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Exceptional Employees, More Successful Companies

Stocks in this article: GOOG GS AAPL MSFT GE

NEW YORK (TheStreet) -- These days, the phrase "people as a source of competitive advantage" is a persistent drumbeat. Business leaders say it and they seem to really mean it. But is it true? Do companies with the best people outperform those with average people?

Let's run a quick test. The primary goal of virtually every public company is share price growth. Thus, the average chage in share price is probably a good measure of business success.

Next, let's identify companies with the best people. Maybe companies that rank high on Fortune's "Best Companies to Work For" list have the best people. The list includes: Quicken Loans, DPR Construction and Edward Jones.

Are the best employees in America really at Quicken Loans? Or is Fortune's ranking really a competition of pandering to employees? When describing why the winners won, the articles describe pet babysitting services and on-site dry cleaning. But most high-caliber employees place opportunities to work with the best and brightest above such things.

There's a better way to identify companies with the best employees or "human capital." James Surowiecki's book Wisdom of Crowds asserts that a diverse group of people who possess unique knowledge about a given task are, on average, very smart. When it comes to identifying companies with the best people, what does the crowd think?

Every year, CNN/Money Magazine conducts an annual survey of graduating MBAs. The survey asks graduates where they want to work. It uses their choices to rank the 100 most desirable companies for MBAs from U.S business schools. Given that the best young talent (i.e., graduating MBAs) want to learn from the highest-caliber professionals, the survey is probably a reasonable indicator of human capital quality.

Where do the MBAs want to go? Let's look at 2009, which I picked because it predicted five-year share price growth. The  best companies in 2009 grew faster over the next five years than average.

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