Common Stocks and Uncommon Profits – Point Seven

Does the company have outstanding labor and personnel relations?

  • According to Fisher, there is no definitive yardstick that can be applied to measure this relationship.  He advises looking at a number of factors and judging from a composite picture.
  • As a rule of thumb, companies without unionized work forces are more likely to have above average labor and personnel relations.
  • Unionization is not a sign of poor labor relations.  Some companies with the best labor relations are unionized; they have learned to coexist for the greater good.
  • A record of constant and prolonged strikes is a good indication of bad labor relations.
  • The absence of strikes does not necessarily indicate good labor relations; it could mean that one party prefers the status-quot to the consequences of the conflict.
  • When a labor surplus exists, a company with a long list of personnel seeking employment, is usually one that has good labor and personnel relations.
  • Companies with good labor relationships usually work swiftly to settle grievances.
  • Companies that pay above average salaries or wages while maintaining above average profits has good labor relations.
  • Lastly, the investor should be sensitive to the attitude of high-level managers to the rank and file workers.  If all they can do to improve earnings is to layoff people in mass without any regard for their well being, this will be detrimental to the long-range investor.

p. 65 – 67

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