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The country's most effective companies A survey of corporate presidents
A SURVEY OF CORPORATE PRESIDENTS
ow do you measure the efjectiueness of any business? By whatever criteria you subscribe to, which are rhe ten most eflectiue business organizations in the United Stars?
60
These are the key questions that we asked the top executives who comprise the membership of the Presidents Association, an affiliate of the American Management Association. We also asked them to name the organization that had done the most outstanding job in each of ten crucial areas. To save time and effort, we did some preselection on the first question and came up with ten criteria that encompassed the factors most com-
monly cited in management literature as determining whether or not an organization is effective. Then we asked them to review the list below and rank them from 1 (most important) to IO, in order of importance. -Continuous growth in sales -Continuous growth in earnings -Significant payoffs from research and development --Good financial controls -Successful policy of diversification and acquisition -Efficient planning for the future -High caliber of middle and top management -Top marketing skills
-Enlightened social consciousness -Coherent philosophy of management In addition, we provided space for the respondents to check other factors that they considered as important as some of the above. One hundred and Sixty-three members of the Presidents Association returned the questionnaire &fore the cutoff date.
REFLECTIONS ON THE RESPONSES
To begin with, a few generahzations. We reject the “great man” approach to the measurement of organizational effectiveness, incorporated in the familiar assertion that “any institution is the lengthmed shadow of a single man.” Obviously, the survey respondents shared our feeling: oilly one executive mentioned strong leadership by da chief executive as one of the prime criteri;: of organizational effectiveness. . We suspect, however, that the responses understated the case for the strong leader. It’s impossible, for example, to think of Polaroid without thinking of Edwin Land or ITT without thinking of Harold Gzneen. Thirty or forty years ago it would have been equally impossible to think of General Motors without thinking of Alfred P. Sloan. We also think of a one-man show famous for the phenomenal turnover among its top management and the brutality of the big boss, who has nevertheless within recent years increased sales and earnings tenfold. The distinction
is clear between the Sloans and quite possibly the Lands and Geneens-who develop an approach to management and a system of controis that constitute a positive legacy to the organization long after they have left the scene-and our unnamed chief executive, who more than likely will be followed by the organizational eunuc~w~ m-id him until the uhimate cdapse or takeover. Another broad-brush generalization: E&ctive management is a holistic phenomenon. The e&c&e organization in other words, may have its particular Strengths, but it has nc special weakness. Procter and .G*& for example is renowned for its marketing organ&&m, and marketing is probably its area of greatest L~X&XKZ, but it would be surprising to discover that it didn’t have good financial controls, that it didn’t plan e&iem!y for the futwe, that it didn’t score high on ali ten criteria mentioned in the questionnaire on management effectiveness.
RESPOMES lo QXJFSEON QNE Now le ok at the responses to the first question. (The sum total of responses varied among items because some respondents failed to fill in alI the blanks.) Obviously, t&e members of the Presidents Association are most impressed by continuous growth in earnings, by the signs of corporate health indicated by what Emerson called “the unimpeachable
61
judgment of an unbribable tribunal-the account of profit and loss.” More than half of the replies-&I-rated continuous growth in earnings the most important single criterion of organizational effectiveness; more than 80 percent rated it as one of the top five criteria; and no one rated it at the bottom of the ten. All of which restates the traditional preeminence of the profit motive as the mechanism that keeps the corporate engine running. We know of only one corporate chief execctive, Edwin Land of Polaroid, who has ever proclaimed at a stockholders meeting that the prime purpose of his organization’s existence was not to make money. Continuous growth in earnings has double the number of mentions as the runner-up, “higher caliber of middle and top management” (40 versus &I), despite the growing recognition that the judgment of Emerson’s tribunal is really not that unimpeachable-figures may not lie, but they frequently conceal and confuse-and despite the growing pressures on the corporate organization to put concern for the en&onment azd other social considerations ahead of profits. Apparently, these pressures are not very effective. Only two respondents gave top billing to enlightened social consciousness; only four listed it among the top three, while 35 percent (57) rated it as the least important Criterion of orgahational efIectiveness.
62
What other criteria received high ratings ? We already stated that high caliber of middle and top management ranked second, with 40 mentions or 25 percent. Almost as many-35-placed it second; over 80 percent put it in the first five; and no one ranked it last. Nor is the high ranking surprising: Good managers take sound measures. In other words, an organization that is staffed at the middle and top levels with men of real ability will probably have good financial controls, increasing sales, a continuous growth in earnings, and the rest of the criteria covered by the questionnaire. The next largest number of firstplace mentions went to ‘efficient planning for the future” with 16, while “coherent philosophy of management” foLwed witt 12 first-place citations. Of more significance is that over &o Percent put efficient planning for the future in the first five and over !%IPercent mentioned coherent philosophy of management as one of the five most important criteria. The two, we feel, are closely r&ted. In an era of continuous change, the successof any organization depends on cuminuous planning for the future-on fixing goals and then on modifying the techniques and strategies adopted to meet these goals whenever circumstances indicate that a change is in order. The company with a coherent philmphy of management-that is, the company that has
Vn an era of continuous change, the success of any organization depends on continuom pianning for the futwe.”
already asked itself the questions, “What kind of business are we in?” and, “C?en that buiness, what objectives should we seek?“-has taken a long first step toward e&&e $a’-ning for the future. Similarly, continuous growth in eamings is related to good financial controls, and it’s not surprising that almost 70 percent of th. respondents labeled good financial contr4Js among the five most significant criteria, while only one person rated it last. It is possible to visualize competitive co that prevent a continuous growth of s despite good financial controls; it is almost impossible to conceive of a continuous growth in earnings without good iinancial upntrols. The world will beat a path to the company with a superior mouse trap, but without good financial control% the company will profit only modestly from it. The questionnaire came up with two surprising results; the relatively low ranking accorded “continuous growth in sales” and the very low rank accorded to “successful policy of diversification and acquisition.” Only one respondent rated continuous growth in sales No. 1, whereas 15 executives rated it last. On the other nand, 26 rated it second and 66, or approximately 4~ percent of the respondents, placed it among tbe top five Clearly, executives feel that saIes are less important a measure of organizational eflectiveness than profits. Many a company has simultaneously increased its sales and decreased its profits, and a few managers would feel encouraged by the combination. In a different culture, the rankings would probably be different. As Desmond Craves points out, European managers typically are less concerned with profits than their American counterparts. The sense of achievement that comes from selling more and presumably increasing their share of the market might lead them to give a higher rating to continuous growth
in sales on any scale of managerial effectiveness. As for “successful policy of diversification and acquisition,” no one put it first, only one put it second, only 26 percent put it among the first five versus 54 (almost a third) who ranked it last-only “enlightened social consciousness*’ garnered more last-choice selections. This is undoubtedly an example of the reverse halo e&t. The years l!Ht-1970 wimessed a wave of mergers and the appearance of the conglcmerate; many of these mergers went sour, and the publicity accorded the grandiose flops such as LTV have tended to give the whole area of diversification and acquisition at least a tarnished name among corporate executives. The same questionnaire, if it had appeared four years ago, probably would have seen divers&cation and acquisition achieve a considerably higher standing. Fiiy, the two remaining criteria: “sign&ant payoffs from research and developmen, and “top marketing skills.” They were both rated as of middiing signiftcaocc, with top marketing skills outranking significant payoffs from R&D. Only four respondents rated it first; however, over 40 percent put it in the top five, and only two rated it last. As we would expect, the number putting it among the first five roughly paralleled the number of respondents who listed continuous growth in salesamong the first five. As for significant payoff5 from R&D, no one put it first and only four people put it second; on the other hand, over 30 perumt put it in the first five and only nine rated it last. The rantngs here tend to drama&e the inrjvitabie subjectivity of the respondents to the .ptestionnaire, The items scored highest by the individual respondent largely rellect the measure of effectiveness by which he feels himself to be judged, by his boss (if he has one), by his board of directors, by i-an&l analysts and the business press, by the value
63
Wall Street places on the securities of his compzny. Its or;ly.in a minority of high-technology companies that payoffs from R&D are the prime measure of organizational effectiveness, and such companies were underrepresented among the survey respondents. Additional criteria cited were: Return on invested capital (8 citations), recruiting and training of managers (2 citations), quality of product and services (2 citations), maintenance and continuity of corporate purpose (rated No. 1 by one respondent), people orientation and development (4 citations), continuity of management succession, sound labor relationships, continuous improvement in market position, good operating controls, executive turnover, how Wall Street views its securities, continuous improvement in productivity, identification and concentration on priorities, effective communication, good promotional opportunities, strong leadership by chief executive, motivating and retaining top executive team (each received a single mention) .
RESPONSES TOQWSTION Two In this question, we asked the respondents to name “the organization that in your judgment has done the most outstanding job in each of the ten areas cited in the first question.”
64
One result stands out: IBM is the big-time winner, talring first place in six out of ten categories: continuous gmwth in earnings, continuous growth in sales, significant payoffs from research and development, efficient planning for the future, top marketing skills, and coherent philosophy of management; second place in high caliber of middle and top management- just nosed out by General Motors-and third in good financial controls and social consciousness. In several in-
stances, IBM led by a country mile; in sales growth, 47 mentions to 14 for second-ranked Sears; in earnings growth, 38 to 16 for second-ranked Xerox; in e&ient planning for the future, 25 to 8 votes for runner-up Eastman Kodak. The close votes in areas where IBM scored tops were in marketing sl&, where it nosed out Procter and Gamble by one mention, 23 to 22, and in coherent philosophy of management-18 mentions for IBM versus 16 for General Motors. General Motors was, on an overall basis, the second most highly rated corporation with two firsts: ‘high caliber of middle and top management,” where, as we mentioned earlier, it narrowly edged out IBM, and “good &unGal controls~ where its lead was commanding-35 citations versus 8 for second-ranked IBM. GM also had a second in coherent philosophy of management, tied with Sears for third place in growth in earnings and planning for the future, and ranked fourth in growth in sales-behind IBM, Sears, and Xerox. In the remaining areas, we had two hands-down winners-ITT received 47 mentions for a “successful policy of diversification and acquisition,” versus second place Textron with four mentions and third place Tenneco with three mentions. Xerox had a commanding lead in “enlightened social consciousness,” with 22 votes compared to 7 for secondranked Kodak and 5 for third-ranked IBM. ‘- both cases, the size of the margins reflects the power of publicity as well as positive accomplishments. True, ITT has pursued an
exceptionally successfui policy cf dirersification and acquisition, but whether it is the most successful can be argued; what can’t be argued is that its efforts have been the most publicized. $Bmilarly, Xerox undoubtedly deserves the bigh marks it received for enlightened social consciousness, but the power of pubiicity explaii the size of the margin. Other osmpanies have done outstanding work in this area, too. For example, when 800 corporate staffers in urban and public afTairs were asked by the newsletter Bz&ess and Society to assign a rating on social consciousness to 45 corporations, Chase Manhattan and First Pennsylvania Corp. received the highest ratings. On our survey, Chase Manhattan rcceived one mention and First Pennsylvania, none. Note: Xerox was not on the newsletter’s list of+ companies but received by far the largest number of write-ins. Three other companies stand out in the corporate ratings: Xerox, gears, and Eastman Kodak Xerox rated lirst in social consciousness, second in earnings growth, and third in *both growth in sales and payoff from research and development gears was second in growth in sales,tied with GM for third in marketing skills and planning for the future, and was also third in possessing a cherent philosophy of management. Kodak placed second in social consciousness, third in planning for the future, and fourth in payoffs from research and development-following IBM, Polaroid, and Xerox. One final fact about the responses to question two: The large number of compa-
nies that received a single nomination. Par example, under eniightened social consciousness, out of 89 citations, 43 received one mention; under diversification and acquisition, out of 101 responses, 35 companies were cited by only one executive. The smallest number of responses was in payoffs from research and development, where 14 out of 138 responses were single-company responses. AU in all, the results are evidence of a healthy diversity of opinion among the experts.
RJSPOWES TOQUESTIONTHREE In question three, we asked the res,pondents to list the ten best-managed companies on an o~erdi basis. To ligbten their task, we tisted 30 companies that are frquendy cited in comparable surveys and by authorities on the subject as among the best managed businesses. We asked the respondents to check the box next to the company name if they felt that it rated as one of the ten most effective organizations. We aIso provided space f&r the respondents to write in the names of any companies not mentioned that they felt bekxaged in the top ten. The results of the survey are shown in the table on p. 64. Obviously, the top five companies present no surprises. These are the same five companies respondents selected in answering question two as possessing speciai excesience in several of the ten areas. The only cause for even mild surprises is that Sears, Roebuck emerged as number two. Apparendy, many of the respondents who made individual selections in each of the spedatizcd areas decided that on an overall basis, Roebuck deserved an accolade. As for the bottom jlivc, each of them, along with Avon Products, which just missed the top ten, received several mentions in most of the categories eoveTtJ in the second question.
65
131 1.8.M. sears Xxbck General Motors Xerox Eastman Kodak Minnesota Mining and Mfg. Procter ad Gamble I.T.T. 56 coca-cola 54 Johnson and Johnson
111 194 99 96 79 69 62
52 51 45 45 38 36 34 31 29 26
AvonProducts GcneralElectric JerseyStandard Polaroid Walt Disney Productions McDonaki’s Corp. CoWpillRrcorp. TcmsInarwncau DcltaAirlincs MerrillLynch
There were 42 wmpanics written in --six of whom received more t&n a single mention: DuPont got six mentions; Westinghouse, three; Black and Decker, Weyerhauser, First National City Bank, and Bank of America, two apiece. 1) WHEREDo WE Go FROMHERS? We’re aware of the principal limitations of the survey. Many small and medim& companies are managed as well as or bet&r than the majority of the wuntry’s fioo laqest wmpanies. But it’s the giant wrporation that gets the publicity and the recognition. Every one of the top ten companies cited in the survey are giants-and this was inevitable. Also inevitable was the super&Sty of the criteria. Only two out of the ten-wntinuous growth in sales and eamings-in-
66
21 18 17 13 12 11 7 7 6 2
American Home Products Fedenued Depilmncnt Stores EliLilly Honeywell Tcnnca, Phillip Mor& $g-d Ma&’ i%stPennsybmiacorp.
wrporate hard and fast facts, and CVUI tdl.q are subject to juggling. The rest, al+, .gh admhdly both ;ubjectivc hnd pa&l, seemed tobethebestaitcriaavailabkaudthecriteria most frequently aqhyed by audmritics on mRnagement~
The real justihtion for the survey isthatitwasaorancndinitsclfbutabcginaing,thdalmchingpadfurasrierofaltides -p~l~OneeVery&issuc-thatWill pmbeindq3thfheopcra~ofdtcaoipontiOOadtCdiUtbCnvVeyUtbCmoarteffcaive
organizatious. We wnsidcr the criteria in the survey working tools, pedchan mcasuhg devices that will be testt4dn~ altered, andaddedtoasweattempttoappiythcm.
ow do you measure the efjectiueness of any business? By whatever criteria you subscribe to, which are rhe ten most eflectiue business organizations in the United Stars?
60
These are the key questions that we asked the top executives who comprise the membership of the Presidents Association, an affiliate of the American Management Association. We also asked them to name the organization that had done the most outstanding job in each of ten crucial areas. To save time and effort, we did some preselection on the first question and came up with ten criteria that encompassed the factors most com-
monly cited in management literature as determining whether or not an organization is effective. Then we asked them to review the list below and rank them from 1 (most important) to IO, in order of importance. -Continuous growth in sales -Continuous growth in earnings -Significant payoffs from research and development --Good financial controls -Successful policy of diversification and acquisition -Efficient planning for the future -High caliber of middle and top management -Top marketing skills
-Enlightened social consciousness -Coherent philosophy of management In addition, we provided space for the respondents to check other factors that they considered as important as some of the above. One hundred and Sixty-three members of the Presidents Association returned the questionnaire &fore the cutoff date.
REFLECTIONS ON THE RESPONSES
To begin with, a few generahzations. We reject the “great man” approach to the measurement of organizational effectiveness, incorporated in the familiar assertion that “any institution is the lengthmed shadow of a single man.” Obviously, the survey respondents shared our feeling: oilly one executive mentioned strong leadership by da chief executive as one of the prime criteri;: of organizational effectiveness. . We suspect, however, that the responses understated the case for the strong leader. It’s impossible, for example, to think of Polaroid without thinking of Edwin Land or ITT without thinking of Harold Gzneen. Thirty or forty years ago it would have been equally impossible to think of General Motors without thinking of Alfred P. Sloan. We also think of a one-man show famous for the phenomenal turnover among its top management and the brutality of the big boss, who has nevertheless within recent years increased sales and earnings tenfold. The distinction
is clear between the Sloans and quite possibly the Lands and Geneens-who develop an approach to management and a system of controis that constitute a positive legacy to the organization long after they have left the scene-and our unnamed chief executive, who more than likely will be followed by the organizational eunuc~w~ m-id him until the uhimate cdapse or takeover. Another broad-brush generalization: E&ctive management is a holistic phenomenon. The e&c&e organization in other words, may have its particular Strengths, but it has nc special weakness. Procter and .G*& for example is renowned for its marketing organ&&m, and marketing is probably its area of greatest L~X&XKZ, but it would be surprising to discover that it didn’t have good financial controls, that it didn’t plan e&iem!y for the futwe, that it didn’t score high on ali ten criteria mentioned in the questionnaire on management effectiveness.
RESPOMES lo QXJFSEON QNE Now le ok at the responses to the first question. (The sum total of responses varied among items because some respondents failed to fill in alI the blanks.) Obviously, t&e members of the Presidents Association are most impressed by continuous growth in earnings, by the signs of corporate health indicated by what Emerson called “the unimpeachable
61
judgment of an unbribable tribunal-the account of profit and loss.” More than half of the replies-&I-rated continuous growth in earnings the most important single criterion of organizational effectiveness; more than 80 percent rated it as one of the top five criteria; and no one rated it at the bottom of the ten. All of which restates the traditional preeminence of the profit motive as the mechanism that keeps the corporate engine running. We know of only one corporate chief execctive, Edwin Land of Polaroid, who has ever proclaimed at a stockholders meeting that the prime purpose of his organization’s existence was not to make money. Continuous growth in earnings has double the number of mentions as the runner-up, “higher caliber of middle and top management” (40 versus &I), despite the growing recognition that the judgment of Emerson’s tribunal is really not that unimpeachable-figures may not lie, but they frequently conceal and confuse-and despite the growing pressures on the corporate organization to put concern for the en&onment azd other social considerations ahead of profits. Apparently, these pressures are not very effective. Only two respondents gave top billing to enlightened social consciousness; only four listed it among the top three, while 35 percent (57) rated it as the least important Criterion of orgahational efIectiveness.
62
What other criteria received high ratings ? We already stated that high caliber of middle and top management ranked second, with 40 mentions or 25 percent. Almost as many-35-placed it second; over 80 percent put it in the first five; and no one ranked it last. Nor is the high ranking surprising: Good managers take sound measures. In other words, an organization that is staffed at the middle and top levels with men of real ability will probably have good financial controls, increasing sales, a continuous growth in earnings, and the rest of the criteria covered by the questionnaire. The next largest number of firstplace mentions went to ‘efficient planning for the future” with 16, while “coherent philosophy of management” foLwed witt 12 first-place citations. Of more significance is that over &o Percent put efficient planning for the future in the first five and over !%IPercent mentioned coherent philosophy of management as one of the five most important criteria. The two, we feel, are closely r&ted. In an era of continuous change, the successof any organization depends on cuminuous planning for the future-on fixing goals and then on modifying the techniques and strategies adopted to meet these goals whenever circumstances indicate that a change is in order. The company with a coherent philmphy of management-that is, the company that has
Vn an era of continuous change, the success of any organization depends on continuom pianning for the futwe.”
already asked itself the questions, “What kind of business are we in?” and, “C?en that buiness, what objectives should we seek?“-has taken a long first step toward e&&e $a’-ning for the future. Similarly, continuous growth in eamings is related to good financial controls, and it’s not surprising that almost 70 percent of th. respondents labeled good financial contr4Js among the five most significant criteria, while only one person rated it last. It is possible to visualize competitive co that prevent a continuous growth of s despite good financial controls; it is almost impossible to conceive of a continuous growth in earnings without good iinancial upntrols. The world will beat a path to the company with a superior mouse trap, but without good financial control% the company will profit only modestly from it. The questionnaire came up with two surprising results; the relatively low ranking accorded “continuous growth in sales” and the very low rank accorded to “successful policy of diversification and acquisition.” Only one respondent rated continuous growth in sales No. 1, whereas 15 executives rated it last. On the other nand, 26 rated it second and 66, or approximately 4~ percent of the respondents, placed it among tbe top five Clearly, executives feel that saIes are less important a measure of organizational eflectiveness than profits. Many a company has simultaneously increased its sales and decreased its profits, and a few managers would feel encouraged by the combination. In a different culture, the rankings would probably be different. As Desmond Craves points out, European managers typically are less concerned with profits than their American counterparts. The sense of achievement that comes from selling more and presumably increasing their share of the market might lead them to give a higher rating to continuous growth
in sales on any scale of managerial effectiveness. As for “successful policy of diversification and acquisition,” no one put it first, only one put it second, only 26 percent put it among the first five versus 54 (almost a third) who ranked it last-only “enlightened social consciousness*’ garnered more last-choice selections. This is undoubtedly an example of the reverse halo e&t. The years l!Ht-1970 wimessed a wave of mergers and the appearance of the conglcmerate; many of these mergers went sour, and the publicity accorded the grandiose flops such as LTV have tended to give the whole area of diversification and acquisition at least a tarnished name among corporate executives. The same questionnaire, if it had appeared four years ago, probably would have seen divers&cation and acquisition achieve a considerably higher standing. Fiiy, the two remaining criteria: “sign&ant payoffs from research and developmen, and “top marketing skills.” They were both rated as of middiing signiftcaocc, with top marketing skills outranking significant payoffs from R&D. Only four respondents rated it first; however, over 40 percent put it in the top five, and only two rated it last. As we would expect, the number putting it among the first five roughly paralleled the number of respondents who listed continuous growth in salesamong the first five. As for significant payoff5 from R&D, no one put it first and only four people put it second; on the other hand, over 30 perumt put it in the first five and only nine rated it last. The rantngs here tend to drama&e the inrjvitabie subjectivity of the respondents to the .ptestionnaire, The items scored highest by the individual respondent largely rellect the measure of effectiveness by which he feels himself to be judged, by his boss (if he has one), by his board of directors, by i-an&l analysts and the business press, by the value
63
Wall Street places on the securities of his compzny. Its or;ly.in a minority of high-technology companies that payoffs from R&D are the prime measure of organizational effectiveness, and such companies were underrepresented among the survey respondents. Additional criteria cited were: Return on invested capital (8 citations), recruiting and training of managers (2 citations), quality of product and services (2 citations), maintenance and continuity of corporate purpose (rated No. 1 by one respondent), people orientation and development (4 citations), continuity of management succession, sound labor relationships, continuous improvement in market position, good operating controls, executive turnover, how Wall Street views its securities, continuous improvement in productivity, identification and concentration on priorities, effective communication, good promotional opportunities, strong leadership by chief executive, motivating and retaining top executive team (each received a single mention) .
RESPONSES TOQWSTION Two In this question, we asked the respondents to name “the organization that in your judgment has done the most outstanding job in each of the ten areas cited in the first question.”
64
One result stands out: IBM is the big-time winner, talring first place in six out of ten categories: continuous gmwth in earnings, continuous growth in sales, significant payoffs from research and development, efficient planning for the future, top marketing skills, and coherent philosophy of management; second place in high caliber of middle and top management- just nosed out by General Motors-and third in good financial controls and social consciousness. In several in-
stances, IBM led by a country mile; in sales growth, 47 mentions to 14 for second-ranked Sears; in earnings growth, 38 to 16 for second-ranked Xerox; in e&ient planning for the future, 25 to 8 votes for runner-up Eastman Kodak. The close votes in areas where IBM scored tops were in marketing sl&, where it nosed out Procter and Gamble by one mention, 23 to 22, and in coherent philosophy of management-18 mentions for IBM versus 16 for General Motors. General Motors was, on an overall basis, the second most highly rated corporation with two firsts: ‘high caliber of middle and top management,” where, as we mentioned earlier, it narrowly edged out IBM, and “good &unGal controls~ where its lead was commanding-35 citations versus 8 for second-ranked IBM. GM also had a second in coherent philosophy of management, tied with Sears for third place in growth in earnings and planning for the future, and ranked fourth in growth in sales-behind IBM, Sears, and Xerox. In the remaining areas, we had two hands-down winners-ITT received 47 mentions for a “successful policy of diversification and acquisition,” versus second place Textron with four mentions and third place Tenneco with three mentions. Xerox had a commanding lead in “enlightened social consciousness,” with 22 votes compared to 7 for secondranked Kodak and 5 for third-ranked IBM. ‘- both cases, the size of the margins reflects the power of publicity as well as positive accomplishments. True, ITT has pursued an
exceptionally successfui policy cf dirersification and acquisition, but whether it is the most successful can be argued; what can’t be argued is that its efforts have been the most publicized. $Bmilarly, Xerox undoubtedly deserves the bigh marks it received for enlightened social consciousness, but the power of pubiicity explaii the size of the margin. Other osmpanies have done outstanding work in this area, too. For example, when 800 corporate staffers in urban and public afTairs were asked by the newsletter Bz&ess and Society to assign a rating on social consciousness to 45 corporations, Chase Manhattan and First Pennsylvania Corp. received the highest ratings. On our survey, Chase Manhattan rcceived one mention and First Pennsylvania, none. Note: Xerox was not on the newsletter’s list of+ companies but received by far the largest number of write-ins. Three other companies stand out in the corporate ratings: Xerox, gears, and Eastman Kodak Xerox rated lirst in social consciousness, second in earnings growth, and third in *both growth in sales and payoff from research and development gears was second in growth in sales,tied with GM for third in marketing skills and planning for the future, and was also third in possessing a cherent philosophy of management. Kodak placed second in social consciousness, third in planning for the future, and fourth in payoffs from research and development-following IBM, Polaroid, and Xerox. One final fact about the responses to question two: The large number of compa-
nies that received a single nomination. Par example, under eniightened social consciousness, out of 89 citations, 43 received one mention; under diversification and acquisition, out of 101 responses, 35 companies were cited by only one executive. The smallest number of responses was in payoffs from research and development, where 14 out of 138 responses were single-company responses. AU in all, the results are evidence of a healthy diversity of opinion among the experts.
RJSPOWES TOQUESTIONTHREE In question three, we asked the res,pondents to list the ten best-managed companies on an o~erdi basis. To ligbten their task, we tisted 30 companies that are frquendy cited in comparable surveys and by authorities on the subject as among the best managed businesses. We asked the respondents to check the box next to the company name if they felt that it rated as one of the ten most effective organizations. We aIso provided space f&r the respondents to write in the names of any companies not mentioned that they felt bekxaged in the top ten. The results of the survey are shown in the table on p. 64. Obviously, the top five companies present no surprises. These are the same five companies respondents selected in answering question two as possessing speciai excesience in several of the ten areas. The only cause for even mild surprises is that Sears, Roebuck emerged as number two. Apparendy, many of the respondents who made individual selections in each of the spedatizcd areas decided that on an overall basis, Roebuck deserved an accolade. As for the bottom jlivc, each of them, along with Avon Products, which just missed the top ten, received several mentions in most of the categories eoveTtJ in the second question.
65
131 1.8.M. sears Xxbck General Motors Xerox Eastman Kodak Minnesota Mining and Mfg. Procter ad Gamble I.T.T. 56 coca-cola 54 Johnson and Johnson
111 194 99 96 79 69 62
52 51 45 45 38 36 34 31 29 26
AvonProducts GcneralElectric JerseyStandard Polaroid Walt Disney Productions McDonaki’s Corp. CoWpillRrcorp. TcmsInarwncau DcltaAirlincs MerrillLynch
There were 42 wmpanics written in --six of whom received more t&n a single mention: DuPont got six mentions; Westinghouse, three; Black and Decker, Weyerhauser, First National City Bank, and Bank of America, two apiece. 1) WHEREDo WE Go FROMHERS? We’re aware of the principal limitations of the survey. Many small and medim& companies are managed as well as or bet&r than the majority of the wuntry’s fioo laqest wmpanies. But it’s the giant wrporation that gets the publicity and the recognition. Every one of the top ten companies cited in the survey are giants-and this was inevitable. Also inevitable was the super&Sty of the criteria. Only two out of the ten-wntinuous growth in sales and eamings-in-
66
21 18 17 13 12 11 7 7 6 2
American Home Products Fedenued Depilmncnt Stores EliLilly Honeywell Tcnnca, Phillip Mor& $g-d Ma&’ i%stPennsybmiacorp.
wrporate hard and fast facts, and CVUI tdl.q are subject to juggling. The rest, al+, .gh admhdly both ;ubjectivc hnd pa&l, seemed tobethebestaitcriaavailabkaudthecriteria most frequently aqhyed by audmritics on mRnagement~
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