’s easy to make the argument that employee engagement and management capability is causing share price outperformance, let’s not get too carried away and start the “Glassdoor ratings >4 hedge fund” (although we did very briefly consider it before publishing this article).

To be very clear, I’ve always believed that there’s a relationship between great talent management and company value. But before we say this is definitive proof of the huge value of talent management, there’s more research required. Do companies that are achieving stronger share-price growth just have happier employees? It is possible that the causation works in the other direction?

In any case, it’s fascinating data that requires more attention and thought. It’s safe to say you should expect more questions from investor relations about your talent management strategy in the near future. 

Please note: Clearly, this isn’t investment advice. And for the sake of full disclosure, nobody involved in the publication of this article holds shares in any of the outperformers referenced.

https://www.cognology.sg/wp-content/uploads/2015/02/ASX-100-Glassdoor-ratings.gif 210 210 Jon Windust https://www.cognology.com.au/wp-content/uploads/2017/01/Cognology-logo-colour-300x101.png Jon Windust2015-02-02 02:18:332021-12-03 11:48:12Does talent management drive share price performance?

Recent Posts

  • Course Builder
  • 7 Trends Driving Change in the Skills Landscape
  • How HR Can Boost Talent Retention, According to New Research
  • The Worried and the Well: How to Boost Your Employees’ Wellness in a Time of Crisis
  • The Quick Pivot at ACSQ

Subscribe

Get our latest news, tip and tricks

Receive our occasional newsletter

Products | Pricing | Resources | Blog | About | Contact

© 2021 Cognology

© Copyright Cognology 2019
  • LinkedIn
  • Twitter
  • Youtube
Scroll to top