This Week's Herman Trend Alert

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  The Herman Trend Alert

July 3, 2013

Employee Retention Affects Stock Prices

With the passing of Steve Jobs, we have seen the stock price of Apple (AAPL) drop drastically from $705 last September to $396.53 as of close of business last Friday. Apple employees who rode the wave of stock appreciation are also aware of this precipitous decline and many workers have chosen to vote with their feet. According to CNBC, they are leaving to accept positions with Google, LinkedIn, and other Silicon Valley employers. At least one analyst sees a direct cause and effect relationship.

However, now the picture is becoming worse; not only has the stock price disappointed shareholders and Wall Street, apparently Apple's declining stock price is now scaring off new employees as well. Actually, it's only logical, with increasing skills shortages and the uptick in the demand for top Information Technology talent, that candidates would choose an established company where their investments in the 401K and employee stock acquisition programs can grow faster.

If Apple can't attract the talented people it needs, it will not be able to change that trend. "The employees should come ahead of shareholders. Apple needs to treat their employees like gods," said Trip Chowdhry, an analyst at Global Equities, told CNBC.

After speaking with numerous recruiters at tech conferences, Chowdhry said that he knew that Apple is beginning to have a "retention problem" that could be serious and many employees described their future at Apple as "bleak."

It doesn't take a rocket scientist to know that stock performance and employee morale are connected, which would mean that Apple employee morale started falling late last year after shares went from over $700 in September to $509 at year's end. That's a depreciation of almost 28 percent.

Years ago, annual reports began talking about corporate culture and employee retention. These forward-thinking investor relations professionals realized then what is playing out at Apple.

The secret for Apple is not to strive to be the highest-paying employer in Silicon Valley*, but rather to be the employer offering the best (read "most employee-centered" culture) in Silicon Valley. Their employees have the answers; we can only hope they will be smart enough to ask the right questions---or hire a consultant who will.

* That distinction belongs to Google.


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