Like most investors, you probably aim for the best possible return when picking potential investments. But as consumers increasingly clamor for companies to embrace social responsibility, good corporate citizenship is becoming a vital part of many companies' success. And it can boost the performance of our portfolios, too.
CR magazine recently released its "100 Best Corporate Citizens" list for 2013, in which it rated members of the Russell 1000 large-cap index on 325 different elements related to responsible behavior. In the coming weeks, I'll delve into each of the seven categories that contribute to a company's overall score.Today, we'll look at the employee relations category, which gets a hefty 19.5% weighting. Here are some of the top-rated companies:
Intel (NASDAQ: INTC )
Gap (NYSE: GPS )
Hewlett-Packard (NYSE: HPQ )
Merck (NYSE: MRK )
Cisco Systems (NASDAQ: CSCO )
To earn their high scores, the companies above engaged in a variety of good practices, including offering their employees benefits such as onsite recreation facilities, vision insurance, and adoption assistance, and disclosing the percentage of employees and managers who are women or members of a minority group.
Digging deeper
So what, exactly, are these companies doing right? Here are a few examples of their employee-related practices:
Intel offers a wide variety of generous benefits, and at Glassdoor.com, 83% of employees chiming in would recommend their employer to a friend. One interesting twist at Intel is that workers are routinely rotated into new positions every 18 to 24 months, to keep them learning new things. Its flexible work options include telecommuting, compressed workweeks, flextime, and more.
At Gap, employees typically receive 20 to 35 days of paid time off, whether for illness, vacation, or personal time. Other benefits include discounts on company merchandise and on other items, too, such as computers, gym memberships, or flowers. There's also paternity pay and child care support. About 67% of workers would recommend their employer to a friend.
Hewlett-Packard has been struggling in recent years, making generous benefits all the more important, in order to attract and retain workers. (It's not always enough, as attested by only 41% of employees recommending the company to friends, per Glassdoor.com.) Along with the usual suspects (401(k) matching up to 4%, dental and vision insurance, adoption assistance, and more), it offers discounts on a wide variety of expenses, such as hotels, insurance, and company products.
Merck offers some workers a benefit that's hard to find these days -- a traditional pension. It has also boosted the percentage of women in executive roles from 25% to 35% between 2009 and 2011, and per its own "Culture Survey," 49% of its workers are "engaged" or "fully engaged." About 64% of its employees would recommend it to a friend, per Glassdoor.com.
Cisco's benefits have led to its being included in Fortune's list of "Best Companies to Work For" for the past 16 years in a row. Its percentage of female workers is 22%, down a little over the past few years, and 82% of workers express satisfaction with their workplace. About 76% of workers would recommend their employer to a friend, per Glassdoor.com.
Earning well while doing good
Companies doing good, such as treating their employees well, can boost your portfolio's performance. And various other studies have suggested that socially responsible investments are at least competitive with the overall market, if not outperforming it on occasion. That's a solid motivation for even the most coolly rational investors to take social responsibility to heart.
If you're in the market for solid socially responsible candidates for your portfolio, check out the real-money portfolio run by my colleague Alyce Lomax. Out of all the Fool portfolios in the group, hers was recently in first place.
Learn more about Cisco
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