Is A Company Culture Important In Investing?
Basically lately I had a poll in 2 different telegram groups - Fundamental Scorecard (my own's Telegram) and Invest for the Long Term (Boon Tee's Telegram Group).
I was questioning if a company culture is an important factor in our investment thesis.
The main reason behind the question was that I used to look at Glassdoor rating as a consideration when I was choosing a company. But recently, there is a company that I was interested in that had a very bad Glassdoor Rating. That made me wonder if I should ignore it.
|Result from "Invest for the Long Term"|
|Result from "Fundamental Scorecard"|
Thus, the poll results shows that more than 50% of Investors that participated in the poll stated that at least a company culture will have at least a 50% weightage in their investment decision making. This mean that if a company has a bad culture, technically you will ignore it.
Nevertheless, the argument against the results were also significant - meaning it does not matter.
3 of the argument that make sense to me includes:
- If a company is massive;
- High Turnover caused employees not tuned to the founder's vision;
- Results/Numbers matter eventually;
- The results that we are taking information from maybe localised.
Initially, I thought maybe this works much better for a small cap companies. But after much thinking, I decided that a company culture SHOULD NOT be a main consideration factor when it comes to investing. After all, what matters when it comes to investing, is a company's moat, a founder's vision, the business model, and eventually the numbers.
However, if the company you intend to invest in or have invested in does have "happy employees", you can also deem it as a "valuation multiple" too.
You will get the idea when you take a look at the top 10 employers in the Forbes' article of the World Best Employers as of Oct 21: