Intel's Secret Weapon

While 2013 was largely a transition year for the chipmaker Intel (NASDAQ: INTC  ) , 2014 has started with a bang. The company seized the stage at last week's Consumer Electronics Show, unveiling wearable computing and announcing the removal of all conflict minerals from its processor supply chain.

What's particularly astounding is that Intel's considered a dinosaur in the start-up saturated Silicon Valley, yet it's at the forefront the tech world. To understand Intel's success, however, investors need to understand what makes this company tick.

A most valuable asset
Intel's ideas inspired the CES audience in large part because Intel employs an inspired workforce. In the tech world, you're only as good as your latest mind-blowing product, so companies like Intel foster a culture of entrepreneurship, risk-taking, and innovation. As former CEO Andry Grove famously quipped, "Only the paranoid survive."

But being paranoid can only get you so far. Intel's built a purpose-driven culture that enables the company to thrive over time. To get a sense of this culture, investors should visit Intel's website where the company's mission statement is laid out as follows:

Delight our customers, employees, and shareholders by relentlessly delivering the platform and technology advancements that become essential to the way we work and live.

Management defines the company's purpose through this statement and elaborates through the company's core values and objectives. All of these communicate to the outside world what makes this company tick and what it strives to become.

Why is this important? The mission statement, core values, and objectives tell you where the company's headed and how it plans to get there -- a roadmap for a $127 billion tech giant. This separates a purpose-driven company from a mere profit-generating machine, and many executives believe it is critical for long-term success.

For example, Google's VP of Corporate Development, David Lawee, notes that a powerful mission statement "attracts the best capital, the best people, and everything else [you] need to build an enduring business."

Still, defining and articulating a mission statement can be quite different from executing it. To gauge whether Intel continuously strives to fulfill its mission, one should look to how it serves its various stakeholders, including customers, employees, and shareholders.

Wall Street analysts often evaluate a company's performance by focusing exclusively on shareholders, assuming that an increasing share price -- even over a short time horizon -- means management is succeeding. In my opinion, however, this approach is shortsighted and can actually cripple a business.

A well-rounded, Foolish approach would start with employees' satisfaction level to see if Intel has the right tools in place to execute on its overall mission.

To better understand Intel's workforce -- the most critical asset for a high-tech company -- I reached out to Glassdoor, the top website for reviews, ratings, and salary information on thousands of companies. I wanted a detailed look at how Intel measures up against its competitors when it comes
 to employing a thriving workforce. The results shown below are based on hundreds of anonymous employee reviews.

Glassdoor Ratings in 2014

Company

Company Rating

CEO Approval Rating

Intel

3.8

85%

ARM Holdings

3.8

100%

Texas Instruments

3.6

72%

Broadcom

3.4

77%

Advanced Micro Devices

3.1

49%

In the race between chip manufacturers, Intel finds itself tied at the front of the pack with ARM Holdings. Coincidentally, their company ratings of 3.8 matches that of tech brethren Apple. In terms of CEO approval ratings, Intel lags behind ARM, but neither company's top brass has been at the helm for over a year, which results in a smaller review sample size.

Though not shown above, a third category provides additional insight. Between 2009 and 2014, the percentage of Intel employees who would recommend the company to a friend increased a staggering 28%, from 55% to 83%. In a relatively short time, the company's made huge strides in workplace satisfaction across operations that span 60 countries and include over 80,000 employees worldwide. Not too shabby.

A leading indicator of success
I believe this type of information can help investors assess whether a company recognizes the importance of empowering employees. In fact, a recent Motley Fool report revealed that the top 33 publicly traded companies on Glassdoor as of 2013 walloped the market over the past decade, with gains of 505% on top of the S&P 500's return.

Highly engaged employees are critical in helping a company during difficult stages of its life, and the past few years have proven challenging as Intel plays catch-up in the mobile market. While 2014 could be the year when Intel turns the corner, yet another challenge will lie ahead as computing spreads in the post-PC era. Supporting a thriving workforce will be critical for Intel to keep its finger on the pulse of fast-accelerating technology.

As my colleague Chris Neiger pointed out during CES, "[T]he tech Intel displayed was more about showing the capabilities of the company rather than showcasing cool new ideas." By revealing new technologies in 3-D scanning, the 'Internet of things', or wearable computing, Intel raised the bar in Las Vegas. But those products will be old news soon. For Intel to dazzle next year's crowds, employees will have to get to work on bigger and bolder projects. 

For any business, it's the capabilities and culture of the company that really matter to stay atop an industry, and Intel's success in this area has translated to enduring success in the market. In my opinion, investors who stay on board could be handsomely rewarded.

You can invest in a great company culture
If you're looking for the next Intel success story, there are plenty of smaller companies that are building dynamic cultures and sustainable businesses. Our CEO, legendary investor Tom Gardner, has permitted us to reveal a few of his best ideas The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover three companies we love. 


Read/Post Comments (2) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 13, 2014, at 10:46 AM, bugsy1339 wrote:

    Glassdoor ratings seem to be pretty poor - most analysts and AMD investors would rate Rory Read alot higher for his work since he came on board AMD as CEO.

    He has changed the companies direction- deleveraging AMD from PC's and Intel. They now have a tom shelf GPU, they are selling SeaMicro servers to Verizon, they are introducing Mantle and are pushing HSA forward. They won the console business and are creating a halo around the rest of their business. AMD is gaining in the workstation market with them winning the Mac Pro business will have their share go from 19% to 30%. They also have to first HSA enabled chip "Kaveri" that is being released tomorrow - check out the OpenCL scores on that chip - so Rory with 49% rating - Bogus IMHO

  • Report this Comment On January 15, 2014, at 10:05 AM, TMFBoomer wrote:

    @bugsy1339

    Thanks for the comment and I appreciate the insight into what's going on with AMD. I think we, as investors, do have to take Glassdoor ratings with a grain of salt. Trying to summarize a leader's performance or a company's culture in a single number is not really possible. There's human bias, recency bias, etc. Since Read has only been at the helm for a few years there could be ratings that were carried over from predecessors. In short, I understand your concerns and think all investors should keep these limitations in mind when evaluating Glassdoor ratings. I think a nice feature would be a ratings history over time presented in Glassdoor to see if the company/CEO is moving in a certain positive/negative direction according to employees. That might more helpful than an absolute number. But, as it is, I thought this was an interesting way to compare peers in a given industry. Thanks again.

    Isaac

    @TMFBoomer

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