Corporate social responsibility
The following attributes have been identified by Royal Philips Electronics as the drivers for building up its reputation: ? Develop new/exciting products ? Leader in innovation ? Financially strong company ? Strong/capable management team ? Sound vision/strategy ? Good employer ? Honest/trustworthy management ? Reliable ? High quality products/services ? Company I admire/respect ? Environmentally responsible ? Socially responsible ? Value for money ? Customer needs Thus the above may be inferred as the key determinants for building up the reputation of the company.
However it cannot be said any of the above attributes would make the company a reputable one that will be admired by the customers. There should be a perfect combination of all these factors prevalent in a company to make it an admirable one. A research has been made by Hay Group Associate Consultant Tiffany Mortelliteo in 2007 for the most admired company in the world. It may be noted that the Hay Group, which has conducted the research for the World’s Most Admired Companies list since 1997 is a global management consulting firm.
They asked 1,506 senior executives and securities analysts to rate companies which sales turnover over US $ 8 billion in 26 countries on scale of zero (worst) to ten (best) on eight different attributes: The attributes include: ? Corporate social responsibility, ? Product innovation, ? The financial soundness, ? Effective people management, ? Efficient use of corporate assets, ? Value of long-term investment, ? The quality of management and ? The quality of products/services.
A total of 616 companies in 68 industries were surveyed over the fourth quarter of 2006. “Social responsibility” was one of the criteria the senior executives felt strongly about including in the determination of a company worthy of admiration. Hay’s longstanding inclusion of social responsibility as a key attribute to determine admirable companies may surprise those who thought that corporate social responsibility (CSR) was a relatively recent development. CSR is not entering mainstream consciousness – it is already firmly embedded there.
The survey defines social responsibility simply as “responsibility to the community and/or the environment,” but it thus relies heavily on the survey respondents’ own understanding of what constitutes social responsibility. The survey result was published by Fortune China magazine in May 2007. Fortune lists the 50 most admired companies overall, from any industry, which is presented in Appendix I, Table No. 1. From the survey, it can be observed that the most admired company may not necessarily be the most successful company.
In the wake of ethics breaches and accounting failures, even reputable firms must make an effort to win back public confidence, according to Marc Saperstein, who earlier this year was appointed to the new post of vice president of corporate citizenship at General Electric Co. , a “Most Admired Company” according to Fortune_ magazine and The Financial Times . He further adds: “It’s more incumbent on corporations than ever before to be transparent, because that’s key to people increasing their trust in corporations …
It’s not enough just to do good in volunteerism and philanthropic activities. To be great, companies also have to demonstrate to stakeholders that they are acting with the right moral and ethical compass, and acting responsibly on financial, social and environmental dimensions. ” “A good reputation increases the length of time a company spends earning above-average financial returns and decreases the length of time it spends earning below-average returns, according to a 2001 analysis of Fortune’s “Most Admired Companies.
” For the year 2004 Fortune’s annual ranking of “America’s Most Admired Companies,” ranked Wal-Mart to be on the top of the list despite its recent bad press and lagging stock price – reports Business Finance Link Issue # 141 . This implies that the financial soundness or any other criteria associated with the share prices really do not matter in deciding on the admiration of a company. People do find different attributes and determinants of their own to decide on admiring a company.