Investors put people and pay before market share

A
company’s ability to attract employees is now a more important factor than
market share, a senior representative of oil giant BP told an international
conference on HR last week.

The link
between management of people and share prices is now so clear that matters such
as pay and recruitment systems have become major factors that influence
investors, said Roy Williams, senior HR adviser to the company.

This means
executive stock options are forcing personnel issues into board discussions.
“Senior non-executive directors and the CEO will all have looked at the stock
price this morning,” he said. “Ten years ago they took three things into
account – book value, earnings and things like image and reputation.

“What is
now invested in is market value, which is about things that are not tangible –
talent, intellectual capital, image, reputation and quality of leadership.”

Even a
company such as BP has about three-quarters of its market value representing
non-tangible assets. In Microsoft and Coca-Cola the proportion is more than 90
per cent.

He told
delegates to the ECA International annual conference that senior managers are
reading Measures that Matter by Ernst & Young, which lists the most valued
and least valued non-financial data which influence investors. “It is what
analysts based their judgements on,” said Williams. “They are full of people
issues.”

By Philip
Whiteley

Comments are closed.