According to a survey from Microsoft, 41% of workers worldwide intend to quit their jobs and find work elsewhere within the next year. Slow down and read that again. We're talking about hundreds of millions of dissatisfied people ready to make a change -- now. It's an eye-popping statistic economists have dubbed "The Great Resignation."
Other surveys show around 25% of the workforce will participate in The Great Resignation, suggesting Microsoft is at least directionally correct. That's a massive shakeup in the global economy that investors can't afford to overlook. Indeed, I believe there are companies poised to benefit from this trend. But they may not be the companies you'd intuitively pick.
Image source: Getty Images.
The motivation
The rise of remote work is partly why workers are looking for new employers. For example, Prudential's survey shows that around 33% of people won't even consider working for a company that requires them to be at the office full-time. For this reason, it may be tempting to mention remote-work enablers like Fiverr and Upwork as beneficiaries of The Great Resignation. To be clear, these two might be long-term winners as well. But I believe there's a bigger element to the trend we're examining that compels me to highlight five other companies here instead.
According to Microsoft's survey, only 33% to 46% of employees feel like they're thriving right now, depending on which demographic they fit into. That's an alarmingly high level of dissatisfaction with their work environments. Combine this statistic with their apparently out-of-touch bosses. The same survey found 61% of business leaders were, in fact, thriving. When the boss appears to be floating on a pool raft sipping lemonade, you're not going to want to stick around when it feels like you're just trying to keep your head above water.
Then there's a final harder-to-quantify factor. It's easy to get caught up in the rat race and suddenly find yourself 20 years down the road wondering where your life went. But the COVID-19 pandemic caused everybody to slow down and reassess life. I believe people are simply looking to do something more meaningful with their lives. Perhaps this is reflected in Prudential's survey. It showed 26% of workers just want to try something new.
Here's who could win from this
Because of these factors, I believe companies with great cultures should retain top talent better than their competitors. That's a great competitive advantage. Not only that, these top workplaces should be able to recruit the massive amount of talent leaving their rivals.
Third-party GlassDoor is a great place to find these quality work environments. And Salesforce.com (CRM 3.42%), Zoom Video Communications (ZM 5.57%), lululemon athletica (LULU 1.59%), Hubspot (HUBS 6.23%), and NVIDIA (NVDA +2.59%) all rank very high on the list. Consider these stats.
| Company | 2021 GlassDoor rank* | Recommend to a friend | Approve of the CEO |
|---|---|---|---|
|
NVIDIA |
2 |
98% |
99% |
|
Hubspot |
4 |
94% |
99% |
|
Lululemon | 8 | 89% | 95% |
|
Salesforce | 17 | 90% | 97% |
|
Zoom | 22 | 93% | 99% |
*Top large companies. There's a separate list for smaller companies.
All five of these companies grew revenue during the COVID-19 pandemic, perhaps exhibiting some antifragility -- antifragile companies get better when exposed to challenges. To be sure, as investors, we care about business results and these five companies delivered despite the coronavirus.
However, there's more to buying stocks than the cold, hard numbers. Otherwise a computer algorithm could outperform regular stock pickers like you and me. Beyond just revenue and profits, there's also more intangible factors that play a roll in determining good companies to invest in. It may not always be true. But I believe strong culture is an intangible factor that correlates with market-beating results more often than not.
To illustrate, these top corporate-culture companies are beating the market over the past three-, five-, and 10-year periods. I've left Zoom off the chart since it only went public in 2019. But note that it's also beating the market during its short time as a public company.
Right now, if I were a shareholder in a company with low marks for corporate culture, I'd be rethinking that investment in light of The Great Resignation. These companies could lose important human capital.
By contrast, I think NVIDIA, Hubspot, Lululemon, Salesforce, and Zoom are all solid candidates to attract top talent in the coming years. After all, wouldn't you want to work for a company where nine out of 10 employees say it's a great place to grow your career?
And if these companies have top talent then I'd wager they'll get top results. It's reminiscent of how in 2020 the Tampa Bay Buccaneers attracted future hall-of-famers Tom Brady and Rob Gronkowski, and in one season it turned into football's championship team.
Image source: Getty Images.
Why Zoom and NVIDIA might be extra good picks now
While I believe all five can be winners, here's why Zoom and NVIDIA may be the strongest of these candidates to beat the market: Their businesses are growing the fastest! Being able to attract top talent is one thing. But you have to be in hiring mode to take full advantage of the opportunity.
Consider that at the end of the first quarter of 2020, Zoom had 2,854 employees. Today, the company has over 5,000 employees, demonstrating this company plans to grow its business for the long haul. Some investors viewed this company as a short-term pandemic play. But there are great reasons to buy Zoom today, including its current efforts to expand its business beyond video communication and into more work-management solutions. It's undoubtedly filling these new positions with some great workers as it flexes its optionality muscles in 2021.
The same goes for NVIDIA. Its career page shows it's hiring over 1,500 new workers right now, including over 1,000 engineers. Remember that in its fiscal 2021 (which ended in February), 40% of the company's revenue came from its data center business, while almost 47% of revenue came from gaming. But NVIDIA is heavily investing and hiring in its automotive segment -- autonomous driving, specifically -- which could be a $3 trillion opportunity by 2030, according to ResearchAndMarkets.com.
If you don't agree with my assessment of Zoom and NVIDIA going forward, that's fine. Equally good investors can see things from different perspectives. The encompassing takeaway for everyone is we should be watching how our favorite companies are retaining their workforces and attracting top talent. This is something that matters in investing and, with The Great Resignation looming, it may matter now more than ever.
