Why EMC and Apple's Leaders Are Great, and Cisco and Microsoft's Aren't
At the Fool, we are big proponents of assessing the leadership of companies you're investing in. That means finding leaders who have a vision for their organization and build out an organization that exudes their purpose.
While ranking leadership can be difficult, leading jobs website Glassdoor released its rankings of the top 25 CEOs as voted on by employees of the companies themselves. Inside the list, there are some surprising results.
No surprise on top
The highest-ranked CEO once again came from Apple, where Tim Cook received a 97% approval rating, 2 percentage points higher than Steve Jobs held last year. Shortly behind Cook on the list in the fifth spot was Google's Larry Page, who received support from 94% of employees. Neither of these companies comes as a huge surprise, especially Google, which has been known for the unique culture it fosters, but it is nice to see approval remaining so high as both companies underwent a CEO transition.
More surprises below
Beyond Apple and Google, there are some relatively below-the-radar names on the list. For example, Qualcomm (NAS: QCOM) had the No. 3 rated CEO in Paul Jacobs. Intel climbed to spot No. 6, while EMC (NYS: EMC) held spot No. 15, and its subsidiary VMware (NYS: VMW) had chief executive Paul Maritz ranked No. 7. Maritiz's approval rating saw a huge jump from last year, moving from 75% to 90%, the second highest jump for any CEO on the list.
I was able to speak with Glassdoor CEO Bob Hohman about the results, and he highlighted that the kinds of leaders on this list normally exude a combination of two key traits: a vision and passion for the company's mission and goals.
In the case of Qualcomm, I've long admired Jacobs' singular driving vision of a planet filled with connected devices. As that vision plays out, employees appear to be buying in more and more to what he's preaching. With EMC, I've praised Joe Tucci's ability to plug holes with great acquisitions that didn't reach too far outside the company's strengths. As EMC and subsidiary VMware keep growing and become increasingly important in next-generation data centers, employees are buying into their vision for the future. Even Oracle CEO Larry Ellison made the top 25 list. While Ellison can be notoriously prickly and even condescending to employees, he does exude a vision for his company and confidence in Oracle's ability to achieve their goals.
That's not to say a singular vision enough is alone. Apple has an internal university, Google gives employees free time for their "pet projects," and employees of Qualcomm routinely listed abilities to keep learning and growing as a reason for their happiness at the company. The point is also that successful companies increasingly give their employees outlets to grow their skills and learn more about the company itself.
Not all great
When I followed up with Hohman on how far below the list Microsoft's (NAS: MSFT) CEO Steve Ballmer was, the answer was startling. While the Top 25 CEOs all ranked above 80% and the average CEO approval sat at 62%, Ballmer's approval was 37%. Also not found on the list was Cisco's (NAS: CSCO) John Chambers, who scored below average at a 58% approval rating. For the record, that's 22 percentage points worse than Meg Whitman, the new CEO of that wonderfully built machine called Hewlett-Packard.
Both CEOs have seen their recent struggles. Ballmer has never been able to create a vision for Microsoft. Bill Gates used to have the overriding goal of "a PC in every household" back in the '90s, but Ballmer has had a tough time defining Microsoft and its sprawling operations in the dawning mobile era. In Chambers' case, while world data traffic has been booming, his constant diversions into new business lines has left Cisco with flat earnings over the past five years.
An unclear vision and poor execution from leadership are two key reasons I've avoided buying both Microsoft and Cisco in the real-money portfolio I manage on Fool.com (which, by the way, you can follow, along with my market commentary and buys, on Twitter). Contrarily, I have purchased EMC, Qualcomm, Apple, and Google across the year in the portfolio. So far, the grouping has been significantly outperforming the market.
It's nice to see Glassdoor's rankings of the employees of these companies validating my view that they're all led by exceptional leadership teams. In the future, that's how I'll continue investing as I hunt for new companies, finding exceptional teams with a long-term focus that will benefit not only employees, but also shareholders.
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At the time this article was published Eric Bleekerowns shares of EMC and Cisco. The Motley Fool owns shares of Apple, Google, Intel, Qualcomm, EMC, Microsoft, Oracle, and Cisco Systems.Motley Fool newsletter serviceshave recommended buying shares of VMware, Google, Microsoft, Apple, and Intel and creating bull call spread positions in Microsoft and Apple. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.