NEW YORK (
) -- The best employer rankings might not be the most natural place to look for investment ideas. But at a time when most companies are announcing layoffs and hiring freezes and cutting back on employee benefits, the companies that continue to invest in their employees are also sending a positive signal to the market.
In theory, at least, such companies are more confident about their future prospects and willing to focus more on the long-term, rather than being guided by short-term financial and stock performance.
Traditionally, companies have often had to negotiate between employee interests and that of shareholders. Indeed, in the nineties, the "seven percent" rule was a popular catchphrase in market circles, referring to the notion that a company that announced a layoff could expect to see its stock soar by 7% immediately following its announcement. The fact is that markets sometimes have trouble evaluating the long-term benefits of investing in intangible assets such as talent.
But in recent years, the stock market has paid greater attention to how a company treats its employees. Smart investors figure that satisfied workers are likely to be more productive, and a company that retains employees successfully saves the huge cost of repeatedly recruiting and training workers.
An innovative workforce is especially important to technology-driven companies. No one knows this better than
, which is famous for creating an informal, playful atmosphere in its offices to stimulate creativity. Google spends millions of dollars offering employees on-site laundry services, hair stylists, saunas, free car washes and more, but its shareholders can't complain. The stock has delivered a 80% return over the past five years.
Google, though, is far from the only company that manages to reward both shareholders and employees. Publicly traded companies on Fortune's list of 100 Best Companies to Work For have, on average, delivered a return of 40% over a period of five years, while the S&P 500 declined by about 9% over the same period. Recent studies have also shown a strong positive relationship between employee satisfaction and long-term share performance.
Read on for a look at 10 companies ranked by market capitalization that have proven to be both great employers and great investments in recent years. All companies figured in Fortune's latest list of 100 Best Companies to Work For and delivered a return of 50% or more over the last five years.
10. National Instruments
, a manufacturer and supplier of measurement and automation products, has figured in the best employer rankings for 11 consecutive years.
Like the other companies in this list, it offers a range of benefits from on-site fitness to compressed work weeks to tuition assistance. Noteworthy efforts in the health department include on-campus walking trails, sports leagues and a new 20-week program called Healthy Eating Everday, designed to change eating habits.
The stock has delivered a return of 57% over the last five years and has appreciated 42% in the past year alone.
9. FactSet Research Systems
FactSet Research Systems
, a provider of financial and economic information, currently falls within the top 50 employers on the list. Employees get free lunch, high-speed Internet access at home for certain positions, 90%-100% health coverage, discounts on gym memberships, weight watcher memberships and nutritional counseling.
The company encourages its employees to learn their clients' business and offers bonuses ranging between $2,500 to $10,000 for passing each level of the CFA (Chartered Financial Analyst) exam.
FactSet is another stock that doubled over the last five years. The company continues to expand in this space and recently acquired market research firm Market Metrics.
Financial software provider
is regularly featured in employer rankings. In 2008 it was awarded with the San Francisco Bay Area Corporate Equality Award, presented to companies in the area that have shown an outstanding commitment to equality in the work place. The company has instituted a number of employee networks designed to encourage diversity. Minorities make up about a third of its workforce.
The stock of Intuit is up about 35 % in the past year. UBS initiated coverage on the stock last week with a buy rating.
is one of today's fastest growing technology companies, with its expertise in cloud-computing technology. Salesforce.com pays its employees top dollar: a senior account executive, which is the most commonly held job title, can earn an average of $250,000 a year. Besides the usual benefits associated with tech companies such as free yoga classes and assistance for new parents, Salesforce.com also allows its employees to spend one week every year on a project of their choosing, as a way of motivating them.
Salesforce.com has grown to a $1.4 billion company in a little over 10 years. Its growth is reflected in its skyrocketing stock price, with the stock expanding four-fold over the last five years.
Where would a consulting company be without its employees? Management consultant
recognizes that its employees have a demanding travel schedule, as they frequently work out of client locations.
Thus, it offers its employees a number of flexible working arrangements, including the option to work from home or compress their work week, fly them back home or have the employee fly someone else to the client location, and so on. But its most recent accomplishment is the incorporation of video conferencing facilities in several of its client's offices in order to reduce the time its employees spend at client locations.
Accenture continues to lead in technology outsourcing in the U.S. and is currently featured a top pick for many analysts in the sector.
Leading agri-chemical company
, best known for its advances in genetically modified crops, has a high employee retention rate. The annual voluntary labor turnover is as low as 2%.
What makes its employees so loyal? Programs that focus on work/life balance such as assisting employees in elder-care and child-care and adoption assistance of up to $7,500, paid vacation of four weeks in the third year of employment in addition to the usual 13-14 days leave and free membership to a professional organization of the employee's choice.
Monsanto has delivered a return of 63% over the last five years and eight out of 12 analysts rate the stock a buy.
4. EOG Resources
, the oil and gas major that was formerly Enron, has never announced a layoff in its history. It is a big paymaster, with the average engineer earning about $170,000 a year.
Benefits include a compressed work week and 100% healthcare coverage, along with on-site fitness facilities and subsidized gym membership.
The stock of EOG has more than doubled over the past five years. Analysts are now featuring it as a pick in natural gas.
3. Colgate Palmolive
is considered a great place to work for those who seek international experience. Close to 80% of its sales are generated from outside the U.S. The company takes workforce diversity seriously; minorities account for 30% of its workforce.
Over the past five years, the company has delivered a return of nearly 80%. As a leader in oral hygiene, it still enjoys premium valuations. But concerns surrounding currency risks are currently weighing on the stock.
2. Novo Nordisk
ranked 25th in Fortune's 100 best companies to work for in 2010. The company offers a great compensation package, with the average diabetes sales agent earning more than $100,000 a year -- and of course, good health care. Employees have the option to work out of home or work on a compressed weekly schedule -- working longer hours, say, for four days a week and taking an extra day off.
The stock appreciated a whopping 248% over the last five years. Regardless, it is still pegged to be among the
in the coming year.
It is no surprise that
consistently figures among the top places to work. Employees get free lunch and dinners prepared by gourmet chefs and have access to free laundry rooms, massage rooms and dry cleaning. The way CEO Eric Schmidt sees it, "Let's face it: programmers want to program, they don't want to do their laundry. So we make it easy for them to do both."
Benefits go way beyond the ordinary. Besides generous maternity leave, Google also offers up to seven weeks of time off for non primary-care givers, and allows new parents to expense up to $500 a month in take-out food in the first three months after their child is born. Google also reimburses up to $5,000 in legal expenses for couples who seek adoption services.
Other benefits include tuition reimbursement of $12,000 a year, so long as the employees get B's or better, five free days of back-up child care if the regular child care falls through, and on-site doctor services. Last year, it instituted a stock-option exchange program to help employees sitting on underwater options. And it's hiring again.
Meanwhile, the stock delivered a return of 20% over the past year, slightly underperforming the S&P 500. Still, 32 out of 38 brokers covering the stock rate it a buy.
-- Reported by Shanthi Venkataraman from New York