|
Being
Admired
By Michael Alan Hamlin
March 3, 2003
Fortune magazine announced the world's
most admired companies last week, and as usual, all top 10 companies
are U.S. multinationals, with Wal-Mart in the lead in this post-Internet
bubble economy. Toyota almost made it to the top 10, coming in at
11. Another Asian company, Sony, made the 13th spot. Germany's BMW,
Finland's Nokia, and Switzerland's Nestlé rounded out the
non-US top 20 Most Admired firms.
One other Asian firm, Singapore Airlines,
came in at 21. No other Asian firm made it to the top 50. Within
Asia, Singapore Airlines, South Korea's Samsung, Australia's News
Corp. and BHP Billiton - a mining and oil-production company - and
China Telecommunications were ranked most admired over all other
Asian multinationals and enterprises.
The results were arrived at by surveying
around 10,000 directors, executives, and managers at 345 companies
around the world. Far Eastern Economic Review's Review 200 provides
a better look at admired companies at the national level in Asia,
but no survey of successful, admired enterprises is as respected
as that of Fortune. And no other demonstrates so clearly, and often
painfully so, how far away the leaders are from the rest of the
pack.
One of the most significant results
of this year's rankings is the fall of General Electric from the
number one position - which it had held for at least the past five
years - to number five. That precipitous decline is due to at least
three factors. Clearly the most obvious is the fall from grace of
legendary former chairman Jack Welch. A scandalous divorce played
out on the front pages of the world's top publications showed that
even folks who spend US$50,000 a year on wine are just as human
in most respects as everyone else. GE has also been on the hot seat
for its "opaque financials" in the aftermath of the Enron
debacle.
A distant third reason for GE's drop
- although it maintained its leadership position in the electronics
sector - is probably due, and there's some irony here considering
reasons number one, the transition in leadership. The company's
new chairman, Jeff Immelt, doesn't enjoy the prestige of his former,
celebrity boss. Although there's a lot of criticism of high-flying
celebrity CEOs these days, eight of the top 10 companies on the
Most Admired list are run or have been run in fairly recent memory
by guru CEOs. And you can bet that Emelt is going to work especially
hard to emulate Welch in that respect, even if he is changing the
way the company is run.
It's also interesting that Wal-Mart
made it to the top of another Fortune list this year, the Fortune
500. That's because it's the only company in history to hold both
spots. That's both spots, not just both spots at the same time.
That unique honor signals both a flight from Internet fantasy, as
well as a refocus on the thing that should be most admired about
a company: profitability.
There's a third reason that Wal-Mart
is an interesting story here, but this has to do with a report in
BusinessWeek. In an article two weeks ago, current and former female
employees discussed a class action lawsuit they have filed against
Wal-Mart for discrimination. Based on data provided by the plaintiffs'
lawyers, it appears that Wal-Mart has two politically and morally
incorrect biases.
First, there's a glass ceiling. Only
about 1.5 percent of top manages are women. Second, women are typically
paid less, and substantially so, from around one third to just half
of what males with exactly the same job are paid. If this turns
into a nasty fight - and it very well could considering potential
damages as well as what appear to be the facts of the case - don't
expect to see Wal-Mart at the top of next year's Most Admired List.
Profitability may be important, but it's not the only important
thing.
What companies fell from the top
10 club this year? They are Home Depot, Citigroup, and Intel. The
luster of Home Depot faded as sales plummeted, and analysts began
to take a closer look at what appears to be a pretty screwed up
culture. Citigroup got, deservedly so, caught up in the WorldCom
scandal - the biggest bankruptcy ever - and fired star Salmon Smith
Barney analyst Jack Grubman for rating WorldCom a buy in return
for a favor from Citigroup chairman Sandy Weill. Oddly, Weill is
still in the saddle, and claims the favor - a donation to a private
school Grubman wanted his kids to attend - was an innocent gesture
on behalf of a valued employee.
Unlike Home Depot and Citigroup,
Intel has been untouched by scandal. But growth has slowed and competition
has increased at a time when Intel is trying to manage itself through
one of those inflection points that made chairman Andy Grove a celebrity
CEO. And speaking - again - of celebrity, CEO Craig Barrett doesn't
have it. While that's not the only reason Intel is no longer one
of the world's top 10 most admired companies, it's undoubtedly a
factor. Admiration of effective CEOs rubs off on their companies.
All this provides us three lessons
from this year's Most Admired list. First, substance matters again.
Second, celebrity does count. And third, scandal hurts.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001). Write him at mahamlin@teamasia.com.).
Copyright © 2003 Michael Alan
Hamlin. All Rights Reserved.
|
