Debating the Merits Of Employer Lists
By Nick Burkholder From Staffing.org
As a culture, we're infatuated with lists -- Big, Best, Most, Worst. "The Most Admired Companies" and "The 100 Best Companies to Work For" both published by Fortune magazine get the most attention. But do these "Most" and "Best" lists really matter when it comes to judging your company's performance? And how should you respond to your employer and employees' questions about the significance of these lists?
First, it's important to understand the basics about the selection process behind these lists. The information I'm about to share with you is not secret; it's usually published in a sidebar, alongside the headline grabbing articles. But you probably don't have time to read every nuance of how these lists are made, so I'm going to walk through the highlights.
Let's start with the basics about the full list, by industry, of The Most Admired Companies.
1. If you aren't in the top ten revenues in your industry, you're not even considered.
The industry ranking only considers up to the ten largest companies by revenues in 58 industries.
2. Once revenues are considered, the rankings are essentially subjective. They're based on the perceptions of the industry executives, directors and analysts.
A total of 10,000 executives, directors and securities analysts rated the companies in their own industries based on eight criteria:
Innovation
Financial Soundness
Employee Talent
Use of Corporate Assets
Long-Term Investment Value
Social Responsibility
Quality of Management
Quality of Products and Services
Granted, these are eight good categories to be judging companies on. However, it's important to realize there were no other standards established. Beyond this point, it's up to the "judges" to decide how they will score companies within these ranks. There are no metrics used, no standardized scales to score by.
And while we're glad to see a human capital criterion on the list, we're disappointed that it's still considered a "subjective" criterion. We've proven through metrics-driven performance analyses that the value of human capital can be accurately and objectively measured. We are emphatic that evaluating an organization's most critical resource -- namely, it's human capital -- should not be based on perceptions. And that's one of the biggest weaknesses of these lists.
Now to the Top Ten List. This is based on a different cut, determined by several important factors.
The same 10,000 executives, directors and analysts were asked to rank their "most admired" in any industry. But they could only choose from a pre-determined list of companies that included 1) the top 25% from the magazine's last year's survey and 2) the top 20% from each industry even if they weren't in the top 25% overall.
This explains how Johnson & Johnson is ranked third in pharmaceuticals behind Pfizer and Bristol-Myers Squibb, but is the only industry representative on the Top Ten. J&J was in the top 25% overall last year even though they weren't in the top 20% of pharmaceutical companies this year. Two of the other top ten, FedEx and Wal-Mart, were also not ranked top in their industry.
And consider this: Enron was ranked last in the energy industry, but their 3.95 score was higher than 26 of the 530 companies rated. So when it comes to the top companies, Microsoft, Pfizer, Starbucks and yes, Enron, made the list.
Understand all that? Our resident Ph.D. started to explain what this all means and how the breakout by the executives, directors and the analysts would skew the results. But he threw up his hands and left, saying, "It's just one of those lists." No doubt, it's more complicated than the judging/scoring system that allowed fourth place Sarah Hughes to catapult over three other performers and win the Olympic gold medal in women's figure skating.
So are these lists of any value?
Yes. Obviously if you're on a list, the situation gives you great potential for branding and promotion. And being on a list -- or wishing we were -- also makes us all think. It forces us to address key questions about performance: What does it mean to be the "Best"? What are we striving for? When do the opinions of outside forces matter and when don't they mean anything?
Each company will have a different answer to each of these questions. But keep in mind that the bottom line reason that these lists exist is to generate sales of publications. Don't let a publication's marketing strategy deter you from your bottom line mission and objectives.
So how do you respond to this list, if you're not on it?
I know a Senior HR Executive who dreads the annual Best and Most lists. She insists that just as the executive team and employees are starting to consider themselves a Best or a Most, a new list comes out and they're never on it. Inevitably it prompts some second-guessing. How good are we? And you begin to wonder: If these other companies are so good, why shouldn't I be working for one of these organizations?
We all want to be part of a highly regarded organization. But what do you tell your boss, if your company is not on an important list?
First, explain how the lists are put together. That will give you the opportunity to put your chances of making the list into perspective, and take the sting out of possible rejection. What is really important is understanding what each list means and what it doesn't, and explaining this to your organization.
Second, remember to focus on your own business objective. Regardless of whether or not you were on a publication's Top-Something List, your most important rankings are from your customers and employees, as well as the suppliers and the communities in which you operate. Ranking high on their lists means that you're doing well, very well. And any other opinions of value may very well follow.
Third, make sure you generate the rankings that are critical to your business. Getting customers and employers to rank your performance is a best practice that drives other best practices. So be in touch with your constituencies. Routinely collect feedback and use it to validate your objectives and assess performance.
Fourth, publicize these rankings -- just like the "Most" and "Best" lists are publicized. We know an organization that fundamentally improved its recruiting performance by publishing candidate and new hire satisfaction ratings in their recruitment advertising.
-- Mr. Burkholder is the president of Staffing.org and a global authority on work-force design, selection and management.
http://www.careerjournal.com/hrcente...ing-lists.html
Debating the Merits Of Employer Lists
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